Newsquawk US Market Wrap: Stocks sold as tech weakness drags Nasdaq lower

• SNAPSHOT: Equities down, Treasuries flatten, Crude up, Dollar up, Gold down.
• REAR VIEW: Trump said no talks or conversations going on, or scheduled, with Iran; Trump said blockade remains in full force and effect; Softer-than-expected US import & export prices; US Housing Starts miss, Building permits beat; US Pending Home Sales unexpectedly decline; US IP falls short, Mfg prod. in line; Iran reiterates Strait of Hormuz will not reopen until demands are met; UKMTO received report of an incident in the Strait of Hormuz; UK u/e rate ticks higher; HD earnings beat.
• COMING UP: Data: UK Inflation (Jul), EU Inflation Final (Jul). Events: FOMC Minutes (Jul). Speakers: ECB's Lagarde. Supply: Germany, US. Earnings: Lowe's.

MARKET WRAP

Stocks were pressured on Tuesday, with the Nasdaq leading the downside amid pronounced weakness in Technology. Semiconductor and memory names were particularly hard hit as US yields remained elevated. Industrials and Materials also lagged, while Energy, Health Care and Consumer Staples outperformed.

The recent backup in long-end yields has been weighing on broader market sentiment, particularly after the 30-year rose to its highest level in around 19 years on Monday. Higher long-term borrowing costs may be reducing the attractiveness of debt-backed financing for hyperscaler capex, potentially weighing on the outlook for AI infrastructure spending and, in turn, demand for semiconductors. Higher yields also present a valuation headwind for growth stocks more broadly. The Vanguard S&P 500 Growth ETF (VOOG) fell over 1%, while the Semiconductor ETF (SOXX) dropped around 5% and the Memory ETF (DRAM) tumbled over 8%.

Regarding data, US Import and Export Prices were cooler than expected, adding to the string of softer July inflation reports ahead of the PCE report due later this month. The weekly ADP Employment Change remained subdued at around 9.5k vs the prior week's 8.25k. On housing, starts declined 12%, below expectations, while the more forward-looking Building Permits rose 5%, topping forecasts. Industrial and Manufacturing Production were broadly in line. In wake of the data, the Atlanta Fed GDPNow estimate for Q3 was revised down to 4.0% from 4.3%.

Crude prices settled in the green following choppy trade. US President Trump said there are currently no talks with Iran and none are planned, while stating the blockade remains in full force and that the Strait of Hormuz is open and operating.

In FX, the Dollar gained as equities declined, with the risk-off tone weighing on the antipodean currencies. Attention now turns to the FOMC Minutes for an indication of how far the hawkish sentiment extended beyond the three dissenters at the July meeting, including whether other officials would have supported a hike. However, Chair Warsh's aversion to forward guidance may limit clues on future decisions, while participants could look through the minutes given the softer NFP and inflation data released since the meeting.

US

IMPORT/EXPORT PRICES: US import prices fell 0.4% M/M in July (exp. +0.1%, prev. -0.3%), the largest monthly decline since May 2025, as a 7.2% decline in fuel import prices more than offset a 0.4% increase in nonfuel prices. Despite the headline decline, the underlying details were firmer, with capital goods prices rising 0.9%, driven by computers, peripherals and semiconductors, industrial and service machinery, and civilian aircraft, while food import prices rose 0.9%. Notably, import prices from China increased 0.8%, the largest monthly rise since July 2008. Export prices fell 1.3% M/M (exp. +0.2%, prev. -0.7%), driven by a 1.5% decline in nonagricultural prices, particularly industrial supplies and materials (-4.1%), while agricultural export prices rose 1.0%. On an annual basis, import prices remained elevated at +5.9% Y/Y, including a 4.5% rise in nonfuel prices, while export prices were up 8.2%. Oxford Economics said that despite the still-sizeable annual increase, it expects import price inflation to moderate, although energy prices are likely to remain volatile until a durable peace is reached between the US and Iran.

INDUSTRIAL/MANUFACTURING PRODUCTION: Industrial Production and Manufacturing Production both rose 0.2% in July, after 0.3% increases in June, with the former shy of the expected 0.3% and the latter matching expectations. Consumer goods output fell 0.4% in July, led by a 1.4% drop in durables. Business equipment rose 0.8%, defence and space equipment increased 1.8%, while materials gained 0.3%. Manufacturing output rose 0.2%, with durable goods up 0.7% despite a 2.1% fall in motor vehicles and parts; nondurables fell 0.4%. Mining output rose 0.2%, and utilities increased 0.5%. Meanwhile, the capacity utilisation rate rose to 76.3% from 76.2%, as expected. Pantheon Macroeconomics says consumer demand is likely to slow in H2 2026 as a fleeting boost from tax refunds fades, and external demand is tepid. The firm thinks that the underlying trend in manufacturing outside of a few tech-adjacent industries likely remains relatively subdued.

