Overnight Developments#

News flow between the closing bell and the Tokyo open skewed dovish on rates and bullish on AI spending:

Monetary Policy: Reuters reports that “multiple” Fed officials are ready to endorse a 25-basis-point cut should core PCE drop below 2.5 % in next week’s release. Meanwhile, Reserve Bank of Australia Governor Bullock hinted at an “openness to policy easing” if wage growth continues to stall.
Trump Fed Pick: Bloomberg notes bipartisan pushback is limited, raising odds Miran is seated before the 18 September FOMC, effectively adding another dovish vote.
GPT-5 Roll-Out: Microsoft confirmed overnight that GPT-5 will be deployed across Copilot, Azure OpenAI Service and Dynamics 365 in the next 30 days. UBS estimates the model could lift Azure growth by 200–250 basis points in the second half.
European Earnings: Siemens, A.P. Møller-Mærsk and LVMH all topped consensus EPS, driving cyclical European stocks sharply higher and offering a constructive read-through for U.S. industrials at the open.

Macro Analysis#

Economic Indicators to Watch#

Investors have a full calendar between now and next Friday’s triple-witching expiration:
The University of Michigan Sentiment Survey (10:00 a.m. ET today) will offer insight into whether household inflation expectations finally broke lower after June’s energy spike faded. Consensus sees the one-year inflation gauge dropping to 3.0 % from 3.3 %.

Next Tuesday brings NFIB Small-Business Optimism (look for a slight uptick to 91.5) and Wednesday delivers July CPI. Economists tracked by Dow Jones expect headline CPI to rise 0.2 % month-over-month, leaving the annual rate at 3.1 %, but any print north of 3.3 % risks undoing the Miran-driven rally in duration.

Finally, the Treasury will auction $44 billion in 10-year notes on Wednesday—closely watched after this week’s soft 3-year and 30-year sales pushed the 10-year yield back toward 4.40 %.

Global and Geopolitical Factors#

Trade policy remains the wild card. While Beijing has refrained from immediate retaliation to the White House’s expanded semiconductor tariff blueprint, the Commerce Ministry reiterated it “reserves every right” to respond. Semiconductor supply-chain executives tell Monexa AI they expect any Chinese action to target niche chemicals rather than finished wafers, but even a short-lived materials squeeze could add cost pressure to foundries such as TSMC and Samsung—a tail risk for chip-heavy benchmarks like the NASDAQ.

Elsewhere, the International Energy Agency trimmed its 2025 global oil-demand forecast by 130 kbd citing “persistent efficiency gains,” offsetting OPEC’s more bullish stance. That divergence muted crude’s reaction to yesterday’s larger-than-expected 5.2 mb U.S. inventory draw.

Sector Analysis#

Sector Performance Snapshot#

Sector	% Change (Close)
Consumer Defensive	+0.42 %
Real Estate	+0.32 %
Utilities	+0.30 %
Healthcare	–0.33 %
Consumer Cyclical	–0.65 %
Industrials	–0.68 %
Basic Materials	–0.70 %
Technology	–0.71 %
Communication Services	–0.90 %
Financial Services	–1.22 %
Energy	–2.17 %

Consumer Defensive’s out-performance marks the third straight session that staples have led, consistent with a rotation into lower-beta exposure while the market digests earnings volatility. PEP gained +2.22 %, its best day since March, after confirming a mid-single-digit price hike for its North American beverages in Q3.

Utilities also drew safe-haven flows; NEE added +2.89 % as investors cheered Florida regulators’ green light for a 1.8-GW solar expansion plan. In a similar vein, Atmos Energy’s +3.63 % pop suggests yield-oriented accounts are already positioning for lower policy rates.

By contrast, Energy suffered a second consecutive drawdown. A –8.75 % collapse in TPL on concerns over groundwater limits in the Permian overshadowed APA (+7.75 %) and ENPH (+5.58 %), each buoyed by idiosyncratic catalysts.

Company-Specific Insights#

Earnings and Key Movers#

The micro backdrop remains in flux, with a half-dozen mid-caps reporting after yesterday’s close and another wave slated for the pre-market chute.

