The Dow Jones and S&P 500 hit record highs Friday after Federal Reserve chief Jerome Powell said that conditions "may warrant" rate cuts in his long-awaited Jackson Hole speech. The Nasdaq slashed weekly losses while the Russell 2000 hit a 2025 high. Earlier in the week, AI leaders led a growth sell-off amid concerns that AI exuberance was getting overblown. Walmart stumbled on earnings, but Home Depot, Lowe's, TJX Cos. were retail winners. Palo Alto Networks rallied on results but some other software makers struggled on results.
Stock Market Has Powell-Wow Friday
The key indexes had a strong finish to what had been a tough week for growth stocks, rebounded powerfully Friday after Fed chief Jerome Powell signaled rate cuts are coming. The S&P 500 and Dow Jones hit record highs Friday, while the Russell 2000 hit a 2025 high. The Nasdaq fell modestly for the week, but slashed losses after rebounding from the 10-week line. Growth stocks also cut big losses or reversed higher.
Powell Signals Rate Cuts
Federal Reserve Chairman Jerome Powell delivered a positive Jackson Hole jolt to the stock market on Friday, signaling that rate cuts will likely resume next month. Powell said downside risks to employment are rising, as hiring fades. Yet he also signaled that the Fed will proceed cautiously, given that inflation is running above target and that the falloff in immigration means that lower supply of labor has balanced out lower demand for labor. Powell expects that inflation will rise further due to Trump tariffs, but the Fed's baseline view is that tariffs will only produce a one-time rise in prices, rather than leading to sustained inflation. Markets reacted by nearly, but not completely pricing in a rate cut for the Sept. 17 Fed meeting.
Palo Alto Earnings, Guidance Strong
Palo Alto Networks reported fiscal Q4 earnings grew 27% per share, with gains accelerating for a second straight quarter. Revenue met targets with a 16% rise to $2.5 billion. Annual recurring revenue (ARR) from subscription-based cloud computing products rose 32% to $5.6 billion, slightly beating. For fiscal 2026, the cybersecurity firm guided slightly higher on revenue. Palo Alto announced the retirement of cofounder and Chief Technology Officer Nir Zuk. Chief Product Officer Lee Klarich will be the new CTO.
Home Depot, Lowe's Rise
Home Depot maintained 2025 guidance but reported slightly worse-than-expected Q2 earnings as "larger projects remain on hold." Lowe's topped Q2 views and raised guidance. The company also will buy interior building products distributor Foundation Building Materials for $8.8 billion. Both stocks rose, with much of that coming on Friday's Powell-fueled rally.
Walmart Skids On Earnings Miss
The Dow Jones retailer reported earnings of 68 cents per share adjusted, up 1% and missing views for 73 cents. The EPS included six cents in legal and restructuring charges, and excluded a 26-cent gain on equity and investments. Revenue grew almost 5% to $177.4 billion, beating views, with a 25% jump in e-commerce sales. Comparable sales climbed 4.8% to outpace estimates. CFO John Rainey during the earnings call said that Walmart is gaining share, with upper income households contributing the most. The company expects tariff costs to keep rising in Q3 and Q4, but CEO Doug McMillon said it will try to keep prices "as low as possible for as long as possible." Walmart lifted its 2026 earnings outlook slightly, but the top end of its range just met FactSet expectations. Shares fell below a buy point.
Stock Market Rallies To Highs On Powell. This Is The Next Big Test.
TJX Hits High On Earnings
TJX reported a 15% EPS gain on a 7% revenue rise and a 4% increase in same-store sales, all beating. The parent of TJ Maxx, Marshalls and HomeGoods expects 2% to 3% comparable sales growth for Q3, and 3% same-store sales growth for the year. The retailer also lifted its full-year earnings guidance to match FactSet views. TJX stock received multiple price target hikes on results. Shares jumped to a new high, and stayed in a buy zone after paring gains. Ross Stores reported a 2% EPS decline that beat while a near-2% sales gain missed. CEO Jim Conroy noted that sales continued to improve from Q1 while tariff costs were lower than expected. Ross is taking a "somewhat cautious" approach to business planning for the year due to uncertainty. It sees 2%-3% comparable sales growth for Q3 and Q4. Ross rose slightly on Friday and was little changed for the week, working up the right side of a consolidation.
