Markets Update - 8/10/26

Quick Summary

• US equity indices started Monday lower as oil prices jumped on fading hopes for a near-term US-Iran deal to reopen the Strait of Hormuz, as discussed in the morning update.
• WTI crude rose more than 6% as President Trump said the US would give Iran more time to face economic pressure rather than force an immediate resolution, while Iran reiterated that reopening the Strait of Hormuz depends on the US permanently ending the conflict and paying reparations. Late Monday, President Trump said in a social media post that in response to Iran’s demand for reparations, “it is an interesting idea” and he was “likewise demanding compensation from Iran” for people killed and gravely wounded in conflicts, as well as for families of innocent protesters killed over the last 50 years. He said he had instructed representatives to put this firmly into future negotiations.
• The rise in oil also pushed Treasury yields higher across the curve, with bets on a September rate hike rising back above 50% per the CME’s FedWatch tool.

The large cap indices would attempt a morning rally, but would run out of gas and turn lower, falling to their lows in the early afternoon before moving somewhat off those levels, still finishing in the red. At day’s end, the Russell 2000 led to the downside at -0.6%, the Nasdaq Composite fell 0.3%, the S&P 500 slipped 0.1%, and the Dow Jones Industrial Average also eased 0.1%.

The rise in yields weighed on rate-sensitive areas, with Real Estate, Utilities, homebuilders, and small caps all under pressure. Semiconductors also weakened through the day, with the PHLX Semiconductor Index falling nearly 3% after last week’s sharp rebound, while Nvidia, Intel, and Apple all fell back.

Traders have one more day to navigate before Wednesday’s key July CPI report.

Market commentary

On the upcoming CPI print

“With earnings largely in the rear-view mirror, geopolitics — and particularly Iran’s impact on oil prices and inflation expectations — should move back to the forefront,” said Fabio Caldato, portfolio manager at AcomeA Sgr. “We are focused on Wednesday’s US CPI print as a key test of the ongoing disinflationary process.”

“The jobs report may have eased some anxieties about a Fed rate hike next month, but those concerns could hit new highs without cooler-than-expected inflation numbers this week,” Chris Larkin at E*Trade from Morgan Stanley noted.

“We would note that even a low CPI print, might not be enough to negate the concerns of the Fed’s hawks, which seem to focus on the durability of above-target inflation for the past four years,” said Thierry Wizman at Macquarie Group.

On Iran

“Everyone has gotten tired of the back and forth,” said Zachary Hill, head of portfolio management at Horizon Investments. But “each time we see some flare-up in Middle East tensions, it’s of a smaller magnitude than what we saw prior, so I do think that’s informing a little bit of what’s going on so far today.” That’s especially with “such strong fundamentals in the earnings season,” he added.

“The failure of the governments to hold talks is worrying Wall Street participants, who had thought last week that the path to an agreement was increasingly narrow,” said Jose Torres at Interactive Brokers.

In today’s Markets Update

• A deeper look at Monday’s stock and sector breakdown.
• A look at selected corporate headlines from Bloomberg and CNBC.
• Updated technical charts across the SPX, Nasdaq, Russell 2000, and equal-weighted SPX, including MarketWatch on equal-weight performance.
• A review of market breadth and participation, including large individual winners and losers, the FT on Berkshire’s shift in equity buying and cash levels, Goldman on Financials, Energy, and prime-book flows, Rubner on semiconductors and market breadth, FactSet on sector EPS and price action, and BofA/Subramanian on Russell 1000 sector weights.
• A look at the rates and Fed backdrop, including Treasury yields and updated Fed hike expectations.
• A review of cross-asset trends, including WTI crude, the dollar, gold, copper, natural gas, and bitcoin.
• Deutsche Bank on the SPX breakout and trend channel, Yardeni on the SPX outlook and AI capex, Tier1Alpha on gamma, and the WSJ on private credit.
• A wrap-up on the pause in the AI trade and whether that might continue until Wednesday.
• A look ahead to Tuesday’s calendar, including US economic data, Fed speakers, Treasury auctions, SPX earnings, and ex-US highlights.

Stock and sector breakdown

Despite the down day for the SPX we still had 6 of 11 sectors higher and two up over 1% (Energy with a big +4.6% gain and Health Care), but we also had three down 1% importantly including the ultra- heavyweight Tech sector (nearly 40% of market cap) along with smaller RE and Utilities.

