Markets
Nia Warfield

Stocks hit record high as July inflation data bolsters rate cut bets

Stocks shot to fresh intraday records Tuesday after in-line July inflation data fortified bets that the Federal Reserve would deliver its first interest rate cut of 2025 next month. The S&P 500 rose 1.1%, the Nasdaq 100 climbed 1.3%, and the Russell 2000 soared 2.9%.

That marked the S&P 500’s first record close of August, with the tech-heavy Nasdaq 100 booking a record close as well.

All 11 S&P 500 sector ETFs went positive on the day, with communication services, tech, and materials leading the way.

Gains on the day were led by chip stocks NXP and On Semiconductor, which jumped 7.2% and 6.1%, respectively. Declines were led by law enforcement equipment maker Axon Enterprise, which fell 6.1%. Elsewhere…

Meta jumped 3.1%, ending the day at $790 — its highest closing price in history. The stock has been on a tear following a series of excellent earnings reports.

Shares of On Holding leapt 8.9% after the Swiss sneaker maker reported strong Q2 sales and offered a sunny outlook as the brand gains traction in the “RTO apparel” market.

D-Wave Quantum were up 6.5% to close the day. Sherwood News spoke with its CEO, following the quantum computing company’s Q2 sales beat last week, about its potential to expand into AI model training.

e.l.f. Beauty shares rose another 4.5% after Morgan Stanley upgraded shares of the popular cosmetics brand to “overweight” and hiked its price target to $134 from $114 on Monday.

Five Below shares also bounced 4.5% after Loop Capital hiked its rating on the stock from “hold” to “buy” and lifted its price target to $165.

Tilray shares climbed 3.2%, extending a rally, as investors continue to pile into the cannabis company, fueled by a report that President Trump is considering weed reform.

Circle shares ticked up 1.3%, paring back from a 15% premarket surge after the fintech firm’s first earnings report as a public company topped revenue estimates but missed on earnings per share.

Nvidia closed largely flat despite a new report from The Information saying that China’s internet regulator has ordered local tech companies to suspend their purchases of Nvidia chips.

Spirit Airlines shares plunged 40% after the discount airliner issued a dire warning about its ability to survive as a going concern without more cash. Rival airlines including Delta, American, Southwest, and JetBlue were all up amid this news and inflation data showing a jump in ticket prices for July.

Plug Power dipped 3.4% after the hydrogen fuel cell developer reported mixed second-quarter results after the bell on Monday, but said it plans to achieve gross margin breakeven in Q4.

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markets
Helena Cheng

Lululemon’s stretch getting tested: Stock plunges after after outlook is cut

Lululemon shares are down double digits in premarket trading after the company cut its full-year sales and profit outlook, overshadowing a Q1 beat and raising fresh concerns about the brand’s turnaround efforts.

The company now expects fiscal 2026 revenue to be flat to down 1%, compared with its prior forecast for 2% to 4% growth. Guidance for full-year diluted earnings per share was dragged down to a range of $10.95 to $11.15, below the company’s previous guidance of $12.10 to $12.30 and well below Wall Street’s estimate of $13.26.

Key numbers for Q1:

  • EPS of $1.69 vs. the $1.68 expected.

  • Revenue of $2.47 billion vs. the $2.43 billion expected.

The modest top-line beat masked a widening divergence between Lululemon’s geographic markets. While international revenue rose 22% overall with a 30% increase in Mainland China, the bigger problem remains North America, where revenue fell 5%.

Interim co-CEO and CFO Meghan Frank acknowledged during the earnings call that recent product rollouts underperformed. A highly anticipated yoga campaign failed to generate its expected “halo effect” across broader product lines.

Profitability metrics took a major hit, with gross margins contracting by 410 basis points to 54.2% due to mounting tariff costs and promotional markdowns. Operating income consequently fell 37% year over year to $276.9 million.

“We experienced spikes of negative commentary in the media and on social channels with regard to our brand, which had an impact on traffic and overall top-line performance,” Frank said during the earnings call. “And second, not all of our product launches have met our expectations. While we have had several successful launches so far this year, we have seen others as we start Q2 not generate the anticipated guest response.”

Lululemon’s valuation has already been steadily compressing for years. While it was once one of retail’s richly valued stocks, investors have been questioning whether the company can return to the double-digit growth era.

The results also arrive during a leadership transition. Lululemon announced back in April that former Nike executive Heidi O’Neill is set to take over as CEO in September, with investors looking to her to revive growth in North America and restore the brand’s growth.

As Lululemon faces both macroeconomic pressure and brand-specific challenges, its stock has dropped around 40% year to date.

markets
Paige Oamek

US job growth skyrocketed in May, blasting past expectations

The US economy added 172,000 jobs in the month of May, the Bureau of Labor Statistics reported Friday, sending 10-year Treasury yields higher.

The strong May job market surprised economists. Experts had predicted only 85,000 new jobs — just half the reported number. The unemployment rate held steady at 4.3%, as expected.

The job growth story is a hopeful spot for the economy as consumers continue to feel inflationary pressure from the Iran war.

Job gains were buoyed by the leisure and hospitality sector, which added 70,000 jobs, as well as local government, healthcare, and education.

Both the March and April jobs reports were revised upward, making them collectively 93,000 higher than previously reported.

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