Obesity Drug News Swings Stocks
Novo Nordisk and Viking Therapeutics diverged on news tied to their weight-loss drugs. The FDA approved Novo's Wegovy as a treatment for metabolic dysfunction-associated steatohepatitis, an advanced form of fatty liver disease. It joins Rezdiffra from Madrigal Pharmaceuticals, the only other approved MASH drug, on the market. Novo also halved the cash price of Ozempic. Shares jumped. But Viking stock crashed 42% Tuesday on mixed results for its experimental weight-loss pill, VK2735. Patients who took the daily pill for 13 weeks lost, on average, up to 12.2% of their body weight. That easily beat out placebo recipients. But a fifth of VK2735 recipients dropped out of the study due to side effects.
Meta Reportedly Freezes AI Hiring
Investors pumped the brakes on shares of Meta Platforms in a busy week of AI-related headlines for the tech giant. The Facebook parent reportedly paused hiring for its AI divisions after a hiring spree that captured Wall Street's attention for its huge offers. Meta is also reorganizing its AI operations into four separate divisions. Meanwhile, U.S. lawmakers are scrutinizing whether Meta's gen AI chatbots pose a threat to children after Reuters reported on internal policy documents where Meta had permitted its chatbots to "engage a child in conversations that are romantic or sensual." Meta told Reuters the documents are "inconsistent" with company policy and will be revised. Meanwhile, Meta signed a $10 billion cloud services contract with Google parent Alphabet, The Information reported.
Stock Market News In Brief
Nvidia has ordered a halt to H20 chip production, The Information reported. Separately, CEO Jensen Huang said the tech titan is in talks with the U.S. to sell a new, more powerful chip to China.
Viking Holdings reported 24% EPS growth in Q2 that met consensus, with revenue up 18.5% to $1.88 billion, above forecasts. But the fast-growing cruise line, which features river cruises and round-the-world adventures, released year-ahead pricing data showing modest year-over-year increases. Shares initially tumbled, but slashed losses after rebounding from key support.
Analog Devices delivered a beat-and-raise quarterly report as it benefits from a cyclical recovery in industrial and automotive chip sales. ADI earnings rose 30% while sales climbed 25% to $2.88 billion in its fiscal third quarter.
Intel jumped Tuesday after SoftBank announced a $2 billion investment in the struggling chipmaker. Shares closed the week little changed. Meanwhile, the Trump administration is looking to take a 10% stake in Intel in exchange for government funding for an advanced foundry.
Hertz will sell used cars via Amazon.com. The rental car stock jumped, while Carvana and other used-car sellers fell on the news, but jumped Friday
Amer Sports beat views with a 20% EPS gain and 23% sales rise to $1.24 billion. The maker of outdoor apparel brands and Wilson sports equipment guided higher. But there were concerns about the Arc'teryx brand and sales in the Americas. Shares initially tumbled, but roared back to test a buy point.
Thoma Bravo agreed to buy Dayforce in a $12.3 billion deal, including debt, continuing its acquisitions of software companies. The private equity firm will pay $70 a share cash, a roughly 32% premium to Friday's closing price.
Medtronic fell Tuesday after beating fiscal first-quarter expectations and raising its full-year earnings outlook, but still below what analysts expected given projected benefits from foreign exchange rates and a lower tariff burden. Elliott Management took a stake in the medical products giant, which added two members to its board and announced a pair of strategic committees in response.
Intuit beat fiscal Q4 views and gave roughly in-line guidance. The financial software firm earnings welled 38% with revenue up 20% to $3.83 billion. Shares tumbled.
Workday said Q2 earnings rose 71% per share while revenue climbed nearly 13% to $2.348 billion, both beating. For the October quarter, Workday expects subscription revenue of $2.235 billion, roughly in-line with estimates of $2.237 billion. The software maker also announced it's buying Paradox, a candidate experience agent that uses conversational AI to simplify the job application process.
Zoom Communications reported Q2 EPS climbed 10% with revenue up nearly 5% to $1.217 billion, both beating. Enterprise revenue grew $7% to $730.7 million, also topping, Zoom guided fractionally higher for Q3 revenue and raised its full-year sales target. Shares jumped.
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