Stocks Supported by Signs the US Economy is Holding Up

US equities saw mixed performance, with the S&P 500 reaching a new all-time high and the Nasdaq 100 a 1-week high, largely supported by upwardly revised Q2 US GDP to +3.3% and declining jobless claims. While Nvidia's weaker-than-expected forecast tempered tech gains, strong Q2 earnings beats from other software and chip companies like Snowflake and Pure Storage provided significant uplift. Treasury yields rose on the robust economic data, even as markets price an 85% chance of a September Fed rate cut, while escalating tariff threats from former President Trump remain a notable macro concern.

Analysis

The US equity market is exhibiting a pattern of selective strength, with the S&P 500 achieving a new all-time high despite mixed index performance. This resilience is underpinned by robust macroeconomic data, including an upward revision of Q2 GDP to +3.3% and stable weekly jobless claims, which suggest a durable economy. However, this economic strength creates a complex dynamic, pushing the 10-year T-note yield to 4.240% and potentially complicating the Federal Reserve's path, even as federal funds futures price an 85% probability of a September rate cut. The Q2 earnings season has been broadly positive, with S&P 500 earnings growth on track for +9.1% year-over-year, yet a significant performance divergence is evident at the company level. While Nvidia (NVDA) shares fell over 1% on a weaker-than-expected data center revenue figure and an underwhelming forecast, other technology firms like Snowflake (SNOW) and Pure Storage (PSTG) surged over 13% and 21% respectively after beating estimates and raising guidance. This highlights a market that is rewarding company-specific execution, a trend also visible in the sharp declines of Hormel Foods (HRL) and Cooper Cos (COO) following poor results. A material overhang remains from geopolitical trade risks, as new tariff threats and implementations could elevate the average US tariff rate to 15.2%, a concern explicitly cited by companies like Best Buy (BBY).

Key Decisions for Investors

• Prioritize stock selection based on fundamental strength and forward guidance, as the market is clearly rewarding companies with strong execution like Snowflake (+13%) and Pure Storage (+21%) while punishing those with underwhelming outlooks like Nvidia (-2%) and Hormel Foods (-14%).
• Remain attentive to the tension between robust economic data, which supports corporate profitability but pushes bond yields higher, and the market's aggressive pricing for a September Fed rate cut, as any disappointment on the monetary policy front could trigger volatility.
• Actively manage exposure to geopolitical trade risks, as the ongoing threat of new tariffs, which could raise the average US rate to 15.2%, presents a material headwind for specific companies and the broader market.