I. Index Overview: Quiet Pause Ahead of “Powell Moment”
On Monday, August 18, U.S. equities paused after a week of gains, with the S&P 500, Nasdaq, and Dow all closing flat in narrow ranges. Trading volume was light, as investors awaited Fed Chair Jerome Powell’s speech at the Jackson Hole Symposium on Friday, alongside key earnings from Walmart and other major retailers.
Key Background and Market Expectations
Geopolitics: Trump suggested that a resolution to the Ukraine conflict could come “as early as today.” While potentially supportive for European markets, implications for U.S. equities remain neutral. A full ceasefire could drive some capital back to Europe, though not a core driver for U.S. stocks.
Historical Patterns Around Powell’s Jackson Hole Speeches:
- 2022: Hawkish “higher for longer” message sparked a near 4% Nasdaq selloff.
- 2023: Nasdaq fell nearly 2% the day before, then quickly rebounded afterward.
- 2024: Powell signaled rate cuts, lifting Nasdaq +1.47% on the day, but markets still corrected nearly 8% in the weeks after.
Valuation Risks: With the S&P 500 trading at 25.5x forward earnings (a two-decade high), if Powell fails to confirm a “50 bps September cut,” a short-term pullback is likely. Still, strong Q2 earnings (+11% YoY, well above expectations of +4%) and earlier corrections in AI and crypto stocks suggest downside risk is limited to ~5%.
II. Stock Highlights: Intensifying Divergence, Bulls vs. Bears
1.Meta (META): AI Reorg Sparks Volatility
Shares fell over 2% after the company announced its fourth AI reorganization in six months. Analysts see this more as a tactical “excuse for rotation” than fundamental deterioration.
2.Walmart (WMT): Earnings in Focus, Low Risk / High Probability Setup
With 92% of S&P 500 constituents having reported (82% beating EPS expectations), Walmart’s report is pivotal for assessing U.S. consumer health. Analysts expect solid revenue and profit growth, with grocery demand offsetting weak dining spend. Shares remain attractive after recent Amazon-driven weakness.
3.Target (TGT): Weak Outlook but Potential Oversold Rebound
Foot traffic has trended lower since February, with analysts expecting soft Q2 results. However, shares are deeply oversold — even a modest beat or optimistic guidance could trigger a relief rally.
4.Home Depot (HD): Earnings Loom, Market-Watch Mode
Street expects slight revenue and profit growth. Stock has gained only +2.7% YTD, lagging the S&P’s +9.5%. Long-term outlook tied to rate cuts is positive, but near-term traders are likely to wait until after earnings.
5.Novo Nordisk (NVO): Wegovy Approval + Ozempic Price Cut
The FDA approved Wegovy for MASH (5% of U.S. adults affected), while the firm halved Ozempic’s U.S. cash price. Shares could rebound toward $70+ in the coming months.
6.Intel (INTC): Subsidy-for-Equity Swap Shocks Sentiment
The Trump administration proposed taking a 10% equity stake (~$10.5B) in exchange for CHIPS Act subsidies. While this dilutes governance benefits, Intel could gain stability if Trump secures new orders.
7.Crypto Stocks: Mixed Signals, Cooling Momentum
- BLSH: Fell nearly 9% as Bitcoin and ETH weakened and Treasury Secretary Besant ruled out new BTC reserves. IPO valuation remains rich.
- COIN, HOOD: Rebounded modestly on sentiment recovery.
- Wulf: Spiked +4.6% after Google’s $1.4B data-center investment (14% stake), though late-day “mystery sell-off” raised concerns of insider cashouts.
- CRCL (CleanTech): Insider Selling Pressures Stock
Shares plunged after insiders sold 8M shares in a secondary offering, breaking below the 5-day average. Short-term outlook remains weak — best to stay on sidelines.
8.Solar Stocks: Policy Relief + Short Squeeze
Sunrun (RUN): Treasury’s revised solar tax credit rules were less restrictive than feared, sparking an +18% intraday rally, but gains faded to +11%. Likely a short-covering bounce, not a long-term trend shift.
9.Cybersecurity: Earnings Divergence
- Palo Alto Networks (PANW): Strong beat and raised guidance, stock rose post-market.
- CrowdStrike (CRWD): Pulled back, now offering long-term entry opportunities (software valuation resets occur roughly every 2–3 years).
III. Market Takeaway: Waiting for Powell, Focus on Certainty
Monday’s muted session reflects positioning ahead of Powell’s speech. Indices remain resilient thanks to strong earnings and rotation into low-beta sectors, but individual stocks showed sharp divergence driven by earnings, policy shifts, and insider activity.
Trading Guidance:
Thursday (Aug 22): Expect lighter risk-taking as bulls historically scale back ahead of Powell.
Friday (Aug 23): Key catalyst — confirmation of a 50 bps September cut would reinforce upside; lack of clarity could trigger a brief correction.
Stay focused on:
- Earnings certainty plays (e.g., Walmart, Home Depot)
- Policy beneficiaries (semiconductors, clean energy)
- Avoid chasing crypto/AI hype until post-correction entry points emerge.
