US Market Wrap 25 August: Technology Decides the Index for a Second Day, This Time Upward

By The Edge Research Team

One sector has now determined the direction of the S&P 500 on two consecutive sessions, in opposite directions. On Monday eight of the eleven sectors rose and the index still fell 0.28 percent, because information technology dropped 1.59 percent. On Tuesday only seven of eleven rose, and the index gained 0.32 percent to 7,677.28, because information technology rose 0.98 percent and led the board. Sector breadth was narrower and the outcome was better, which is the arithmetic of concentration. Note that this is a statement about sector counts, not about how many individual shares rose.

The Nasdaq Composite was the strongest major index, up 0.66 percent to 26,151.30, with the Nasdaq 100 up 0.64 percent to 29,209.23. The Russell 2000 added 0.50 percent to 3,010.02 and the Dow Jones Industrial Average 0.30 percent to 53,577.40. Reuters reported that technology rebounded from Monday’s chip-led selloff ahead of Nvidia’s results and that Treasury yields fell for a second straight session, and attributed the day’s gains to that combination.

A narrower board, and a cleaner top

The spread between the best and worst sectors was 2.68 percentage points, against 3.35 on Monday, on our calculation. Beneath technology, communication services rose 0.46 percent, materials 0.36 percent and health care 0.33 percent, with utilities, financials and real estate each up less than a quarter of a percent. That is a thin set of gains behind a single strong leader.

The four declining sectors tell the more interesting story. Energy was the weakest at minus 1.70 percent, tracking a crude market that fell for a second consecutive session. Consumer staples was next at minus 0.87 percent, which is a reversal worth noting: staples was Monday’s strongest sector at plus 1.76 percent and is Tuesday’s second weakest. Industrials fell 0.30 percent and consumer discretionary 0.27 percent.

Taken with Monday, the two sessions describe a market rotating quickly rather than moving as a block. Defensive positioning was rewarded on Monday and unwound on Tuesday, while the sector that was sold hardest on Monday was bought back hardest on Tuesday.

The data was soft and the market rose anyway

Two housing and confidence releases landed during the session and neither was encouraging. The Conference Board’s consumer confidence index fell to 89.4 in August from 90.2 in July, its second consecutive monthly decline. The composition was the notable part: the present situation index rose 6.8 points to 121.2 on improved views of current business and labour conditions, while the expectations index fell 5.8 points to 68.2. Consumers felt better about now and worse about the next six months, and the Conference Board’s chief economist Dana Peterson noted that prices, oil and gasoline featured prominently in respondents’ written comments.

The Census Bureau reported that new single-family home sales fell 10.5 percent in July to a seasonally adjusted annual rate of 607,000, from 678,000 in June, and were 6.3 percent lower than a year earlier. The median price of a new house sold was 393,800 dollars, and the months of supply at the current sales rate rose 12.9 percent to 9.6. Separately, S&P Dow Jones Indices reported that its national Case-Shiller home price index rose 1.5 percent year on year in June, up from 1.2 percent in May.

A market that rises on the day it learns that new home sales fell more than a tenth and that consumers expect less of the next six months is a market trading something other than the incoming data. What it was trading is visible in the bond market and on Wednesday’s calendar.

Yields, the auction and Nvidia

Reuters reported the 10-year Treasury yield down 5.55 basis points at 4.649 percent, the 30-year down 5.04 basis points at 5.181 percent and the two-year down 3.64 basis points at 4.200 percent, a second consecutive session of falling yields across the curve. The Treasury sold 69 billion dollars of two-year notes during the session at a high yield of 4.204 percent with a bid to cover ratio of 2.60, and 95 billion dollars of six-week bills at a bid to cover of 2.71.

Falling yields with soft data and a firm equity tape look like a market pricing a less restrictive path rather than a weaker economy, but the yield move was not a pure read on the data. Reuters tied the session’s dollar and rates picture to the sanctions announcement and to the Treasury’s buyback expansion, noting that the dollar had stumbled late last week after Treasury Secretary Scott Bessent said the Treasury would double the size of quarterly repurchases of longer-dated bonds, which raised concerns that a more direct effort to hold down borrowing costs could debase the currency. Crude falling for a second session pulled on the same lever from the inflation side.