After Berkshire Hathaway was a net seller of equities for more than three years under former CEO Warren Buffett, Greg Abel turned that around in his first quarter as CEO, plowing $19.8B net into equities, including $10B into Google parent Alphabet and $4.5B into Berkshire. He also agreed to buy home builder Taylor Morrison for an enterprise value of $8.5B.

Overall, Berkshire spent $23B on public equities in its second quarter and sold just $3.7B, the smallest amount since 2022. That saw cash levels drop by $15B to $365.5B, the first quarterly drop since early 2022.

Net income more than doubled from last year to $25.7B as the value of its stock positions swelled. Operating income, Berkshire’s preferred method to gauge the performance of its owned businesses, also rose 16% from the previous year to $13B, led by its railroad and electronic-parts businesses.

In contrast, its flagship insurance businesses reported a 13% drop in operating earnings to $1.7B, as Geico had to pay out larger claims to policyholders and boosted spending on advertising.

Over the period, net income at the conglomerate’s collection of manufacturing, service, and retailing units jumped 24% to $4.5B, while profits at Berkshire’s utilities business surged 27% to $891M.

Goldman said Financials was among the most net-bought US sectors both that week and over the preceding month. Hedge funds bought the group for a fourth straight week, driven by long buys outpacing short sales by 3.8 to 1.

Relative to the Russell 3000, hedge funds were most overweight Financial Services, including Capital Markets and Transaction and Payment Processing, and most underweight Insurance over the prior three years. Relative weighting in Banks was in the 35th percentile.

Goldman said US Energy net exposure, as a share of total US net market value, ended the week at 4.0% in the 95th and 98th percentiles versus the prior one and three years. The aggregate long-short ratio was 1.87, in the 99th and 100th percentiles over those horizons.

Goldman’s prime desk saw equities modestly net sold during the week, driven by short sales outpacing long buys in Macro Products. Single-stock net flows were roughly flat as long buys were offset by short sales. The increase in single-stock gross flow was the largest in seven weeks, with 10 of 11 sectors excluding Information Technology seeing re-grossing activity.

Rubner said July’s semiconductor selling reduced the industry’s S&P 500 weight from nearly 20% to 16%. Broad indices masked material underlying volatility, while the average stock remained near records.

FactSet noted that every sector had seen some positive change in 12-month forward EPS since the start of July, and every sector had seen some positive price movement except Utilities.

Intel fell 4.6% premarket after announcing a $15B equity raise.

BofA’s Subramanian said that after June’s Russell reconstitution, Technology saw the largest Russell 1000 weight increase, rising 93 basis points to 36.0%, followed by Industrials, up 30 basis points to 10.2%, and Communication Services, up 16 basis points to 9.5%.

All other sectors saw lower weights, with Financials down 45 basis points to 12.0% and Health Care down 27 basis points to 9.1%.

Outside Real Estate, Materials was the smallest Russell 1000 sector at about 2%. Since 1986, the smallest sector outperformed the largest one over the following two years by 3.6 percentage points, with a 58% outperformance rate.

And the number of large SPX winners (up over 3%) eased just slightly to ~50 from ~55 Friday up from ~25 Thursday, ~30 Wednesday, but still down from ~110 Tuesday, while large losers (down over 3%) rose to ~30 from 17 Friday but down from ~45 and ~40 Wednesday and Thursday.

Midday movers

• MarineMax. Shares soared 46% after the boat and yacht retailer agreed to be sold to Blackstone Infrastructure’s Safe Harbor Marinas for $53 a share in cash, or $1.5 billion. The deal is expected to close by the end of 2026.
• Varex Imaging. The imaging component maker’s stock climbed 48% after Teledyne Technologies agreed to buy Varex for $18.90 a share in cash. The deal is expected to close in early 2027. Teledyne rose a fraction.
• Artificial intelligence infrastructure. Stocks tied to artificial intelligence infrastructure slid. The Global X Data Center & Digital Infrastructure ETF lost 1%. Corning’s stock fell more than 3%. Photonics stocks Coherent and Lumentum dropped 12% and more than 6%, respectively.
• Doximity. Shares of the digital medical platform fell 5%. On Friday, the stock surged more than 32% after CEO Jeffrey Tangney said the company was seeing huge margins on its artificial intelligence search tool.
• NetApp. Shares gained 6% after Morgan Stanley lifted the data storage company to equal weight from underweight. Analyst Erik Woodring wrote that improving storage fundamentals support higher earnings estimates, while valuation at peak P/E already reflects meaningful credit for the improving outlook.
• Verisk Analytics. Shares tumbled more than 5% after a Delaware judge ruled on Friday that the data analytics company must proceed with a $2.35 billion acquisition of AccuLynx. Verisk had terminated the deal in December because a Federal Trade Commission review of the merger was not completed by the transaction’s termination date.
• Apple. The iPhone maker’s stock dipped 2% after Jefferies downgraded Apple to underperform from hold. According to the bank’s supply-chain checks, analysts concluded that an all-glass iPhone by Apple, which the company has not publicly announced, appears to be canceled. The source said that puts pressure on Apple as it tries to sell more expensive devices to combat rising memory costs.

