I. Market Overview: S&P Closes Above 6,500 for First Time
On Thursday, August 28, U.S. equities closed higher across all three major indices. The S&P 500 stood out, not only marking its 20th record close of the year but also breaking through the 6,500 level for the first time. The Dow and Nasdaq also gained modestly, though sector performance was uneven.
Key Data Support:
- Q2 real GDP growth revised upward to 3.3% annualized (vs 3.1% est., prior 3.0%), driven by stronger consumer spending.
- Weekly initial jobless claims fell to 229k (vs 230k est.), with continuing claims at 1.954M (vs 1.96M est.), showing labor market resilience.
- The S&P bounced off its 5-day MA intraday, closing higher for the third consecutive session, keeping bulls in control.
II. Core Driver: Corporate Buybacks as “Invisible Hand”
Corporate share repurchases have been a major tailwind. As of August 20, U.S. companies had already announced over $1 trillion in buybacks (fastest pace ever), with full-year estimates at $1.1T and projections of $1.2T by 2026.
Key Contributors: Apple ($100B), Alphabet ($70B), JPMorgan ($50B), Bank of America ($40B), Morgan Stanley ($20B). NVIDIA added a $60B buyback this week, helping stabilize shares after post-earnings volatility.
Controversy: Treasury Secretary Besant criticized Boeing for “large buybacks without R&D investment,” raising concerns of potential regulation or tax penalties on excessive repurchases.
III. Market Focus: PCE Data on Friday, Rate Cut Bets Firm
Markets are now watching the July core PCE price index (due Friday). Consensus expects +2.9% YoY (vs June’s 2.8%). Since PCE is derived from already released data, deviation risk is limited.
Consensus Strategy:
Regardless of PCE outcome, expectations for a September rate cut remain firm.
- With bullish sentiment elevated, investors are advised to lock in gains on mega-cap tech (e.g., NVIDIA) while keeping partial exposure to mid-cap tech and cyclicals to capture rate-cut upside.
Small caps (IWM) are up 7.7% MTD vs SPX +2.6% and NDX +2.1%, suggesting potential for catch-up trades into month-end.
IV. Stock & Sector Highlights: Divergence Deepens
1.AI Infrastructure – CRWV Bounces Back
CRWV surged as Google’s AI/cloud infra expansion renewed optimism. Stock recovered prior losses, turning profitable for recent dip buyers.
2.Consumer & Retail – COTY vs BMNR
- COTY: CEO & executives bought shares repeatedly (Aug 22 & Aug 26), lifting confidence. Stock +13.8% yesterday.
- BMNR: Ongoing lockup controversy (possible dates: July 28, Aug 27, Sep 2, Oct/Dec) keeps shares under pressure. ARK’s Cathie Wood added $15.6M, but PIPE investors’ low $5.40 entry creates heavy selling risk.
3.Robotics – RR as a “Pump-and-Dilute” Play
Richtech Robotics spiked on “disruptive robot” buzz, then announced a $100M ATM equity offering, a classic small-cap dilution move. Insiders also sold shares (COO sold 100k on Aug 26). While balance sheet is healthy, stock’s speculative nature is clear. Possible short-term trade if it drops back near $2–2.5 ahead of NVIDIA’s GTC conference (Oct 27–29).
4.Software – Snowflake vs CrowdStrike
- Snowflake (SNOW): Q2 revenue $1.15B (+32% YoY, beat), net loss $298M (-$0.89/share, better than est.). FY guide $4.4B (above est. $4.34B). Stock rallied, though valuation remains stretched.
- CrowdStrike (CRWD): Q2 revenue $1.17B (+21% YoY, slightly above est.), but swung to a $77.7M loss (vs +$47M YoY). Q3 guide slightly below est., though FY EPS outlook raised. Stock fell 8% AH, but rebounded intraday off 200-DMA support.
5.China & EVs – Li Auto Surprise, PayPal Stagnates
- Li Auto (LI): Q2 revenue -4.5%, profit flat QoQ but +69.6% sequentially. Weak Q3 guidance (-40% YoY deliveries). Stock initially -5% premarket, then reversed into gains (classic China ADR “fade bad news” trade).
- PayPal (PYPL): Range-bound $67–70 for 4 weeks. Fraud system glitch led to temporary German bank suspension (€100B frozen), now resolved. Structural headwinds remain: slow innovation, weak strategy, falling from fintech leadership. Best left as a trading vehicle.
V. Conclusion & Strategy
August 28 showcased both U.S. economic resilience and widening stock divergences.
- Tailwinds: Record corporate buybacks, AI infra support, stable rate-cut expectations.
- Risks: Crowded VIX shorts, overheated small-cap speculation (RR), mega-cap valuation pressures (SNOW).
Strategy:
- Take profits in stretched large-cap tech.
- Keep selective exposure to AI infra (CRWV), small-cap beneficiaries of rate cuts, and earnings-backed software names (SNOW short-term).
- Manage risk tightly in speculative trades; favor “certainty plays” over hype-driven moves.