PENDING HOME SALES: Pending home sales fell 2.3% M/M in July, against the expected rise of 0.3%; M/M sales declined across all four major US regions. NAR Chief Economist Yun notes the highest mortgage rates of the year hit right in the middle of summer, and that's pulling back contract signings, and home prices are at record highs. Yun adds, job gains should bring more buyers into the market, and currently pending contracts are 30% below their pre-pandemic 2019 level, while payroll employment is 5% above. As such, Yun notes the gap points to sizable pent-up demand that should be unleashed in the coming years as more supply reaches the market and affordability improves.

HOUSING STARTS/BUILDING PERMITS: Housing starts tumbled 12.4% in July to 1.239mln from 1.415mln, and beneath the expected 1.340mln. Single-family starts fell 9.9% to 808k unit rate, with multifamily -16.8% to 431k unit rate. Building permits rose 5% to 1.443mln (prev. 1.374mln), above the anticipated 1.370mln; single-family permits +2.5% to 894k unit rate, and multifamily +9.4% to 549k unit rate. Overall, housing starts disappointed in July, but the more forward-looking permits figure suggests there was more momentum in the sector than the headline starts figure suggests.

FIXED INCOME

T-NOTE FUTURES (U6) SETTLED 3+ TICKS HIGHER AT 108-18

Yield curve flattens but yields remain elevated. At settlement, 2-year -0.7bps at 4.175%, 3-year -0.1bps at 4.254%, 5-year -1.1bps at 4.367%, 7-year -1.4bps at 4.525%, 10-year -1.8bps at 4.708%, 20-year -2.6bps at 5.282%, 30-year -2.4bps at 5.287%.

THE DAY: Treasury yields were marginally lower across the curve on Tuesday, with the long end leading the move in a modest bull flattening. However, yields remain elevated, with the 30-year still trading close to 5.300%. There was little obvious catalyst behind the move, with the flattening appearing more reflective of a pause in the pronounced steepening seen over recent sessions.

There was no Fed speak, but several data points were digested. On prices, US Import and Export Prices were cooler than expected, adding to the string of softer July inflation reports ahead of the PCE report due later this month. The weekly ADP Employment Change remained low at around 9.5k vs the prior week's 8.25k. On housing, starts declined 12%, below expectations, while the more forward-looking Building Permits rose 5%, topping forecasts. Industrial and Manufacturing Production were broadly in line. In wake of the data, the Atlanta Fed GDPNow estimate for Q3 was revised down to 4.0% from 4.3%.

The recent backup in long-end yields has also been weighing on broader market sentiment, particularly after the 30-year rose to its highest level in around 19 years on Monday. The Nasdaq has underperformed, with Technology shares lagging and particular weakness in semiconductors. Higher long-term borrowing costs may be reducing the attractiveness of debt-backed financing for hyperscaler capex, potentially weighing on the outlook for AI infrastructure spending and, in turn, demand for semiconductors. Higher yields also present a valuation headwind for growth stocks more broadly.

Fed pricing was little changed again on Tuesday, with markets increasingly responding to tier-one economic data and policy decisions themselves. This week's focus turns to the FOMC Minutes on Wednesday for an indication of how far the hawkish sentiment extended beyond the three dissenters at the July meeting, including whether other officials would have supported a hike. However, Chair Warsh's aversion to forward guidance may limit clues on future decisions, while participants could look through the minutes given the softer NFP and inflation data released since the meeting.

SUPPLY

Notes/Bonds

• US to sell USD 16bln of 20-year bonds on August 19th and USD 8bln of 30-year TIPS on August 20th; all to settle August 31st.

Bills

• US to sell USD 92bln of 13-week bills and USD 79bln of 26-week bills on August 17th; all to settle August 20th.

STIRS / OPERATIONS

• Fed Hike Pricing via CME FedWatch: Sept 8.7bps (prev. 9.0bps), Dec 23.6bps (prev. 23.9bps).
• EFFR at 3.63% (prev. 3.63%), volumes at USD 93bln (prev. USD 99bln) on August 17th.
• SOFR at 3.66% (prev. 3.62%), volumes at USD 3.068tln (prev. USD 2.957tln) on August 17th.
• NY Fed RRP op demand at USD 0.45bln (prev. USD 0.725bln) across 1 counterparty (prev. 1) on August 13th.
• Treasury Buyback [Liquidity support, 20-30year, max USD 2bln]: Accepts USD 2bln of 19.868bln offers, O/C 9.934x. Accepts 3 of 36 eligible issues.

