Mid-Morning Look

Wednesday, August 27, 2025

U.S. stocks are off to an expected slow start as Wall Street awaits NVDA’s big earnings results after the close tonight, a gauge for the broader technology/AI sector that will span other sectors including data centers, semi’s, nuclear power/demand names among them. Concerns weighed on tech stocks last week after OpenAI CEO Sam Altman spoke of a potential bubble and a study from the Massachusetts Institute of Technology showed AI tools boosted individual productivity, not corporate earnings – but prices have bounced nicely since then. U.S. markets were steady most of yesterday before a late day pop pushed averages to highs of the day. Overnight, a handful of tech earnings in the software space are boosting sentiment early (MDB, OKTA, NCNO). Outside of earnings, market attention also remains on interest rates as investors are pricing in a 25-basis-point interest-rate cut in September following the dovish commentary by Fed Chairman Powell last Friday. Upcoming data will either help/or hurt that narrative with GDP data tomorrow, PCE inflation data Friday and the monthly jobs report next Friday. New York Fed President John Williams said on CNBC this morning that there was a need to stay data dependent before deciding on a move in September. The two-year U.S. Treasury yield hit lows around 3.6450%, lowest since May 1, while the yield of the 30-year is up 4bps to 4.947%; the 10-yr +2.3bps to 4.279%. Crypto and the US dollar bouncing after weakness to kick off the week initially.

• In Autos: Trade news as the European Union said it will seek fast track removal of all tariffs on US industrial goods by the end of the week, after the US and the EU established a written framework for the trade deal agreed to in late July. President Trump requested that tariffs be removed before the US lower its duties on the bloc’s auto exports. In stock news, Ford (F) is recalling more than 355,000 trucks in the U.S over an issue with the instrument panel display, the National Highway Traffic Safety Administration said on Wednesday. The recall affects certain Ford 2025-2026 models – F-550 SD, F-450 SD, F-350 SD, and F-250 SD – and the 2025 F-150. Porsche (POAHY) has begun the search for a successor to CEO Oliver Blume, Reuters reported.
• In Aerospace & Defense: for gov’t IT services (BAH, CACI, LDOS, KBR), Bloomberg reported the Pentagon to scrutinize 400,000 contracts for cuts which involves the DoD’s in-house Department of Government Efficiency (DOGE) team to identify “additional savings” and efficiencies. Short seller Grizzly Research said they were short ACHR but long JOBY in an “X” post this morning saying this is not a judgement call on the eVTOL industry, rather a contrast in operational progress between the two companies.

• CBRL +4%; shares rise after the restaurant chain said it would stick with its decades-old logo, scrapping plans for a new one following social media backlash.
• ELAN +4%; will replace SRPT in the S&P MidCap 400, and Sarepta Therapeutics will replace BRKL in the S&P SmallCap 600 effective prior to the opening of trading on Tuesday, September 2.
• GOOS +13%; as controlling shareholder Bain Capital has received bids to take the luxury goods maker private at a valuation of about $1.4 billion, CNBC reported late on Tuesday.  https://tinyurl.com/52rvfhw7
• KSS +19%; raised its annual profit forecast for FY25 to $0.50-$0.80 from prior view $0.10-$0.60 (est. $0.63) while narrowing its FY25 revenue view to down 5%-6% from down 5%-7% and comp sales view to down 4%-5% from down 4%-6% (follows a Q2 EPS beat and smaller comp loss).
• MDB +33%; better-than-expected Q2 results, with non-GAAP EPS of $1.00 (consensus $0.66) on revenue of $591.4M (consensus $556.3M), up 24% y/y, an acceleration from 22% last quarter, on Atlas revenue growth of 29%, up from 26% growth last quarter, and guidance was raised (DDOG, ESTC, SNOW rise in reaction).
• NCNO +13%; shares rose after Q2 subscription revenue was 3.4% above the high end of guidance (4.1% above consensus), while non-GAAP OI/EPS were also well above consensus and raised its FY26 subscription revenue guidance by 1.3% and non-GAAP OI/EPS guidance by 5%/11%.
• OKTA +2%; posted Q2 beat and FY26 raise across all metrics as cRPO growth of 13.5% beat consensus 10% while Q3 cRPO guide of 10% met consensus; OKTA FY26 revenue guide raised by $25M, EBIT margin raised 50 bps, and FCF margin raised by 1pt; said U.S. public sector again strong.

• PSKY -4%; after Morgan Stanley reduced its tgt from $12 to $10, maintains Underweight to reflect the merger close (including the $15/share cash tender) and updated forecast.
• PVH -2%; after reporting Q2 adj EPS of $2.52, beating $2.00 consensus as better sales and gross margin more than offset higher SG&A and a higher tax rate; Q2 sales increased 4% reported (or +1% ccy) driven by Americas +11%; slightly raised year outlook.
• PYPL -1%; shares fall after Suddeutsche Zeitung reports German banks blocking PayPal payments, Suddeutsche Zeitung says security systems designed to filter out fraudulent payments have apparently failed at the payment service provider, so German banks have blocked direct debits.
• SBAC -2%; was downgraded to Neutral from Buy at Bank America as highlights the potential for incremental deployments on the AT&T side to be longer dated following the AT and EchoStar (SATS) mid-band spectrum deal announcement
• SJM -5%; shares fell after reporting a Q1 EPS miss ($1.90 vs. est. $1.93) while Q1 net sales were weighed down by decreased sales of coffee, dog snacks, sweet baked goods and fruit spreads, while backs its FY26 ES outlook but raised its sales outlook.