Mid-Morning Look

Friday, August 22, 2025

U.S. stocks surge following the text from Fed Chairman Powell prepared keynote speech at the Fed’s Jackson Hole event, pointing to a possible rate cut at the upcoming FOMC September meeting but stopped short of committing to cutting interest rates as he walked a narrow line acknowledging growing risks to the job market while also saying risks of higher inflation remain (stock markets wiped out 5 days of losses in 5 minutes on Powell comments). Powell’s comments open the door to a rate cut at the Fed’s September 16-17 meeting but also put heavy weight on jobs and inflation reports that will be received before then. Powell comments boost several asset class as Treasury yields fall, lifting interest rate sensitive sectors such as homebuilders and dividend paying sectors (telco, utilities) and banks. Gold prices also jumping along with crypto assets and Small caps surge with the Russell rising over 2% which are more impacted by rates. A strong start to the day for U.S. markets with NYSE breadth more than 11:1 advancers leading decliners, all eleven S&P sectors surging and markets on track to snap the 5-day losing streak for the S&P and 6-day losing streak for QQQ’s. Traders now put about 90% probability on Fed rate cut in Sept, vs 75% before Powell’s remarks (though important to note that we get another PCE, CPI, PPI and jobs number prior to the next FOMC meeting in mid-September).

Asian markets continue to outperform while US listed China stocks still lagging; note the Nikkei hit record highs this year, the Shanghai index is at a 10-year high and the Hong Kong index at a 4 year high. Chinese equities jump, led by technology shares, as the Information reported Nvidia has instructed component makers to stop production related to H20 AI chips. The CSI 300 adds more than 1%, while Hong Kong’s Hang Seng tech gauge climbs 1.6%. In the rest of Asia, equities move in tighter ranges ahead of Federal Reserve Chair Powell’s remarks. Bitcoin is down around 10% from its all-time high of $124,000.

• “It is also possible, however, that the upward pressure on prices from tariffs could spur a more lasting inflation dynamic, and that is a risk to be assessed and managed.” Powell went on to say, “the stability of the unemployment rate and other labor market measures allows us to proceed carefully as we consider changes to our policy stance.
• Nonetheless, with policy in restrictive territory, the baseline outlook and the shifting balance of risks may warrant adjusting our policy stance,” Powell said, noting that while tariffs are expected to drive prices higher the baseline case is for that impact on inflation to fade.

• In Uranium/Power: Early strength in the group (CCJ, DNN, UEC, UUUU, URA, LEU) after Kazatomprom cuts 2026 output by 8M lbs U₃O₈ (~10%), equal to ~6–8% of global supply; Kazatomprom posts lower profit, revenue but backs production guidance. The drop in profit/revenue was mostly due to a fall in sales volumes, it said.

• GOOGL +1%; following last night’s unconfirmed story broke by The Information that Google won a $10B cloud contract from META spanning six years, according to two people familiar with the matter. Meta has largely been reliant on Amazon Web Services for cloud infrastructure though it also uses Microsoft Azure.
• KBH +4%; as homebuilders LEN, TOL, DHI, BZH jump on lower Treasury yields after Powell comments.
• RBLX +1%; was upgraded from Peer Perform to Outperform w/ $150 tgt at Wolfe Research and raise its FY’26 Bookings and EBITDA ests. by 7% and 13%, respectively, driven by incremental contributions from Regional Pricing + Advertising opportunities.
• ROST +2%; topped Q2 profit estimates and reinstated its annual earnings forecast; reported adj. Q2 EPS of $1.56 (vs. $1.40-1.55 guide) inclusive of $0.11 tariff related headwinds, driven by +2% same-store sales growth (in-line w/ Street and -70bps gross margin contraction Y/Y to 27.6%.
• ULTA +1%; was upgraded to Overweight at Barclay’s with $589 tgt based on return to sustainable positive comps and margin expansion; promotional improvement; ULTA x Target exit optimizing retail distribution points; below-average tariff headwind; and conservative FY25 guide.
• TSLA +4%; as large cap Mag 7 names rebound after 5 days of losses (AAPL, AMZN, GOOGL, META),
• ZM +5%; after Q2’s results were above consensus, with revenue +4.7% Y/Y to $1.22B (vs. +3.1% est.) and 41.3% op. margin well above consensus of 38.7% and FY26 revenue guidance was raised to 3.5% Y/Y growth at the midpoint (3.0% prior) primarily driven by better enterprise growth momentum +7% y/y in Q2).

• ETHZ -33%; as files S-3ASR registering 74.8M shares for resale by Hudson Bay & other selling stockholders (from $156M convertible notes).
• GAP -2%; was downgraded to equal weight from overweight at Barclay’s saying the previous bullish scenario for double-digit operating margins by FY26 is off the table.
• INTU -7%; after reporting solid FQ4 results driven by GBSG/QuickBooks and CK. While overall FY26 guidance was largely in line, GBSG guidance was below due to a larger than expected drag from Mailchimp.
• WDAY -4%; delivered solid FQ2 results, with upside across subscription revenue, backlog, and margins and raised FY26 subscription revenue guidance to $8.815B (up by 20bps to 14.2% Y/Y); however, without Paradox, the FY guide would have remained at $8.800B