The S&P 500 Index ($SPX) (SPY) on Wednesday closed up by +0.51%, the Dow Jones Industrials Index ($DOWI) (DIA) closed down by -0.05%, and the Nasdaq 100 Index ($IUXX) (QQQ) closed up by +0.79%.  September E-mini S&P futures (ESU25) rose +0.56%, and September E-mini Nasdaq futures (NQU25) rose +0.79%. 

Stock indexes mainly settled higher on Wednesday.  The broader market was supported by lower T-note yields and increased chances of a Fed rate cut later this month.  T-note yields fell after the July JOLTS job openings fell more than expected to a 10-month low.  The 10-year T-note yield on Wednesday fell -6 bp to 4.21%. 

Strength in megacap technology stocks was also a supportive factor for the broader market.  Alphabet rose more than +9% after a judge ruled in an antitrust case late Tuesday that the company won't be forced to sell its Chrome browser.  Also, Apple rose more than +3% after a court ruling stopped short of barring the company's lucrative search arrangement with Google, a deal that has generated roughly $20 billion in revenue a year for Apple. 

The weakness in energy-producing stocks and energy service providers was a negative factor for the overall market on Wednesday after the price of WTI crude oil fell by more than 2%.

US July JOLTS job openings fell -176,000 to a 10-month low of 7.181 million, showing a weaker labor market than expectations of 7.380 million.

US July factory orders fell -1.3% m/m, right on expectations, and the second straight month orders have declined.

The Fed Beige Book hinted at signs of stagflation and was bearish for stocks as it stated that "most of the twelve Federal Reserve districts reported little or no change in economic activity since the prior Beige Book period.  Also, across districts, contacts reported flat to declining consumer spending because, for many households, wages were failing to keep up with rising prices.  In addition, nearly all districts noted tariff-related price increases, with contacts from many districts reporting that tariffs were especially impactful on the prices of inputs."

US MBA mortgage applications fell -1.2% in the week ended August 29, with the purchase mortgage sub-index down -3.1% and the refinancing mortgage sub-index up +0.9%.  The average 30-year fixed rate mortgage fell -5 bp to 6.64% from 6.69% in the prior week.

Fed Governor Christopher Waller said the fed funds rate is currently above the neutral rate, meaning monetary policy is restricting the economy, and that inflation is likely to move "much closer" to the Fed's goal in six or seven months.  He added that the Fed should aim to get ahead of a sharp slowdown in the job market and "we need to start cutting interest rates at the next meeting" and make multiple cuts in the coming months.

St. Louis Fed President Alberto Musalem said, "The current modestly restrictive setting of the policy rate is consistent with today's full employment labor market and core inflation nearly one percentage point above the Fed's 2% target," and it's important to take a "balanced approach" to policy right now and not weight too much to support the labor market or to fight inflation. 

Atlanta Fed President Raphael Bostic reiterated that he sees one interest rate cut this year, as price stability remains his primary concern, and it's not unambiguously clear that the labor market is weakening materially.

The remainder of this week's US economic calendar is busy.  On Thursday, the Aug ADP employment change is expected to increase by +68,000.  Also, weekly initial unemployment claims are expected to increase by +1,000 to 230,000, and Q2 nonfarm productivity is expected to be revised upward to 2.7% from the previously reported 2.4%, with Q2 unit labor costs expected to be revised downward to 1.2% from 1.6%.  In addition, the Aug trade deficit is expected to widen to -$78.0 billion from -$60.2 billion in June.  Finally, the Aug ISM services index is expected to climb by +0.9 to 51.0.  On Friday, Aug nonfarm payrolls are expected to rise by +75,000, and the Aug unemployment rate is expected to rise by 0.1 to 4.3%.  Aug average hourly earnings are expected to increase +0.3% m/m and +3.7% y/y.

Regarding tariffs, a federal appeals court ruled late last Friday that President Trump exceeded his authority by imposing global tariffs without Congressional approval, but the court let the tariffs remain in place while appeals continue.  The US Court of Appeals for the Federal Circuit Court said, "The statute bestows significant authority on the President to undertake a number of actions in response to a declared national emergency, but none of these actions explicitly include the power to impose tariffs, duties, or the like, or the power to tax."  The case now appears to be headed to the Supreme Court for a final decision.  According to Bloomberg Economics, the average US tariff will rise to 15.2% if rates are implemented as announced, up from 13.3% earlier, and significantly higher than the 2.3% in 2024 before the tariffs were announced.

Federal funds futures prices are discounting the chances of a -25 bp rate cut at 95% at the next FOMC meeting on September 16-17.  The markets are discounting the chances at 53% for a second -25 bp rate cut at the following meeting on October 28-29.

Overseas stock markets on Wednesday settled mixed.  The Euro Stoxx 50 closed up +0.64%.  China's Shanghai Composite closed down -1.16%.  Japan's Nikkei Stock 225 closed down -0.88%.

Interest Rates

December 10-year T-notes (ZNZ5) on Wednesday closed up +15 ticks, and the 10-year T-note yield fell -4.8 bp to 4.213%. 

