Key Takeaways
- U.S. stocks reached record highs as July wholesale inflation (PPI) decelerated to 4.7% year-over-year, reinforcing bets that the Federal Reserve will pause rate hikes in September.
- Applied Materials (AMAT) shares rose after reporting Q3 revenue of $9.12 billion and adjusted EPS of $3.50, both beating analyst estimates, while providing a strong Q4 outlook.
- Lam Research (LRCX) announced a massive $3 billion investment over five years to expand its global lab network and increase experiment capacity by over 50%.
- Vice President JD Vance signaled a focus on energy security regarding the conflict with Iran, stating the primary goal is maintaining affordable gasoline prices for Americans.
- Tyson Foods (TSN) is shuttering multiple beef plants in Illinois and Utah due to a tightening cattle supply, marking a significant retrenchment in its meat-packing operations.
Market Rally Fueled by Moderating Inflation
Wall Street traders drove the S&P 500 to a new record and the Nasdaq 100 up 1.1% following data showing U.S. wholesale inflation cooled more than expected in July. The Producer Price Index (PPI) rose 4.7% from a year earlier, a sharp drop from June's 5.5% increase, while month-over-month prices remained unchanged.
Money markets are now pricing in less than a 40% chance of a rate hike in September as energy and food costs continue to retreat. Despite the optimism in equities, the U.S. Treasury sold 30-year bonds at the highest rate in 25 years, indicating that investors still demand high compensation for financing the national deficit.
Semiconductor Sector Strength
Applied Materials (AMAT) delivered a robust Q3 earnings report, posting revenue of $9.12 billion against expectations of $9.02 billion. The company’s semiconductor systems division led the way with $7.04 billion in revenue, and management issued an optimistic Q4 revenue forecast of up to $10.75 billion.
In a major expansion move, Lam Research (LRCX) unveiled plans to invest $3 billion over the next five years. The capital will be used to bolster its global lab network, aiming for a 50% increase in experiment capacity to meet the growing demands of the semiconductor industry.
Geopolitical Tensions and Energy Security
In a pre-recorded interview on Fox News, Vice President JD Vance addressed the ongoing conflict with Iran, emphasizing that the administration's top priority is keeping oil and gasoline cheap for American consumers. Vance noted that the U.S. has "a lot of tools at our disposal" to compel action from Iran and stabilize the Strait of Hormuz.
Simultaneously, the U.S. military is rotating its naval presence in the Middle East, replacing the USS Abraham Lincoln with the USS George Washington. This move comes amid reports of supply shortages and strain on sailors after the Lincoln spent over 250 days at sea without a port call.
Corporate Movers and Earnings Highlights
CBOE Global Markets (CBOE) rewarded shareholders by increasing its quarterly cash dividend by 19% to $0.86 per share. Meanwhile, AMD (AMD) successfully raised $4.75 billion in its largest-ever U.S. dollar bond offering to strengthen its balance sheet.
In the EV and AI space, Faraday Future (FFIE) reported a Q2 operating loss of $34.8 million but set a target for 2,000 EAI Robot unit shipments by the end of 2026. Veritone (VERI) posted Q2 revenue of $24.26 million and expects to reach operating profitability as early as the first half of 2027 through aggressive cost-cutting measures.
Ed Liston is a senior contributing editor at TheStockMarketWatch.com. An active market watcher and investor, Ed guides an independent team of experienced analysts and writes for multiple stock trader publications.