• Everpure. The data storage provider’s stock surged 9% after Morgan Stanley and Susquehanna raised their investment recommendations.
• Berkshire Hathaway. Shares rose almost 2% after the Geico insurance owner said Saturday it saw operating earnings grow 16% in the second quarter. Manufacturing, service, and retailing earnings saw strong growth, as did energy profits. Insurance was weaker, with investment income declining 9%.
• Intel. The stock fell nearly 3% after the chipmaker announced it will offer $15 billion in common stock. Intel plans to use the cash for general corporate purposes, which may include capital expenditures and working capital.
• Monday.com. The work management software provider’s shares dropped more than 6% after guidance disappointed Wall Street. Monday.com sees revenue in a range of $368 million to $370 million for the current quarter, while the FactSet consensus called for $372.8 million. Guidance for full-year revenue was roughly in line with expectations.
• eBay. The online retailer’s stock dropped 3% after Bloomberg said GameStop is considering abandoning its takeover offer. GameStop’s unsolicited bid was originally rejected by eBay in May, when it was called “neither credible nor attractive.”
• Hewlett Packard Enterprise. Shares rose 4% after Morgan Stanley upgraded HPE to overweight from equal-weight. Analysts said HPE has an attractive risk-reward profile and that the market is underappreciating the asymmetry between HPE’s earnings power and valuation.
• Archer Aviation. Shares surged almost 8% after the aerospace company agreed to acquire three Boeing subsidiaries. Boeing is also taking an undisclosed stake in Archer. Archer CEO Adam Goldstein said the acquisitions will help the company diversify revenues and expand. Boeing’s stock gained a fraction.

• AbCellera Biologics. Shares soared 43% after the biotech company reported strong Phase 2 clinical results for its medication to treat hot flashes caused by menopause. AbCellera said the results showed best-in-class reductions in both frequency and severity of moderate-to-severe vasomotor symptoms after a single dose.
• N-Able. Shares plunged more than 37% after the software maker gave disappointing current-quarter guidance. N-Able sees third-quarter revenue of about $135 million, short of the FactSet consensus estimate of almost $142 million. Adjusted EBITDA of $41.0 million to $42.0 million also missed the $46.3 million consensus estimate.
• Sionna Therapeutics. The stock collapsed 92% after the biotech’s cystic fibrosis drug failed to meet key endpoints in a proof-of-concept trial. Sionna said it was disappointed with the results and would not advance the drug as an add-on to standard care.

Other corporate news

Intel Corp. plans to offer $15 billion worth of new stock in what may be its first public share sale since the chipmaker listed in 1971, a bid to extend its comeback and capitalize on the AI boom.

Microsoft Corp. is planning to “significantly” increase production of its next-generation AI chips, the Information reported.

Apple Inc. was downgraded to an underperform rating at Jefferies, in the latest example of growing bearishness toward the company.

GameStop Corp., led by Chief Executive Officer Ryan Cohen, is considering withdrawing its $56 billion bid for eBay Inc., according to people familiar with the matter.

Boeing Co. will sell several of its units that specialize in developing technologies for flying taxis and drones to Archer Aviation Inc. as the US planemaker focuses on its core commercial and defense units.

On all charts, the colored lines are moving averages, which measure average price over the relevant lookback period. The daily charts use days and weekly charts use weeks.

• 20 = green
• 50 = purple
• 100 = blue
• 200 = brown

On monthly charts, blue is the 10-month moving average and brown is the 20-month moving average.

