Good Morning Investors,
New highs, new signals. With the S&P 500 ($SPY ( ▲ 0.35% )) and Nasdaq ($QQQ ( ▼ 0.46% )) setting fresh records again, the market continues to reward those who stayed invested through April’s noise. Today is about confirmation. Producer prices and jobless claims will test the “cooling but not cracking” narrative that drove rate-cut odds higher, while positioning rotates beneath the surface. I’ll cover what PPI means for September, where AI capex remains an earnings engine, how corporate headlines map to margins and policy, and why crypto’s leadership still matters for risk appetite into month-end.
Opening Bell: Flat futures into PPI and claims
Futures are steady after a record-setting session. S&P 500 and Nasdaq 100 sit near the flatline, the Dow is little changed. At 8:30 a.m. ET we get PPI and weekly jobless claims. Consensus looks for a 0.2% m/m rise in headline PPI and 2.5% y/y, with core ex-food and energy at 0.2% m/m and 2.9% y/y. Claims are seen near 228,000. The backdrop is straightforward. A “good enough” CPI shifted the debate from pause-or-cut to 25-or-50 in September, helped by Treasury’s public push for faster easing. Another benign print should keep small and mid caps in the leadership seat into Jackson Hole.
Market Framework: Tariffs vs earnings, policy vs positioning
Before the bell, global equities were mixed. Europe hovered near two-week highs, Japan eased from records on a firmer yen and BOJ watch. Oil edged up ahead of the U.S.–Russia summit on Ukraine, while the dollar stayed near recent lows on cut expectations. Domestically, the tape still trades like a soft-landing base case. Earnings beats are broad enough to support multiples, while tariff pass-through remains uneven. That combination favors resilience, not recession.
Technology & AI: Capacity still chasing demand
Google will invest an additional 9 billion dollars in Oklahoma over two years to expand U.S. cloud and AI infrastructure, splitting spend between a new Stillwater data campus and an expansion at Pryor. This is the same capex arms race we have been leaning into all year. Cisco reinforced the theme, guiding AI-related orders above 800 million dollars in Q4 and topping 2 billion dollars in fiscal 2025, more than double its original target. Bottom line, the infrastructure build continues to monetize, even as policy adds frictions at the margin.
Corporate Highlights
Deere’s quarter reflected the tariff and demand squeeze. Lower profit and a tighter guide underscore weaker crop prices, softer big-ticket purchases, and a shift toward rental fleets to manage cash.
Birkenstock beat on profit, held margins, and flagged readiness for the 15 percent U.S. tariff on European imports. Full-price sell-through stayed firm, a clean read on pricing power.
Meta’s WhatsApp said Russia is restricting calls and attempting to curb encrypted services for over 100 million users. Platform risk remains a policy wildcard, but product engagement typically proves sticky.
The administration’s sector-specific pharma tariff timeline appears pushed out by weeks as attention shifts elsewhere. That defers a potential cost shock for now.
KBR secured a multiyear NASA health and safety contract with options extending to 2035, adding durable backlog.
Enterprise Products is investigating a crude leak tied to the Seaway system near Houston. Early indications point to contained operational impact.
Paramount Skydance outlined plans to reinvigorate core brands while increasing film output post-merger. The strategy leans into IP scale rather than linear divestiture.
Cognizant will delay annual wage increases to November for most staff, citing macro uncertainty and tariff-related pressures.
Crypto Framework: Leadership holds, ETH in pole position
Bitcoin ($BTC.X ( ▼ 0.63% )) printed a new all-time high above 123,600 before consolidating near 120,000 this morning. Ethereum is pushing toward its prior peak near 4,800, with momentum supported by stablecoin growth, new issuance frameworks, and clearer agency signals on digital assets. Bullish’s ($BLSH ( ▼ 2.65% )) IPO pop reinforced institutional demand for crypto infrastructure, even as some recent listings (Circle, CoreWeave) saw profit-taking. My near-term stance is unchanged. I remain bullish on both bitcoin and Ethereum, with a tactical tilt to ETH ($ETH.X ( ▼ 0.28% )) on momentum. I am watching Solana at 210 for a clean break. I maintain an 8,000 year-end target on ETH given the structural bid from stablecoins and the build-out on the Ethereum stack.
Technical Picture: Breadth improving, rotation helps durability
The index highs matter, but Tuesday and Wednesday told the story beneath the surface. Small caps and cyclicals continue to respond to easing odds, while mega-cap tech consolidates leadership without losing trend. That rotation improves durability. If PPI cooperates, breadth should stay constructive. If it runs hot, I still expect pullbacks to be shallow given positioning and liquidity.
Today’s Calendar
08:30 ET: Initial jobless claims (cons 228,000), continued claims (cons 1.964 million)
08:30 ET: PPI final demand m/m (cons 0.2 percent), y/y (cons 2.5 percent)
08:30 ET: PPI ex-food and energy m/m (cons 0.2 percent), y/y (cons 2.9 percent)
08:30 ET: PPI ex-food, energy, transport (prior 2.5 percent y/y)
Also watching: PPI machine manufacturing index, claims 4-week average
Earnings: Applied Materials (Q3 cons 2.36 EPS), Tapestry (Q4 cons 1.02)
Ex-dividends (selected): Diamondback Energy, Invesco, Paccar, Pool, TJX, WEC Energy, Vulcan Materials
Stocks to Watch
Alphabet: 9 billion dollar Oklahoma AI and cloud expansion, part of the 2025 capex plan with incremental spend earmarked beyond.
Cisco: AI infrastructure demand continues. Q1 revenue guide above Street, AI orders topped 2 billion dollars in FY25.
Deere: Lower Q3 profit, tighter outlook on tariffs and softer ag demand. Shares weaker premarket.
Birkenstock: Profit beat, firm full-price demand, reiterates margin framework despite 15 percent tariff headwind.
Meta/WhatsApp: Reports of call restrictions in Russia as the state pushes domestic platforms.
KBR: NASA award of up to 3.6 billion dollars including extensions.
Enterprise Products: Investigating crude release tied to Seaway; flows adjusted.
Paramount Skydance: Post-merger strategy centers on revitalizing Nickelodeon, MTV, BET and ramping film output.
Analysts’ Notes
CAVA: Morgan Stanley cuts target to 97 from 107 after lower same-store outlook
Cisco: Piper Sandler raises target to 70 from 64 on stronger AI-driven guide
Hasbro: UBS lifts target to 88 from 82 on expected H2 gaming and Wizards strength
Smithfield Foods: Morgan Stanley nudges target to 30 from 29 after Q2 beat and guidance raise
Final Thought
I have said for months that this rally was under-owned and overdue for validation. We are getting it. The market now expects a lot into Jackson Hole and a September cut. That can invite a short reset, particularly in mega-cap tech where we have already harvested some gains after riding the April-to-August move. I have added a touch of healthcare where pessimism is well priced, and I expect small and mid caps to outperform into the cut as investors front-run easier policy. The longer arc remains intact. A cutting cycle alongside robust AI monetization and still-healthy earnings breadth is a powerful combination. Use any policy-induced wobble to accumulate operators with pricing power and capacity to convert AI capex into durable revenue. The next leg is built on execution, not hope.
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Dan Sheehan
This newsletter is for informational purposes only and should not be considered as investment advice. Please consult with your financial advisor about your specific situation.