Shesa's Weekend Stock Market Updates - 8|16|26

Welcome to my weekend updates

Last week most of the U.S. indexes finished the week mixed. The market extended its recent winning streak on the S&P 500 and Nasdaq, supported by cooling CPI/inflation data and solid corporate results from some AI Data Center companies. This year the small-caps stocks outperformed, suggesting broader participation. So far, Q2 earnings season continued to impress, with a high percentage of S&P 500 companies beating estimates and overall earnings growth tracking around 50%, well above earlier forecasts as AI adoption continues. The AI infrastructure spending and related semiconductor companies have been delivering great results. More importantly, the CPI and PPI data were good for investors as it reduced market odds of a September Fed rate hike from around 50% earlier in the week to around 30% by Friday. Here is how the stock indices performed for the week:

• S&P 500 was up +0.4% to close at 7,785.76, marking its third consecutive weekly gain and briefly setting a new all-time high of 7,798.99 on Thursday. 
• Nasdaq was almost breakeven, up +0.1% at 26,729.16. 
• Dow was the loser down -0.6% to end the week at 53,732.41. 
• Small-cap (Russell 2000): Up +1.1% to 3,068.42.

For the year (Year-to-date):

• S&P 500: up +13.7%
• Dow: up +11.8%
• Nasdaq: up +15.0%
• Russell 2000: up +23.6%

Economic New Last week

• July CPI came in in-line with Wall Street expectations, up +0.1% monthly and up 3.4% year-over-year.
• July PPI was lower than expected, remain unchanged vs. expected of a 0.2% increase. Year-over-year, the PPI increased by 4.7%
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• July retail sales unexpectedly declined -0.6% vs. 0.1% expected. It seems like this was the largest drop in over a year.
• Consumer sentiment fell to a preliminary 51.0 in August (below expectations).

Economic Report this week

Wednesday, Aug. 19: July FOMC Minutes

Earnings last week

Nebius (NBIS) 

Revenue: $582.3 million (up 454% year-over-year).

AI Cloud Revenue: $575 million, up 514% year-over-year

EPS: Reported at -$0.12, much better than estimate of -$0.67 to -$0.82.

My View: The backlog reached to $40B. This company is going through spectacular growth and a major beneficiary of AI growth. The sock went up 46% in last one week. I think this is the best among the AI infrastructure stocks. 

CoreWeave (CRWV)

Record revenue growth + massive backlog signaling exceptional AI demand, plus raised full-year guidance.

Revenue: $2.575 billion (up 112% YoY from $1.212 billion)

Net loss per share: -$1.14

Revenue backlog: approximately $104 billion.

Cisco (CSCO)

Beat on top and bottom line, driven by strong acceleration in AI infrastructure demand from hyperscalers. It also raised full year guidance.

Revenue: $17.3 billion (up 18% YoY; beat $16.8 billion estimates). 

EPS: $1.22 (up 23% YoY; beat $1.17 estimates).

Earnings this week

Some key retailers will release earning this week.

Tuesday, August 18: Home Depot (HD) 

Wednesday, August 19: Target (TGT) 

Thursday, August 20: Walmart (WMT)

Stocks to watch

NVDA, DELL, MU, TSLA, SPCX, NBIS, RDW, IONQ, GOOG, FCEL

Going forward

The FED minutes will be very important. Due to the softer inflation data only about 30% of the analysts are expecting rate hike in September. However, if the Fed minutes is hawkish then market may become volatile. Also, Geopolitical situation may bring volatility if oil prices continue to rise. Next major earnings will be Nvidia (NVDA) and DELL will follow. All indexes viz. S&P 500 and DOW has hit new all-time high. Nasdaq is in a striking distance. We will see if it can hit new all-time highs around NVDA earnings release timeline. But I feel September and first part of October may become risky and volatile. Hence, as we approach toward that timeline, it will be logical to be cautious.