CRUDE

WTI (V6) SETTLED USD 0.32 HIGHER AT 84.06/BBL; BRENT (V6) SETTLED USD 0.15 HIGHER AT 91.02/BBL

The crude complex saw slight gains on Tuesday, and traded within tight parameters in light holiday trade. Middle East headlines were the highlights, and the main market came after the usual punchy Trump rhetoric. The US President said there are no talks or conversations going on, or scheduled, with Iran and the naval blockade remains in full force and effect. As such, immediate upside was seen in crude, but it swiftly pared. Further from the Iranian side, the Foreign Minister remarked that Tehran rejected ceasefire proposals; reiterating that the war must end, not pause, albeit seeing little reaction. Elsewhere, the UKMTO said it received a report of an incident 40nm Southeast of Al Mocha, Yemen, while warning sirens were heard in Dubai, although the UAE later reported the situation is safe. Ahead, the weekly private inventory metrics after-hours will be watched as well as any further geopol updates. WTI (V6) traded between USD 83.77-85.07/bbl, while Brent (V6) traded between USD 90.61-92.00/bbl.

EQUITIES

CLOSES: SPX -0.66% at 7,694, NDX -1.68% at 29,491, DJI -0.22% at 53,344, RUT -1.24% at 3,020.

SECTORS: Energy +1.79%, Health +1.59%, Consumer Staples +1.06%, Financials +0.45%, Utilities -0.38%, Consumer Discretionary -0.42%, Real Estate -0.45%, Communication Services -0.65%, Materials -0.92%, Industrials -1.46%, Technology -1.93%.

EUROPEAN CLOSES: Euro Stoxx 50 -0.94% at 6,469, Dax 40 -0.87% at 26,141, FTSE 100 +0.05% at 10,725, CAC 40 -0.82% at 8,509, FTSE MIB -1.04% at 53,032, IBEX 35 -0.26% at 19,930, PSI +0.93% at 9,305, SMI +0.06% at 14,311, AEX -0.67% at 1,107

STOCK SPECIFICS:

• Fabrinet (FN): Strong Q metrics & guidance were overshadowed by investor concerns around margins, heavy capital spending & pace of future growth, following a strong run in shares.
• Home Depot (HD): EPS, rev. & SSS beat.
• Einride (ENRD) to deploy 500 TSLA Semi trucks on its SAGA AI platform to serve customers across the US, incl. AMZN.
• Bath & Body Works (BBWI) was upgraded at Citi.
• Abercrombie & Fitch (ANF) was downgraded at Raymond James to Market Perform from Outperform.
• Klarna (KLAR): GMV light w/ dismal next Q & FY outlook.
• Amazon (AMZN) reportedly plans to grow its Louisiana data centre investment from USD 12bln to USD 18bln with a third data centre campus.
• UGI (UGI) recently received a roughly USD 9bln takeover offer from KKR (KKR), according to WSJ citing sources.
• Copart (CPRT) reportedly said to be among suitors for CCC Intelligent Solutions Holdings (CCC).

FX

The Dollar Index saw marginal gains on Tuesday, albeit in holiday thin trade amid a lack of tier 1 US data and Fed speak. The Greenback lacks direction due to headline catalysts being light as desks await the next risk event. Attention continues to remain on US Treasury yields, which remain elevated and are weighing on sentiment. Ahead, the FOMC Minutes are due on Wednesday and attention is on how hawkish (or not) they will be, while Fed pricing was little changed ahead of the September confab as a hold currently seems most likely based on recent data, albeit there is still more to come.

G10 FX was lower across the board to varying degrees against the Dollar in pretty thin headline newsflow. Antipodeans were the underperformers, and likely hit on risk, with the EUR the relative outperformer, albeit still flat. For the single-currency, ECB's Chief Economist Lane said that EZ inflation being one percentage point above the ECB's 2% target is a lot.

Elsewhere, Cable saw a slight knee-jerk higher following the UK jobs report, and likely on the earnings metrics, although this proved shortlived as the Unemployment Rate remained sticky vs expectations of a downtick.

Looking at the Loonie, it saw very modest weakness as a White House Official confirmed leaders of the US and Canada spoke last night and that "no resolution that would prompt the US President to hold off on the retaliation tariffs which are set for August 19th". Despite this, there were conflicting later reports that a deal between the US and Canada to stave off new tariffs on Canadian goods is now on President Trump's desk, and it is now up to Trump whether the 50% duty goes into effect, as scheduled, at midnight.