Retail Earnings & AI Stocks Set Stage for Market Momentum

Good Morning Investors,

Markets hover in late-summer calm as the S&P 500 notched its narrowest intraday range since March. With Jackson Hole now just days away, investors are in wait-and-see mode, parsing corporate earnings and geopolitical signals for incremental direction. Futures are little changed: Dow ($DIA ( ▼ 0.26% )) -0.07%, S&P 500 ($SPY ( ▼ 0.23% )) -0.04%, Nasdaq ($QQQ ( ▼ 0.28% )) +0.02%. The lull underscores the market’s confidence in an earnings-led rally that has carried the S&P 500 to 6,468, a fresh record.

This week’s retail earnings slate that started with Home Depot today, then we get Target and Lowe’s tomorrow, and Walmart Thursday, will provide the most tangible read on consumer resilience. Beneath the surface, rotation into healthcare and homebuilders remains intact, pointing to healthy breadth even as mega-cap AI continues to dominate headlines.

Intel ($INTC ( ▼ 2.0% )) secured a $2 billion equity injection from SoftBank at $23 per share, giving the Japanese group a ~2% stake and cementing it as a top-10 shareholder. The capital is significant, but the symbolism is greater: it highlights growing alignment between Wall Street, Washington, and global capital around Intel’s role in the semiconductor supply chain.

As I told the BBC this week, Washington’s agenda is clear: accelerate domestic production, reduce dependence on Asia, and position Intel at the center of the AI and national security landscape. SoftBank’s investment is a clear vote of confidence in Intel’s turnaround, even if the execution risks remain daunting - from ramping Ohio fabs, to restoring profitability, to competing with Nvidia in AI hardware.

The message is unmistakable. Intel is no longer just a corporate turnaround story; it is a strategic necessity. You can read my full comments in the BBC’s coverage here: Intel gets $2bn SoftBank investment.

Nvidia ($NVDA ( ▲ 0.4% )) is working on a new AI chip for China based on its Blackwell architecture, tentatively called the B30A. More powerful than the current H20, the chip adopts a single-die design likely to deliver half the compute of Nvidia’s flagship B300. Samples could reach Chinese clients as soon as next month, pending U.S. regulatory approval.

This is the flashpoint of U.S.–China tech policy. Washington is wary of giving Beijing access to even scaled-down versions, while Nvidia argues that maintaining Chinese developer reliance on its ecosystem is critical to preserving U.S. leadership. Huawei’s advances in silicon, combined with Chinese state-media pressure campaigns, add urgency to Nvidia’s balancing act.

For investors, the China revenue line, 13% of Nvidia’s FY24 total, remains strategically contested but commercially material. With Trump hinting at a compromise allowing “30–50% off” compute versions for China, this saga is both political and financial.

Home Depot ($HD ( ▼ 0.53% )) missed both earnings and revenue expectations for the first time since 2014, posting adjusted EPS of $4.68 vs. $4.71 consensus and revenue of $45.28B vs. $45.36B expected. Shares are off ~2% pre-market.

The driver is a “deferral mindset” among homeowners delaying large projects. Transactions fell to 446.8 million, though average ticket sizes rose modestly to $90.01. Encouragingly, July comps improved to +3.3% after flat May/June, and big-ticket sales rose 2.6%. Management reiterated full-year guidance (+2.8% sales growth), betting on stabilization and future Fed rate cuts to unlock housing turnover and renovation activity.

Strategically, Home Depot is doubling down on professional customers, with acquisitions of SRS Distribution ($18.25B) and GMS ($4.3B) expanding its exposure to roofing, landscaping, and specialty distribution. Roughly 55% of revenue is now professional. This is less a miss than a reminder that the housing market is frozen, not broken.

The S&P 500’s march to 6,468 is rooted in fundamentals. Q2 earnings growth landed at 11.8% YoY, triple expectations, driven by 82% of companies beating estimates. Technology led with +18% EPS growth, consumer discretionary +9.5%. Margins held at 12.1%, defying tariff fears.

Full-year 2025 EPS growth is now projected at 10.3%, with Q3 tracking at +8%. The Magnificent 7 delivered 26% growth and lifted 2026 capex forecasts to $461B, but breadth is improving as healthcare and homebuilders contribute. The rally is no longer multiple-driven, but earnings-led.

The risk: market concentration remains high. But breadth expansion and rising corporate guidance ratios suggest this rally has legs. I maintain my year-end S&P 500 target of 6,500, with 7,000 achievable by mid-2026 as AI spend transitions from cost to monetization.

08:30 – Housing Starts (July): Exp. 1.290M; Prior 1.321M 08:30 – Building Permits (July): Exp. 1.386M; Prior 1.393M

Earnings: Home Depot, XPeng, Medtronic, Amer Sports, Toll Brothers, La-Z-Boy

Markets don’t often hand you quiet August Mondays with the S&P at all-time highs. The message is clear: this is an earnings-led rally, not a speculative bubble. The American consumer continues to power through tariffs, housing remains frozen but not broken, and rotation is broadening leadership.

Jackson Hole could inject volatility, but policy noise aside, the setup is constructive. Stay invested, lean into secular themes, AI infrastructure, healthcare quality, energy security, and be ready to add to quality names if there is the pull back people are talking about.

The market still rewards innovation, punishes hesitation, and climbs the wall of worry one record close at a time.

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Dan Sheehan

[email protected]

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.