Morning Note

Trading Observations

• ADP numbers – Shows growth slowing, just 54,000 jobs in Aug

• After JOLTS and Beige book a Sept cut baked in, so unless very weak any reaction muted?

• Construction quits worth watching https://tinyurl.com/bde9s6mj [tinyurl.com]

• Though JPM clients most short bonds in a long time betting on higher rates https://tinyurl.com/48cs4y2t [tinyurl.com]

• CRDO higher on blowout should help the hyperscalers

• Still stuck in 6400-6500 range,  unlikely to break either way today

• Oscillators neutral but starting to work toward oversold

• II Bulls up to 55% from 51% (over 60 usually a headwind)... possibly more relevant than AAII

• There Bulls drop to 32% from 34% (bears up to 43%)

• Smalls and transports the two to keep an eye on https://tinyurl.com/5e6b3e9j [tinyurl.com]

• Christmas spending going to be less robust this year? https://tinyurl.com/5uwsazmk [tinyurl.com]

Futures

DOW -1

S&P +5

Nasdaq +24

Charts/Sentiment

Financials / Consumer / Healthcare

AEO - +25% - Sydney Sweeny and Travis Kelce weren’t cheap, but they look worth it. Stock was cheap, comps were negative, and now they aren’t. Execution important from here.

OSCR – Up 3% on solid guidance into a conference. Was up big yesterday too.

Baird on Banks – Fundamental updates coming next week at a big conference. They think risk/reward is tough here given recent strength and wouldn’t chase with fresh money.

CHWY – Baird reiterates buy on good sales and margins coming to earnings.

TROW – Up 8% after Goldman is taking a $1B stake.

CUBI – Down 4% on a $150M share offering.

DOLE – Down 9% on secondary offering pricing. Not a lot of demand for a 10x P/E fruit company is telling.

GAP - Gap Stores to Add Beauty Products Next Year -- WSJ

Technology

Citi Global TMT Day 2: am session (MCHP, ZS, TXN, ADSK, CMCSA, ADT, TER, ALAB, MSFT, VZ, CSGP, GLW, OS, KLAC, TDC, ALIT, SMCI, BOX, ANET, CHKP, ADP, HPE, FVRR, ADI, DT, NYT) .... keynote PANW CEO ... pm session (INTC, PTC, SIRI, G, CRTO, OLED, NICE, U, CWAN, CLS, GRAB, ONTO, VEEV, OUT, AKAM, ESTC, T, SOUN, TMUS, ASAN, LOGI, PEGA, SLAB, Softbank)

CRDO/AI bullish commentary: "Demand for Credo's reliable and power-efficient high-speed connectivity solutions continues to ramp as hyperscalers and data center operators accelerate investments in AI-driven infrastructure .... expansion into PCIe-based solutions for AI scale-up networks significantly broadens our TAM, and we are well-positioned to capitalize on the industry shift to 200 gig per lane scale-up solutions ... poised for contd success with a clear path for growth through fiscal '26 and beyond"

AAPL: iPhone event creeping closer, 9/9 @ 1pm ET .. Moffet upgrading to Neutral (from SELL)

AI WARS: DeepSeek is building a more advanced AI model and could release it by the end of the year (Bloomberg)

AI Semis: AVGO up tonight ... expect bullish update from Hock (also speaking at GS next week)

AMZN: +1.5% Related to SemiAnalysis article which hit ystdy - "While the market overplays the Cloud Crisis theme, we call for an AWS AI Resurgence". Link: https://semianalysis.com/2025/09/03/amazons-ai-resurgence-aws-anthropics-multi-gigawatt-trainium-expansion/ [semianalysis.com]

AMZN: testing new AI-powered agentic workplace software - will let companies design custom agents for business and team needs. Early users include BMW, Intuit, and Koch Industries

CIEN: +13% BEAT + RAISE; margins ahead - "With visibility well into fiscal year 2026, we are confident in the continued momentum of our business and remain focused on further expanding our operating leverage as we continue to grow."

CRM: -5.5% mixed print but lackluster checks, cRPO small beat while guide just inline/slight miss vs buyside expectations. Oper margins healhty. $20B Buyback (10% mkt cap); FCF looks weak and FY guide ok - FY26: Total Revs guided +8% y/y cc (vs prior ~8% y/y cc) – a raise at low-end in reported terms .... some question the durability of demand, especially with Agentforce ... lack of material upside to the op. margin guide (bumped to 34.1% vs. 34%)

DUOL: downgraded to Neutral at DA Davidson on decelerating user growth ... NOTHING NEW AS DATA HAS BEEN SAYING THIS FOR WEEKS/MONTHS

GTLB: -10% CFO departure and a conservative top-line guide raise questions about 2H growth algorithm .... Qrtr better but guided down Q3 slightly and did not flow any revenue beat to the FY guidance. Guide implies a big deceleration despite the acceleration seen in Q2

HPE: +3% raised full-yr sales/profit guidance thanks to AI networking orders. 2025 FCF guidance cut overshadowed solid sales across its key segments + FCF rebound seen next yr .... Analyst Day in October next catalyst + AI backlog healthy

META: Cleveland positive checks but yet to see details

NVDA: demand for Nvidia chips in China remains strong despite Beijing’s attempts to make tech firms buy from local semiconductor vendors (Chinese tech firms are closely watching to see if Washington approves a version of Blackwell for the China market) (Reuters)

SNOW: -1.8% lower after hours ... CRM sympathy + CFO change

STX/WDC: both sounded great at Citi ... contd upside momentum here

TSLA: says its Robotaxi app is now open to all users (Bloomberg) .... Musk shunned from upcoming Trump WH Tech dinner

*TEXAS INSTRUMENTS DOWN OVER 5% PREMARKET AFTER CITI CONFERENCE – Could see pressure on other semi analog names: ON, STM, ADI etc

Industrials 

AptarGroup (ATR) initiated overweight at KeyBanc; $220 PT

Atlas Copco upgraded to outperform from neutral at BNP Paribas Exane

Carlisle Cos. (CSL) launches new share buyback for up to 7.5M shares

Centuri Holdings (CTRI) 27.4M-share (all for holder) common stock offering at $19.60/share. Stock closed @ $20.55.

Leidos Holdings (LDOS) upgraded to outperform from sector perform at RBC Capital Markets; $210 PT

MasTec (MTZ) initiated outperform at Mizuho Securities; $215 PT

Middleby (MIDD) initiated outperform at Wolfe Research; $163 PT

NIO Inc (NIO) downgraded to hold from buy at Freedom Broker; $6.50 PT

Parker-Hannifin (PH) downgraded to hold from buy at Deutsche Bank; $809 PT

Primoris Services (PRIM) initiated neutral at Mizuho Securities; $112 PT

Quanta Services (PWR) initiated neutral at Mizuho Securities; $360 PT

Tesla (TSLA) Robotaxi app now available to all

Latest Media

$AFRM - From $50 to $160 to $9 to 78 (current)

Affirm’s (BNPL) business is working. (Is that really a good thing?)

We’re still out.