Mid-Morning Look

Thursday, July 30, 2026

After closing on the lows in dramatic fashion on Wednesday, with the S&P 500 swinging 140 points from highs post FOMC meeting to end on lows after Warsh press conference, major averages are rebounding nicely to start the day, but still nowhere near yesterday highs. Rotation again into the volatile semiconductors/AI/data center sector early behind MSFT commentary in addition to strong earnings/guidance from power names like PWR are boosting data center plays that crumbled in recent days. The casualty today is software (sans MSFT after results which is +14%) as the IGV falls and investors rotate back into the early winners or 2026. Also of interest in the AI sector, David Faber on CNBC noted Situational Awareness (Leopold Aschenbrenner) “exited all of their public investments” [entire stock book] in one enormous block trade “both the longs and the short book” all sold to a single fund (which was predominantly in many names in the AI sector). Inflation data and weaker GDP data being overshadowed by MSFT results/impact on AI space.

The hyperscalers are seeing contrasting fortunes, with Microsoft rallying after earnings suggested that its AI investments are starting to generate returns. Azure cloud revenue grew a better-than-expected 43% year-on-year, while its capital expenditures were lower than expected. On the flip side, Meta Platforms fell as it gave a disappointing quarterly revenue forecast and reported the lowest free cash flow in years — a sign of ballooning expenses for AI bets. Worth watching for tech is possibly early signs of unwind of “carry trade” as the Dollar index (DXY) -0.9% under 100 now as the Japanese Yen strengthens further, dropping below 159 vs. the Dollar for a 2.9% move (2 month lows). Japanese intervention widely speculated given the Yen at 40-year lows this week; the Euro also rising back above 1.15 vs. the buck. The Bank of England kept its key rate unchanged at 3.75% in a 6-3 vote, with three policymakers backing a hike and none supporting a cut.

Treasury yields were back on the move early as the 10-year rose 2 bps to 4.70% (now down), the 30 bps up 3 bps to 5.23% and the 2 yr unchanged at 4.27%. Yesterday was a roller coaster ride for bond markets after the FOMC meeting as the yield on 30-year U.S. Treasury bonds up 9.84 basis points at 5.193% after hitting 5.213%, highest level since July 2007 (now higher), the 2yr yield dropped -10bps to 4.22% then closed just -1bp on the day at 4.27% while the 10yr rose 7bps to 4.68%. Crude oil prices snapped a three-day losing streak in emphatic fashion on Wednesday, Brent crude closing up 6.7% around $90.70/bbl, WTI +7% to $84.60/bbl.

On Wednesday, as expected, the FOMC held rates steady at 3.5%-3.75% with three hawkish dissents to this decision. Similarly, as expected, there were no substantial changes to the meeting statement language. In the press conference, Chair Warsh outlined areas of debate amongst meeting participants, most notably the extent to which shocks were impacting output, employment, and prices. That said, he did not provide much detail around those discussions, presumably leaving that for the minutes.

• U.S. Q2 GDP (advance) rose a lighter +1.5% Q/Q annual rate vs. +2.3% consensus and +2.1% in Q1, as Consumer spending surged at a 3.2% rate after abruptly slowing to a 0.5% growth pace in Q1.
• Weekly Jobless Claims climbed to 197,000 from 188,000 last week and vs. consensus 200,000; the 4-weel moving average fell to 202,750 from 207,750 prior week; continued claims fell to 1.782M from 1.789M prior week (est. 1.798M); US Insured Unemployment Rate unchanged at 1.2%.

