Inflation and Retail Sales
CPI and PPI both came in tamer than expected. Retail sales came in weaker than expected, but the headline looks worse than the reality.
The numbers: retail sales fell 0.6% month over month on the headline. Excluding vehicles, down 0.3%, a half-percent miss against expectations. Excluding vehicles and gas, down 0.2%.
The drop is not that bad. Sales were still up 5% year over year from July 2025. The month over month fall came from a strong June that included Amazon (AMZN) Prime Days and World Cup spending, which pushed June much higher. Total sales from May 2026 to July 2026 rose 6.3% year over year. So sales fell from last month but posted solid year over year gains. Stock futures barely moved on the release.
Prime Day and World Cup spending already showed up in Visa (V), Mastercard (MA), travel, and Airbnb (ABNB). Because that spending landed in June, some effects may carry into the next quarter for firms that report quarterly. The June Amazon Prime Day makes for a tough year over year comparison.
Retail Earnings Next Week
Earnings season moves into its second half, with fewer reports, less high-profile names, and more focus on the retail consumer. The schedule: Home Depot (HD) on Tuesday; Lowe's (LOW), Target (TGT), and TJX (TJX) on Wednesday; John Deere (DE, industrial), Walmart (WMT), and Ross Stores (ROST) on Thursday.
Walmart (WMT) matters most as a window into the US consumer, because it pulls so much data from its huge sales volume.
Iran
A US naval blockade in the Strait of Hormuz stays in place, and the two sides look far apart. Negotiations continue loudly through headlines. Scott Bessent announced the US will roll out economic isolation measures against Iran next week. This maximum pressure step pairs severe financial sanctions with the naval blockade to cut off all of Tehran's remaining oil export revenue.
US policy is shifting. The US does not want troops on the ground and does not want to widen the war, so it will play a long game and choke Iran off economically. Crude oil did not move much on the news, trading up slightly at $81.34 a barrel. Bessent getting involved with sanctions marks a new chapter.
Applied Materials (AMAT)
The company reported and, like other tech firms, is dealing with strong demand it must catch up to, which reassures investors in tech and AI. Adjusted EPS came in at $3.50, up 41% year over year. Revenue was $9.12 billion, up 25% year over year, beating the $9 billion consensus. Gross margins expanded to 50.4%. Semiconductor systems revenue hit a record $7 billion, up 27%. Global services reached $1.8 billion, up 22%.
Even with strong numbers, the bar is set so high that good results do not always lift the stock. Shares fell about $30 pre-market, from the mid $530s toward $500.
SanDisk (SNDK)
SanDisk held its "In Focus" investor day, which moved the stock like an earnings event. Investor days deserve close attention because they can move shares as much as earnings do.
The company alleviated all demand fears by issuing a bullish long-term financial model running through fiscal year 2030. Putting longer dates on demand paints a strong picture. Targets: revenue growth in the mid to high teens annually; non-GAAP gross margins around 80%; adjusted operating margins of 75%; adjusted free cash flow margins near 50%; and a commitment to return 100% of excess cash to shareholders after funding internal business investment. The stock rose pre-market. JP Morgan (JPM) added an overweight rating with a $22.50 target.
Workday (WDAY) and the Software Selloff
Workday (WDAY) was halted yesterday on news it is in talks with Silver Lake. Software has been beaten down for many months, left behind during this period. That kind of selloff eventually leads to valuation plays: investors take equity stakes in beaten-down names. The pattern showed up with Bill Ackman and Netflix (NFLX). Now Silver Lake is trying to take Workday (WDAY) private.
The stock surged about 18% to close near $206.40. Reports say private equity firm Silver Lake is in ongoing takeover talks to take the $43 billion enterprise software company private. The Workday move also lifted other software names like DocuSign (DOCU). The open question: will it go private?
Private equity is now looking at beaten-down software names for opportunity, a possible "SaaS apocalypse" turning into buyout targets. When stocks get sold off this hard, the next step is watching for investors to take stakes.
Reddit (RDDT) Joins the S&P 500
Reddit (RDDT) enters the S&P 500 before the open on August 18th, replacing Avalon Bay (AVB). Rocket Lab (RKLB) had been floated as a possible pick. Reddit becomes only the second pure-play social media company in the index, joining Meta Platforms (META). The little player in social media has been growing very well and posting strong numbers. The addition is a big deal that should spark interest and excite shareholders.