Healthcare & Biotech: YMAB stunned the tape with a +103 % intraday move after posting narrower-than-expected Q2 losses and unveiling progress on its ¹⁷⁷Lu-omburtamab candidate for glioblastoma. Management guided to a cash runway through 2028—a meaningful de-risking event. Elsewhere, PODD spiked +9.47 % after CMS published a favorable reimbursement rate for the Omnipod 5 patch pump.

Technology: The after-hours focus was squarely on OpenAI’s GPT-5 deployment. MSFT shares are indicated up roughly +0.6 % pre-bell, recouping half of yesterday’s –0.78 % slide, as Street models scramble to capture incremental Azure usage. In stark contrast, FTNT faces additional downgrades this morning following its guidance cut; Citi reduced its target to $92 from $127, warning that decelerating secure-SD-WAN bookings could persist into 2026.

Media & Streaming: FUBO confirmed overnight that Q2 North American revenue exceeded $365 million versus prior guidance of $337–347 million, yet the stock settled –0.94 % as operating-cash-flow burn remains sticky. Investors will parse management commentary on advertising’s scatter market at 8:00 a.m. ET.

Energy: COP impressed with a top-line beat and better-than-expected cash return—$2.2 billion via dividends and buybacks—even as WTI hovered near $82. The stock, off –0.55 % yesterday in sympathy with the group, trades at just 6.7× next-twelve-month EBITDA, well below its eight-year median of 8.3×.

Consumer Discretionary: ABNB cratered –8.02 % after reporting a 17 % year-on-year surge in active listings—good for homeowners, bad for ADRs. Management’s softer-than-expected EBITDA margin guide adds to concerns that supply growth is pressuring take-rate.

Pre-Market Catalysts To Watch#

– Tempus AI (TEM reports before the open. Street seat-belt checks are in place for EPS –$0.18 on $298 million revenue; with shares up +5.8 % yesterday, a miss could invite profit-taking.

– Canopy Growth (CGC also prints. Jefferies warns that any slip in gross-margin progress could reignite funding fears.

– iRobot (IRBT will hold an investor call at 9:00 a.m. ET to discuss yesterday’s narrower loss and long-range gross-margin target; investors want clarity on inventory rightsizing ahead of the holiday cycle.

Conclusion#

Morning Recap and Outlook#

The cross-currents heading into Friday’s open can be distilled to three actionable themes:

Dovish Policy Drift: Stephen Miran’s likely confirmation to the Fed tilts the near-term policy outlook more accommodative. A cooler University of Michigan inflation print would cement an equity-friendly rate narrative, boding well for long-duration growth assets.
AI-Led Earnings Revisions: GPT-5’s commercial launch reignites the “AI spend” trade just as investors question software’s pricing power post-Fortinet. Keep an eye on MSFT, AMD and hyperscaler capex guides for confirmation.
Defensive Rotation: Staples and utilities continue to absorb flows as macro uncertainty lingers. Names such as PEP, COST and regulated utilities offer relative shelter, but rich valuations limit upside—stock selection is critical.

Against that backdrop, futures signal a flat-to-slightly-green open, but expect volatility around 10:00 a.m. ET when sentiment data cross the wires. For now, buy-the-dip in AI beneficiaries seems intact, yet the market’s patience for execution missteps—especially in software security and consumer discretionary—has thinned. Stay nimble, lean on quality balance sheets, and watch dollar liquidity: the greenback’s gentle slide this week, if extended, could give cyclicals a late-summer lifeline.

Key Takeaways for Investors
– The Fed’s composition is turning incrementally dovish, nudging policy-sensitive sectors higher.
– GPT-5 deployment is a genuine, quantifiable catalyst for cloud revenues; position accordingly.
– Sector rotation favors defensives and idiosyncratic winners in Healthcare; energy remains a stock-picker’s game.
– Monitor upcoming CPI and Treasury auctions—the bond market, not earnings, will shape August’s narrative.
– Tactical positions: overweight AI infrastructure and consumer staples, underweight high-beta financials until breadth improves.