Tech Pullback & Walmart Earnings Test Investor Sentiment

Good Morning Investors,

Markets extended their pre–Jackson Hole drift on Wednesday with another measured step lower for Big Tech. The Nasdaq fell 0.7%, the S&P 500 slipped 0.2%, and the Dow eked out a modest gain. The move lacked panic but underscored the market’s current sensitivity to sentiment shifts in AI and megacap leadership.

Today’s spotlight will be Walmart’s results, a read-through on the consumer ahead of Powell’s Friday speech, and a dense economic calendar including jobless claims, PMI data, and existing home sales.

US futures are slightly weaker heading into Thursday’s trade. Dow ($DIA ( ▲ 1.94% )) futures are off 0.4%, S&P 500 ($SPY ( ▲ 1.54% )) futures down 0.2%, and Nasdaq 100 ($QQQ ( ▲ 1.54% )) futures marginally lower at 0.1%. Europe opened softer across the board, while Asia was mixed, with Australia hitting a record high above 9,000, India surprising with stronger PMI data, and Japan’s Nikkei logging a third day of declines. The dollar is steady, gold is edging lower, and oil is holding gains on strong US demand signals.

Minutes from the July meeting confirmed that the Fed’s first double dissent since 1993 remains isolated. Most participants were reluctant to cut rates given lingering inflation pressures, with some even questioning whether policy is truly restrictive. Futures markets still price an 80% chance of a September cut, with a second move expected in December.

The policy debate now sits in the shadow of Friday’s Jackson Hole address. Powell’s task is to manage expectations without fanning either complacency or panic. Meanwhile, the administration continues to exert pressure, including a high-profile call for Governor Lisa Cook’s resignation, underscoring the political undertones surrounding monetary policy.

The week’s tech pullback remains measured, with declines of 0.1% to 2% across Nvidia ($NVDA ( ▲ 1.72% )), Alphabet ($GOOGL ( ▲ 3.17% )), Amazon ($AMZN ( ▲ 3.1% )), Apple ($AAPL ( ▲ 1.27% )), Meta ($META ( ▲ 2.12% )), AMD ($AMD ( ▲ 2.47% )), Broadcom ($AVGO ( ▲ 1.52% )), and Palantir ($PLTR ( ▲ 1.64% )). AI leaders have given back some recent gains but remain structurally intact. Still, this week has reminded markets that not every AI initiative delivers, with an MIT report showing 95% of projects fail to produce measurable results hitting a nerve.

Beneath the surface, market breadth has improved. While the eight most valuable US stocks all fell Wednesday, the next seven largest names, led by Walmart and Oracle, rose. That is consistent with our ongoing thesis for a broadening leadership base and why we continue to favor small and mid-cap exposure into the autumn.

Walmart ($WMT ( ▼ 1.15% )) raised its full-year outlook after another strong quarter, showing why its combination of scale, price discipline, and logistics execution continues to outperform in a split retail environment. Tariff costs are rising, but management is absorbing them selectively to preserve traffic, raising prices only where necessary.

E-commerce growth of 26% in the US and nearly 50% in store-fulfilled deliveries, one-third expedited, reflects the company’s ability to monetize speed and convenience while also expanding its marketplace commissions. Higher-income shoppers are increasing their share of spend with Walmart, and profitability milestones in US and global e-commerce reinforce its competitive advantage.

This is the retail model that works in the current macro climate, value positioning with structural margin levers that can offset inflation, tariffs, and discretionary softness.

Washington and Brussels outlined fresh specifics of their recent trade deal, including a capped 15% tariff rate on semiconductors, pharma, and autos, materially lower than earlier threats. The EU committed to major energy purchases, AI chip investments, and expanded US defense procurement. While the agreement reduces immediate tariff risk, much of the EU's spending pledge remains framed as "intended" rather than binding, leaving room for future negotiation risk.

Economic Data

08:30 – Initial Jobless Claims (est. 225k; prev. 224k)

08:30 – Philly Fed Business Index (est. 7.0; prev. 15.9)

09:45 – S&P Global Manufacturing PMI Flash (est. 49.5; prev. 49.8)

09:45 – S&P Global Services PMI Flash (est. 54.2; prev. 55.7)

10:00 – Existing Home Sales (est. 3.92m; prev. 3.93m)

Earnings

Pre-Market – Walmart, Nordson

After-Market – Ross Stores, Intuit, Workday

We are now in the third week of controlled consolidation, and the pullback in AI and megacap tech is still consistent with a healthy rotation rather than structural deterioration. My small and mid-cap overweight remains, with Russell 2000 upside to $250. That said, I am watching tech closely, especially if Jackson Hole delivers a hawkish tilt that sparks a deeper September sell-off. That would be my cue to begin adding back targeted AI infrastructure exposure for the next leg higher.

Crypto remains part of the allocation mix, I am a buyer of Bitcoin and Ethereum dips, with ETH’s $5,000 target intact. Solana’s long-term breakout level sits at $210.

The Fed backdrop still points to September and December rate cuts, with ISM readings above 50 supporting a bullish base case. Powell’s Friday speech will be critical for tone, but I see any short-term volatility as opportunity, not threat. For disciplined investors, this environment continues to reward patience, breadth, and an eye for quality beyond the top of the index.

👉 Subscribe for daily notes: dansheehan.beehiiv.com

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.