Tightening risk has not been removed. Reuters reported that expectations for a Federal Reserve increase at the September meeting had dwindled to a 38.1 percent chance of a rise of at least 25 basis points, down from about 55 percent a month earlier, on CME FedWatch. That is a diminished probability, not an absent one, and it is the number to watch through Jackson Hole.

Nvidia reports after Wednesday’s close and the positioning around it is unusually calm. Reuters reported that options implied a 5.4 percent move in either direction, about 280 billion dollars of market value, against 6.5 percent implied before the May report and an average actual swing of 7.4 percent over the past twelve quarters. Nvidia was up 11.7 percent year to date against the S&P 500’s 11.8 percent, while the Philadelphia semiconductor index was up 61 percent, so the single stock has lagged both the index it dominates and the sector it defines.

Single stocks and the wider tape

Dick’s Sporting Goods reported second quarter net sales of 5.6 billion dollars, up 53.2 percent on the Foot Locker acquisition, with GAAP diluted earnings per share of 3.50 dollars against 4.71 a year earlier. Dick’s own comparable sales rose 4.9 percent while Foot Locker’s fell 3.6 percent on a pro forma basis, and the company cut full-year consolidated operating income guidance to a range of 1.45 to 1.55 billion dollars. After the close, Intuit reported fourth quarter revenue of 4.4 billion dollars, up 14 percent, full-year revenue of 21.4 billion dollars, also up 14 percent, and guided to 23.3 to 23.5 billion dollars for fiscal 2027.

CNBC reported that Canada unveiled retaliatory tariffs on goods from the United States worth about 20 billion United States dollars.

Crude extended its decline through the close. West Texas Intermediate for October was down 5.01 percent at 80.75 dollars a barrel at our capture and Brent 5.93 percent at 86.70 dollars, both well below the levels at which they stood when the commodity settlement windows closed earlier in the session. December gold rose 0.44 percent to 4,718.70 dollars. The VIX fell 2.52 percent to 15.45, the dollar index eased 0.10 percent to 98.903 and bitcoin slipped 0.39 percent to 78,491.20 dollars.

United States equities, 25 August close

S&P 500 sectors, 25 August close, ranked by change

Commodities, currencies, volatility and crypto, intraday 25 August

Europe, 25 August close, for reference

Asia, 25 August close, for reference

Middle East, 25 August close, for reference

United States index and sector closes are final, confirmed static across two pulls at 20:26 and 20:45 GMT after the 20:00 GMT close, and every previous close chain-checks against our own published table of 24 August. Commodities, currencies, volatility and crypto are a single intraday capture taken at 20:45 GMT and continue to trade after the equity close; the crude levels shown are materially below those in our commodities wrap of the same date, which captured at 19:23 GMT after the settlement windows, and both are correct on their stated basis. Treasury yields are as reported by Reuters during the session and are not closing levels; the Treasury daily par yield curve for 25 August had not been published at the time of writing and no curve table is carried. European, Asian and Middle East closes are carried verbatim from our wraps of the same date. Sources: CNBC for index, sector, commodity, currency, volatility and crypto levels; Reuters; The Conference Board; United States Census Bureau; S&P Dow Jones Indices; United States Department of the Treasury; CNBC for the Canada tariff report; Dick’s Sporting Goods and Intuit company filings; Central Bank of Kuwait; The Edge calculations.

WHAT IS AHEAD

Nvidia reports second quarter results after the United States close on Wednesday at about 20:20 GMT. Earlier the same day, at 12:30 GMT, the Bureau of Economic Analysis releases July personal consumption expenditures inflation alongside the second estimate of second quarter gross domestic product and preliminary corporate profits. The Jackson Hole Economic Policy Symposium runs from Thursday to Saturday on the theme of financial innovation and its implications for payments and policy, with keynote remarks from Federal Reserve Chairman Kevin Warsh on Friday. Boursa Kuwait is closed on Thursday 27 August for the birth of the Prophet Muhammad, peace be upon him, and resumes on Sunday 30 August.

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