What Happened Yesterday
Close | Move | Mood | |
|---|---|---|---|
S&P 500 (SPY) | 770.56 | -0.32% | Stalling |
Nasdaq 100 (QQQ) | 718.45 | -0.34% | Dragged |
Dow (DIA) | 537.28 | -0.32% | Bored |
Russell 2000 (IWM) | 300.99 | +0.34% | Insufferable |
VIX | 15.28 | -1.16% | Napping |
Gold (GLD) | 400.96 | -0.39% | Fine |
Oil (USO) | 127.61 | +1.34% | Very awake |
10-year Treasury | 4.696% | -1.7 bp | Waiting |
Bitcoin | $63,552 | -0.56% | Sulking |
Three of the four majors closed red, the only green one was small caps, and the whole board moved about as much as a parked car. Underneath it, one megacap took a beating, and the reason it took a beating is the most interesting thing that happened all day.
Alphabet ate the index by itself
Alphabet fell 3.84% on 1.51 times its normal volume and closed a hair above its low for the day. No bounce, no dip buyers, just a steady all-day exit. A thousand dollars of Alphabet on Monday was $961.62 by Tuesday's bell, which is a rough day for a stock people describe as a bond substitute.
The dated fact behind it: on Monday, Alphabet closed a $25 billion senior notes offering, with 10 tranches maturing in 2066. Senior notes are corporate IOUs that get repaid before shareholders see a nickel, and a 2066 maturity means Alphabet is now borrowing money that comes due when today's interns are arguing with Medicare.
That comes on top of the July 22 quarter, when Alphabet raised its 2026 capital spending guidance to $195 billion to $205 billion from $180 billion to $190 billion. Capital spending is the money a company spends on buildings and machines rather than salaries, and Alphabet spent $44.9 billion on it in one quarter, roughly double a year ago. Free cash flow, the money left over after you pay for all of that, came in at negative $5.9 billion, the company's first negative quarter since it went public in 2004.
For three years, the AI story has been "these companies are so rich they can build this out of petty cash." Petty cash is now a bond prospectus with a maturity date in the 2060s, and the market spent Tuesday deciding what that is worth.
CoreWeave showed you the other end of the same trade
After the bell, CoreWeave reported revenue of $2.58 billion, more than double the same quarter last year, with a revenue backlog above $104 billion and another $25 billion of commitments signed in the third quarter. Backlog is work that is contracted but not delivered yet, so it is a promise, and promises have been an excellent business this year.
Then the other line. Net loss widened to $626 million from $290 million, largely due to interest costs. CoreWeave is not losing money because nobody wants its data centers. It is losing money because renting out 1.5 gigawatts of them requires borrowing, and lenders charge for that.
The tell is not the demand number; it is that a company doubling revenue also doubled its losses at the same time, which is what happens when growth is financed rather than funded.
Oil went up again, then the inventory data walked in
USO rose 1.34% on 1.61 times normal volume, a second straight gain, and is up 8.16% over the last two sessions. The Strait of Hormuz still has nothing enacted, no route deal, no toll, no reopening, just another week of people announcing things at each other. Traders keep paying up for a supply disruption that lives entirely in press releases.
Then, at 3:30 Central, after crude had already settled, the American Petroleum Institute's weekly survey showed a crude inventory build of 9.07 million barrels, against an expected draw of half a million. That is a lot of oil sitting in tanks for a market pricing a shortage. The API number is the industry's own tally, and it is the warm-up act. The government's version arrives this morning.
Here's the Thing: the fear premium and the barrel count are now openly disagreeing in public, and one of them is going to apologize.
Everything else was a waiting room
Existing home sales from the National Association of Realtors fell 1.7% in July, against an expected 0.7% dip, marking a second straight monthly decline, while the 30-year mortgage rate stood at 6.81%. Treasury sold three-year notes at 4.291%, up from 4.179% at the prior auction, so the bond market is charging slightly more to lend to the government than it did last month. The VIX slipped, and the 10-year eased 1.7 basis points to 4.696%. A basis point is one hundredth of a percent, a unit of measurement invented so bond traders can sound busy on quiet days.
None of it mattered because everyone in the building was already looking at Wednesday morning.
What to Watch Today
The main event
7:30 AM CT, July CPI from the BLS. Consensus is 3.4% headline against 3.5% in June, and 2.5% core against 2.6%. Core strips out food and energy, which is convenient this month, because energy is the part currently on fire.
9:30 AM CT, EIA weekly crude stocks. Consensus is a 0.5-million-barrel draw. The API said 9.07 million the other direction last night. Somebody is about to be very wrong on camera.
The rest
5:00 AM CT: OPEC monthly report, with September quotas already agreed in principle at roughly 188,000 barrels a day higher.
6:00 AM CT: MBA mortgage applications, coming off a 2.9% drop.
12:00 PM CT: 10-year note auction. The last one stopped at 4.58%.
1:00 PM CT: Treasury's monthly budget statement; consensus near a $346 billion deficit, up from $120 billion prior.
After the close: Cisco reports, consensus around $0.99 a share.
The one thing that could ruin everyone's day: a hot core CPI print. Oil has fallen 8% over two sessions, and two FOMC voters have said publicly this month that they are prepared to raise rates. The Fed is holding at 3.50% to 3.75%, with three dissenters who wanted to hike in July. A 2.5% core reading keeps the peace. A 2.8% reading makes August look very different.
Markets closed on Tuesday, pretending they had no opinion. They have an opinion. They just wanted the data first.
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