• In Restaurants: SBUX delivered strong Q3 results and raised FY26 guidance as the “Back to Starbucks” turnaround gains traction; Q3 EPS of $0.85 beat consensus by $0.20 with ~$0.05 from fundamentals and ~$0.15 from tariff/tax favorability and raised FY26 EPS guidance to $2.55-2.65. CMG shares rose after results as same-store sales of +2.2% came in above consensus of +1.4%; and include positive traffic and raised its FY2026e SSS expectations to be up LSD% (from about flat previously); YUM Q2 Adj EPS $1.62 tops est. $1.57 but revs $9.17B miss est. $9.19B with Taco Bell Comp Sales +7% (+6.57%), Restaurant Margin 16.3% (est 17%), Worldwide Comp Sales +3%, (est +2.89%) and Pizza Hut Comp Sales -1% (est -0.46%); Jersey Mike’s (JMKE) 43.48M share IPO priced at $23.00 which was the midpoint of $21.00-$25.00 target range.
• Auto sector: RACE Q2 Adj. EPS: $3.05 tops est: $2.83 and revs rose 11% y/y to $2.253B vs est. $2.140B while FY26 guidance also raised above the street on both EPS and revenue; SAH posted Q2 profit and notched higher revenue rising 7.6% to $3.93B vs. est. $3.78B, driven by improving performance across all business units. CVNA shares fell as Q2 results beat top/bottom line, but guidance disappoints as sees FY adj. EBITDA guided $2.7B–$3.0B vs. est. $2.97B, and management sees sequentially higher retail units in Q3. ORLY Q2 EPS $0.86 in line with consensus as sales were $4.89B vs. est. $4.86B; raising full-Yr 2026 comparable store sales guidance to a range of 4%-6%
• Footwear sector: ADDYY shares tumbled as qtr operating profit in the April to June period rose by 5% to €574M but came in below an analyst consensus of €623M, weighed down by marketing spend; CROX shares fall as Q2 adj EPS $4.23 misses the $4.34 estimate on lower margins of 25.1%, lower than last year’s 26.9% and guided Q3 revs to be flat compared with a year ago, while adjusted EPS expected to be $3.20 to $3.30 (below estimates of rev growth +2.4% and EPS $3.53); BOOT delivered strong Q1 results, with momentum across new stores and core categories and said remains confident in its outlook for the balance of the year.

• FTNT +5%; reported strong Q2 results across all metrics and significantly raised 2026 guidance with Q3 revenue $2.01B-$2.1B, consensus $1.95B and FY26 revenue $8.02B-$8.18B, consensus $7.81B; product revenue accelerated again to 52% Y/y.
• LRCX +21%; posted strong results & guide, increased its WFE outlook to the low 150B range; said Q4 gross margins, up >200bps to 52.0%, said ‘27 would be another strong growth year following what will be an excellent 2026; guided Q2 to 20% sequential growth.
• MKTX +30%; as ICE agreed to acquire MKTX in a deal valued at $5.7B to expand fixed-income offerings, where ICE will buy all outstanding shares of the trading platform for $167 each in cash, the exchange operator said, which is a 33% premium to its previous closing price
• MSFT +15%; reported better results as revs rose 18% to $90B, and adjusted EPS of $4.74 topped estimates, while Azure revenue grew 43% topping $100B for the first time in revs, and Intelligent Cloud sales exceeded expectations, sending shares higher by 8%.
• PWR +16%; with EPS $4.24 above est. $3.30 and revs $9.6B vs. est. $8.6B and adj EBITDA $1.1B vs. est. $875M; raises 2026 revenue outlook to $39.3B-$39.7B saying growth was supported by increased investment from customers in Electric Grid, power Generation and mission-critical infrastructure

• CAPR -52%; after an FDA panel of experts voted against the effectiveness data of its cell therapy for a heart condition related to Duchenne muscular dystrophy (DMD) in a 9 to 3 vote, aligning with concerns of the FDA’s staff that the company had not provided sufficient evidence of the therapy’s effectiveness, while questioning changes to key analyses after its late-stage study was completed.
• CVNA -10%; shares fell as Q2 results beat top/bottom line, but guidance disappoints as sees FY adj. EBITDA guided $2.7B–$3.0B vs. est. $2.97B, and management sees sequentially higher retail units in Q3.
• FICO -14%; shares fell as Q3 revenue and adjusted operating income modestly missed expectations, driven by Software softness, while posted sequential decline in mortgage score revenues, as rapid VS4 share gains in conforming mortgages at UWM and Rocket are weighing on the stock.
• META -9%; shares tumbled after results missed and said free cash flow (FCF) fell to its lowest level since the third quarter of 2022 as the company ramped up spending on its artificial intelligence ambitions. Free cash flow dropped to $784M in Q2 vs. $8.5B in the prior year quarter
• MO -7%; shares fell in tobacco as Q2 revenue was flat y/y, and adjusted EPS missed analyst expectations ($1.48 vs. est. $1.50) and narrowed full-year adjusted EPS guidance FY26 adjusted EPS view to $5.61-$5.72 from $5.56-$5.72 and raised lower end of range
• TDOC -27%; shares fell as its BetterHelp continues to weigh on results as the model transitions from cash to insurance; Q2 revs $606.9M miss est. $616.3M; guides Q3 revs $569M-$609M below the consensus $629.2M; also guides year EPS loss greater than expected.
• TREE -22%; after lowering ’26E EBITDA by 5% to $145–152M on SMB softness from higher energy-prices/interest-rates, offset by Insurance segment strength. Outlook assumes SMB grows modestly from 2Q with FY “slightly-down to flat,” with 2H Insurance VMM growing MSD-HSD.