US equity futures were mixed on Monday as attention turns to the upcoming earnings.
The consumer is the real test this week. Friday’s preliminary University of Michigan sentiment reading dropped to 51 from 55.2 in July, badly missing forecasts, while July retail sales posted their steepest monthly decline in over a year.
That puts real weight on this week’s retail earnings from Walmart, Target, Home Depot, and Lowe’s, where the market wants proof the consumer is holding up.
On monetary policy, traders have pulled the odds of a September rate hike back, with a 70% hold probability. However, a hike is still expected later this year. Wednesday’s FOMC minutes should show how split the committee actually is.
Today’s sharpest signal sits in memory and storage. SanDisk, Western Digital, Micron and Seagate are all firmer on an upbeat sentiment for the industry since Sandisk’s investor day last week. The latter’s stock is up significantly, as Micron exceeded the USD 1000 bar. Broadcom is only fractionally higher, still digesting Friday’s sell-off and now facing scrutiny after Bank of America flagged that its AI chip-financing vehicle could carry up to USD 370 billion in debt by 2029 against USD 29 billion of disclosed exposure. The financing behind the AI build-out remains as much of a focus as the demand story itself.
This week’s retail earnings and Wednesday’s Fed minutes will decide the market’s direction. Our focus remains on the strongest stocks in the strongest sectors, and we are watching the S&P 500 for confirmation the uptrend stays intact. Until the consumer data or the Fed genuinely turns, we see no reason to fight the trend, though semiconductor leadership is one area we are watching closely for strength confirmation.
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