Dec T-notes rallied to a 4.75-month high on Wednesday, and the 10-year T-note yields fell to a 4-week low of 4.199%.  T-notes rallied Wednesday after the US July JOLTS job openings fell more than expected to a 10-month low, boosting the chances for a Fed interest rate cut at the September 16-17 FOMC meeting to 95%, according to the swaps market. Also, Wednesday's 2% fall in WTI crude prices reduced inflation expectations, with the 10-year breakeven inflation rate falling to a 1.5-week low of 2.404%. 

On the negative side, concerns over Fed independence are bearish for T-note prices, with President Trump trying to oust Fed Governor Cook.  The worry is that Mr. Trump is trying to replace Cook and other Fed officials with policymakers more inclined to lower interest rates regardless of inflation risks.

European government bond yields on Wednesday moved lower.  The 10-year German bund yield fell -4.6 bp to 2.740%.  10-year UK gilt yield fell from a 7.5-month high of 4.845% and finished down -5.2 bp to 4.748%.

Eurozone July PPI eased +0.2% y/y from +0.6% y/y in June, slightly stronger than expectations of +0.1% y/y.

The Eurozone Aug S&P composite PMI was revised downward by -0.1 to 51.0 from the previously reported 51.1.

Swaps are discounting the chances at 1% for a -25 bp rate cut by the ECB at the September 11 policy meeting.

US Stock Movers

Alphabet (GOOGL) closed up more than +9% to lead gainers in the S&P 500 and Nasdaq 100 after a judge ruled in an antitrust case late Tuesday that the company won't be forced to sell its Chrome browser. 

Apple (AAPL) closed up more than +3% to lead gainers in the Dow Jones Industrials after a court ruling stopped short of barring the company's lucrative search arrangement with Google, a deal that has generated roughly $20 billion in revenue a year for Apple.

The Campbell's Company (CPB) closed up more than +7% after reporting Q4 adjusted EPS of 62 cents, better than the consensus of 56 cents.

Western Digital (WDC) closed up more than +4% after Morgan Stanley named the stock its "Top Pick" with an overweight rating and a price target of $99.

Macy's (M) closed up more than +20% after reporting Q2 net sales of $4.81 billion, better than the consensus of $4.71 billion, and raising its full-year net sales estimate to $21.15 billion-$21.45 billion from a previous estimate of $21.00 billion-$21.40 billion. 

HealthEquity (HQY) closed up more than +7% after reporting Q2 adjusted EPS of $1.08, stronger than the consensus of 92 cents, and raising its 2026 adjusted EPS forecast to $3.74-$3.91 from a previous estimate of $3.61-$3.78, above the consensus of $3.73.

Kraft Heinz Co (KHC) closed up more than +3% after Morgan Stanley upgraded the stock to equal weight from underweight, citing reasonable valuation.

Gold mining stocks rallied on Wednesday, with the price of COMEX gold posting an all-time high.  As a result, Anglogold Ashanti Plc (AU) closed up more than +3% and Gold Fields Ltd (GFI) closed up more than +1%.   

Dollar Tree (DLTR) closed down more than -8% to lead losers in the S&P 500 after forecasting 2026 adjusted EPS of $5.32-$5.72, the midpoint below the consensus of $5.53. 

Energy stocks and energy service providers were under pressure on Wednesday after the price of WTI crude oil fell more than -2%. ConocoPhillips (COP), Diamondback Energy (FANG), Halliburton (HAL), and APA Corp (APA) closed down more than -4%.  Also, Occidental Petroleum (OXY) and Devon Energy (DVN) closed down more than -3%.  In addition, Exxon Mobil (XOM), Phillips 66 (PSX), and Schlumberger NV (SLB) closed down more than -2%.  Finally, Chevron (CVX) closed down more than -2% to lead losers in the Dow Jones Industrials. 

Intuitive Surgical (ISRG) closed down more than -5% to lead losers in the Nasdaq 100 after company executives gave cautious comments during the Wells Fargo Healthcare Conference.  CEO Samath said he expects 2025 gross margins of 66% versus a previous forecast of 66% to 67%, and that tariff impact is expected to be higher in 2026. 

Bruker Corporation (BRKR) closed down more than -11% after announcing a public offering of $600 million of Mandatory Convertible Preferred Stock.   

Smithfield Foods (SFD) closed down more than -5% after announcing the launch of a secondary public offering of 16 million shares of common stock. 

Marvell Technology (MRVL) closed down more than -3% as analysts have lowered their price targets for the stock by an average of 8.6% since it reported earnings last Thursday.

Zscaler (ZS) closed down more than -1% after forecasting 2026 adjusted EPS of $3.64-$3.68, weaker than the consensus of $3.68. 

Earnings Reports(9/4/2025)

Broadcom Inc (AVGO), Ciena Corp (CIEN), Copart Inc (CPRT), Docusign Inc (DOCU), Guidewire Software Inc (GWRE), Lululemon Athletica Inc (LULU), Samsara Inc (IOT), Science Applications International (SAIC), Toro Co/The (TTC), UiPath Inc (PATH).