MACD is the moving average convergence-divergence line, a momentum measure that compares longer-term and shorter-term momentum to gauge whether a move is strengthening or weakening. RSI is the Relative Strength Index, which compares gains and losses over the stated lookback window. The source uses the standard 14 periods.

Turning to the charts, the SPX remained just below Tuesday’s all-time high. The source described the chart as solid and saw some momentum behind it.

Nasdaq eased back from the highest close in two months. Otherwise similar to the SPX.

The Russell 2000 (RUT) similar to the SPX just under its all-time high.

The equal-weighted SPX also the same story just a few pennies below its all-time closing high.

MarketWatch said the Invesco S&P 500 Equal Weight ETF had outpaced the cap-weighted S&P 500 by 1.75% year to date, the first time it had outperformed this late in the year since 2022.

Given that, 45% of stocks in the index were outperforming, the highest share since 2022.

Yields rose across the curve Monday:

Two-year Treasury yields rose for the second time in three sessions as they chop back and forth over the past week ending at 4.25%. They are still down 18 basis points from the peak close July 23rd, which was the highest since February of last year and remain over the nearly three year downtrend line that they’ve been over for the most part for the past three weeks.

They are ~59 basis points above the Effective Fed Funds rate (red line), continuing to call for rate hikes.

In that regard, FOMC rate hike expectations per the CME Fedwatch tool saw a September hike flip back over 50%.

10-year yields rose to 4.71%, less than a basis point from the highest close since January 2025 on July 31st.

30-year yields similarly rose to 5.25%, just two basis points from the highest level since 2007 on July 31st.

VIX edged up to 15.5 from the lowest close since early January.

The indicator remains in its “normal” range post-GFC, consistent with ~0.97% average daily moves in the SPX over the next 30 days.

The Daily Chartbook nightly email highlighted an OddStats chart on S&P 500 returns following different VIX levels.

The source said the VIX does a good job of predicting future volatility because market participants do a good job of pricing expected volatility.

It also noted that red return outcomes were scarce across multiple time horizons, arguing that selling stocks solely because of any given VIX level is likely to be misleading.

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The VVIX (VIX of the VIX) though also edged higher to 92.5.

The current level is consistent with “moderate” daily moves in the VIX over the next 30 days (historically, normal is 80-100, but we’ve been above 90 most of the time since July ‘24). Above 100 is the level flagged by Charlie McElligott as indicating higher stress.

But the 1-day VIX (with the weekend falling off) fell to 9.3, the least since July 6th and before that June 2nd. The reading is consistent with a move of 0.58% in the SPX next session.

WTI up over 6% to the highest in a week. While technicals are secondary here, as I noted Tuesday the daily MACD has crossed over to a “sell longs” reading and the RSI is under 50, but they are turning up.

The DXY dollar index (which is fixed weighted with a heavy (57%) weighting vs the euro) edged off the lowest close since mid-June, just hanging on to its trendline from the January lows.

The daily MACD as noted two weeks ago flipped to quite negative while the RSI is at 40. As I said then, “clearly consolidating, but too early to call it a downtrend. But if it resumes its decline, that might be enough for me.” Just about there.

Gold futures (/GC) extended their rally after the best week since January, pushing through the 100-DMA to the highest close in over two months. As noted Thursday “still has a good technical setup with positive daily MACD and RSI,” with the latter now the strongest since January.

US copper futures (/HG) I noted Friday “had gained while gold was moribund and now the roles have reversed with copper falling back,” although it was able to stabilize for a mild gain Monday. It continues though to have “supportive technicals,” with positive daily MACD although the RSI has fallen off. I remain bullish long term.

US natural gas futures (/NG) jumped +5%, the best day since May, although that just takes it to the top of the range over the past couple of weeks. The daily MACD though has flipped to more bullish while the RSI is climbing rapidly.

Bitcoin futures continue to trade in their range over the past month+, also at the same levels they were at in early June. As I mentioned over a month ago, “the daily technicals continue to look better than the price action, so maybe there’s a chance?” That never translated into more than a modest move higher, and now they have softened back to neutral. I would though still probably be a buyer if they saw a strong move above $67,500.

Other research

Deutsche Bank said that after two months of trading sideways in a tight range through the middle of the prior week, the S&P 500 jumped well above the range in four days. Unlike most sharp rallies, which usually follow sizable selloffs, this one occurred with the S&P 500 only 4% below record highs.

