What Happened Yesterday
Close | Move | Mood | |
|---|---|---|---|
S&P 500 (SPY) | 771.10 | +0.66% | Grateful |
Nasdaq 100 (QQQ) | 721.11 | +1.37% | Vindicated |
Dow (DIA) | 535.22 | +0.19% | Uninvited |
Russell 2000 (IWM) | 299.81 | +0.29% | Polite |
VIX | 14.51 | -4.60% | Reckless |
10-Year Treasury | 4.674% | +2.1 bp | Unbothered |
Gold (GLD) | 422.60 | +0.30% | Up 13.74% this month |
Bitcoin | 80,257.54 | +1.56% | Back over 80k |
The Dow gained about a tenth of what the Nasdaq did, which is what happens when the entire day's news is about chips and software and your index is full of neither.
Nvidia Had a Wonderful Day. Its Neighbors Did Not.
Nvidia closed up 8.74% at 227.98 on roughly 300 million shares, well above Wednesday's turnover, after guiding to about 70% revenue growth in fiscal 2028 against roughly 45% that Wall Street had modeled. Guidance is a company telling you what it thinks next year looks like, and this one landed so far above the room that the room simply repriced.
Then you check who came along and the party gets thin. Amazon fell 1.54%, Alphabet fell 0.39%, AMD fell 0.89%, Micron fell 0.32%, and Meta fell 0.88%. Broadcom rose 4.48% and Microsoft 1.75%, which is less a broad rally than Nvidia plus the two companies most visibly holding its coat.
Micron is the tell. It opened at 966.99, then spent the session sliding to a low of 906.89 before closing at 935.39, red on the day. A stock that gaps up 3% on the best possible news for memory demand and closes lower does not have a demand problem, it has a shareholder problem.
For two years "the AI trade" meant a basket. Thursday it meant one ticker, its supplier and its landlord, while half the neighborhood quietly listed their houses. A rally that narrow is not a rally; it is one stock wearing an index as a coat.
They Held a Funeral for Software
Software Showed Up With Raised Guidance
All summer the fashionable fear was the "SaaSpocalypse," the idea that AI coding assistants would let companies build their own tools and quit paying for software subscriptions forever. Thursday, the market read the actual quarters and changed its mind at speed. Okta rose 28.63% to 172.91. Salesforce rose 22.58% to 252.05. CrowdStrike rose 20.50% to 227.96.
Salesforce reported $11.35 billion in revenue and $5.90 in adjusted earnings per share, both above estimates, free cash flow up 81% to $1.1 billion; and its Agentforce platform at $1.5 billion of annual recurring revenue, the subscription money it can reasonably expect to keep collecting. It raised full-year guidance. The stock opened at 230.05 and never traded below that price all day, which is the market announcing that nobody who wanted in got a discount.
Read the fine print first. Three of the eleven points of full-year revenue growth come from Informatica, a company Salesforce bought rather than a product it invented, and remaining performance obligations, the contracted work not yet billed, grew a merely respectable 10%.
The thesis was that AI eats software. Thursday's rebuttal is that AI is currently the thing software sells, and the companies with an existing customer list get to sell it first. Both can be true about eighteen months apart, and the market has elected to worry about that later.
Four Fed Presidents Talked at Jackson Hole
One of Them Gets a Vote
Day one produced a great deal of quotable hawkishness and, on inspection, very little voting power. Cleveland's Beth Hammack, who does vote this year, said inflation has run above the 2% target for more than five years, that she sees no sign financial conditions are restrictive, and, plainly, "I believe now is the time to act."
The other three have no say in 2026. Kansas City's Jeff Schmid, whose seat rotated off the committee this year, wondered aloud, "I don't know what we're restricting currently with the rate policy that we're at today," which is a bold read on a 3.50% to 3.75% target range and an entirely free one when you cannot vote on it. Chicago's Austan Goolsbee said everyone should be on edge about inflation, and Boston's Susan Collins called the latest reading mixed and expects it to ease on its own. Neither votes this year either.
Jobless claims did the hawks a quiet favor. 203,000 for the week ending August 22, against 208,000 expected, which is the labor market declining, leaving nobody an excuse to go easy.
Count the ballots, not the microphones. Four presidents spoke, three are spectators until January, and the one holding a vote wants to raise. That is a meaningfully more hawkish committee than the volume of the commentary suggests.
Nobody Wants the Long End
Including the Government
Yields drifted up, the 10-year to 4.674% and the 30-year to 5.196%, and Thursday's 7-year note auction cleared at 4.512% against 4.473% last time, meaning buyers wanted more yield to take the paper. Nine days earlier the Treasury said it will at least double its long-end buybacks, from $2 billion to $4 billion per operation, starting September 9. A buyback is the government buying its own outstanding bonds to support the price, and scheduling extra ones outside the normal quarterly rhythm is not a thing relaxed borrowers do.
Gold noticed. GLD closed at 422.60 and is up 13.74% in August alone, which is a remarkable amount of affection for a rock that pays no interest in a world where the 30-year pays 5.2%.
Stocks spent Thursday celebrating a chip forecast for 2028. The bond market spent Thursday charging the Treasury more to borrow, while the Treasury queued up to buy back its own debt. Only one of those two rooms is being asked to price the next thirty years.
What to Watch Today
Everything lands inside the same fifteen minutes.
8:45 AM CT, Chicago PMI (August). Consensus 57.0 against 57.6 in July. Above 50 still means expansion.
9:00 AM CT, University of Michigan consumer sentiment, August final. Consensus 51.0 against 55.2 in July, one-year inflation expectations seen at 4.3% against 4.2%. Consumers bracing for higher prices is precisely the chart hawks bring to meetings.
9:00 AM CT, Kevin Warsh's first Jackson Hole keynote as Chair, scheduled. He has already stripped forward guidance out of the post-meeting statement, so this is the closest thing to an explanation anyone gets before the September 15 to 16 meeting.
12:00 PM CT, Baker Hughes rig count. No notable earnings, which is merciful.
The one thing that could ruin everyone's day: the market walked in with VIX at 14.51 and a Nasdaq priced off a 2028 forecast. If Warsh spends nine o'clock agreeing with the only person at Jackson Hole who can vote, that forecast gets discounted at a higher rate, and Thursday's lovely moves are remarked inside four minutes.
Thursday was the market crossing three fears off the list. Software is not dead, the labor market is not cracking, and Nvidia is not out of customers. It celebrated by selling the hedge it needs at nine o'clock this morning.
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