It was also the second quarter in a row in which the market remained range-bound for an extended period before breaking out during earnings season. Deutsche Bank said that reflected resistance to position for exceptional earnings growth, followed by bursts of catching up toward it.

Deutsche Bank said that despite the sharp rally, the S&P 500 had just caught back up to the bottom of a strong uptrend channel that had been in place for nearly four years and had annualized at 23%.

It said the pattern since Liberation Day had been periodic drops below the channel, followed by rapid catch-up rallies and then a noisy advance along the bottom of the channel.

Yardeni said the S&P 500 had broken out of its summer range to another record high. The index stood 3.5% above its 50-day moving average and 9.8% above its 200-day moving average, which it did not regard as extreme readings.

The source said the current bull market had gained 116.9% since October 12, 2022, ranking fifth among the eight bull markets since 1966. It argued that bull markets usually end when earnings roll over rather than because of age or accumulated gains.

JPMorgan’s Dubravko Lakos-Bujas and team raised their S&P 500 forecast for a second time in two months, seeing the benchmark rise to 8,000, about 3% from Friday’s close, after raising their target to 7,800 from 7,600 in June.

The source said the second-quarter earnings season supported the view that capital expenditure by AI hyperscalers is being monetized through customer demand. As backlogs convert to recognised revenue, cloud growth should remain supported and demand indicators across hyperscalers remained high and rising.

Tier1Alpha saw the S&P 500 starting the week with much higher gamma, with its Gamma Volatility Throttle Index exceptionally positive at 17.19.

10-day realized volatility continues to compress toward its historical average for these levels. All else being equal, this dynamic should remain in place throughout the week.

Recent quarterly reports from funds overseen by the industry’s big players showed that loan health and investor returns are worsening, according to an analysis by The Wall Street Journal.

Non-performing loans at Blue Owl, Blackstone, KKR, and Golub Capital had hit five-year highs, though the report said they remained below prior periods of heavy stress such as the Covid pandemic and the 2015 oil-price crash.

The source said bad loans had appeared primarily in healthcare companies. Analysts and fund managers were concerned that defaults could spread to software companies, which made up 20% or more of loans in many funds.

Private-credit funds managed by Ares, Golub, and KKR all reported increases in borrowers on watch for deteriorating performance. Their watchlists were at their highest levels since 2022 to 2023, which the source said could signal more defaults if growth weakened.

Wrap-up

As I wrote Sunday:

So will the now “on again” AI trade continue? The evidence is there, with momentum building, expected earnings continuing to ratchet higher, and positioning not yet “extreme” according to DB.

And the overall setup remains favorable as well, with systematics biased to buy according to BofA, discretionary and hedge fund positioning light according to DB and Goldman, buybacks almost back to full strength, retail re-engaging, the economy remaining resilient even if pay growth continues to ease — something we’ll need to keep an eye on — and earnings growth spectacular.

Sentiment is not really a tailwind but not yet a headwind — “it takes bulls to have a bull market” — seasonality is not great, and rates are pushing up toward levels that may cause some indigestion, but none of those are yet at levels that I would consider “red flags.”

And as discussed at the top, it appears from the most recent indications that President Trump has no appetite for dialing things up militarily at this point, which means it’s likely things will drag on with little change through the midterms unless or until Iran decides it wants to reopen the Strait.

I had said last Sunday I was becoming more constructive, and that continues into the coming week.

And the good news is we certainly didn’t break down, but we also certainly didn’t extend as I thought might happen to start the week. The Iran conflict appearing to become even more never-ending, which pushed up oil prices and Treasury yields, certainly didn’t help. And perhaps traders are unwilling to step in front of Wednesday’s CPI report.

If that’s the case, we could very well get another session like today, particularly with no economic or earnings catalysts to really propel things in either direction ahead of that.

The Day Ahead

US economic data picks up a little Tuesday with July NFIB small business sentiment and existing home sales along with the ADP weekly job growth estimate.

In terms of Fed speakers nobody on the calendar.

US Treasury auctions pick back up for non-Bills (>1yr in maturity) with a 3-yr auction.

In terms of SPX Q2 earnings as noted in the Week Ahead we’re very much in the windup phase now with just three SPX components reporting Tuesday none >$100B in market cap.

Ex-US highlights include a policy decision from Australia.

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