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It’s been another week for the record books.
While stocks are under a little pressure today, the S&P 500 (^GSPC) closed at a record high on Thursday, marking the index’s 20th record close of the year.
Investors continue to show a desire to buy dips in the market, reasoning that the Fed is poised to slash interest rates in September and corporate earnings will be just fine.
That’s not to say investors won’t dump subpar stories.
Dell (DELL) and Marvell Technology (MRVL) are hot names on the Yahoo Finance trending ticker page for the wrong reasons.
Dell showed weakness in PCs in its most recent quarter, likely as it lost market share to rival HP (HPQ). Marvell Technology also served up softness in its key data center business. Guidance wasn’t great either.
Both stocks are getting drilled despite the Street being out in force defending the names.
Here’s what else is on my radar heading into the long holiday weekend:
The Fed and all its drama: The battle between President Trump and Fed governor Lisa Cook rages on into the holiday weekend. In the process, it sheds light on one of the biggest challenges the Fed will soon have to deal with: whether to cut rates in September. “The Fed is facing a troublesome and delicate policy dilemma this fall as there is potential that initiating another rate-cutting cycle next month prompts ‘runaway inflation’ like we saw in the 1970s,” Sevens Report Research founder Tom Essaye said. “At the same time, choosing to wait to cut rates in order to avoid such a resurgence in inflation could very well ‘break’ the labor market and tip the economy into a recession, sparking volatility across asset classes.”
Forget tariffs at your own risk: Caterpillar (CAT) said it now expects the net impact from tariffs to be $1.5 billion to $1.8 billion this year, up from a previous range of $1.3 billion to $1.5 billion. Gap (GAP) slashed its full-year profit margin guidance last night due to higher-than-expected tariff costs. Both stocks are getting hit today.
Is the tech trade waning? Marvell Technology is out with lackluster guidance. Dell is calling attention to weakness in traditional server and PC sales. These stocks are under pressure. This comes a day after Nvidia (NVDA) sold off because it didn’t beat Wall Street’s data center expectations.
Stock analysis: Gap
Another classic American brand has been visited by Trump, the tariff man.
Gap reported better-than-expected second quarter earnings on Thursday evening, powered again by its namesake division. The business has turned the corner amid more fashionable wares and frequent online marketing blitzes.
Expect a big denim push into the fall, Gap CEO Richard Dickson told me (video above).
Meanwhile, Old Navy continued its steady performance as consumers traded down from more mid-tier-priced department stores like Macy’s (M).
The long-struggling Banana Republic division showed signs of moving beyond an inflection point. Dickson credited better fits for men and women. The women’s business is leading the rebound, Dickson explained.
Dickson added that the upscale brand has finally begun its long-sought-after turnaround.
“Look, I’m very pleased with the progress that the brands are making, but we’ve got a lot more value creation coming, and I’m excited about the future,” Dickson said.
But the company took a more cautious approach to its full-year margin outlook amid more certainty on tariffs.
“These are circumstances we are all dealing with, but what we need to make sure of, particularly in our portfolio, is that we are not compromising the long-term integrity of our strategy. And our customer value proposition remains intact,” Dickson said.
The Street is taking a more cautious posture on Gap despite Dickson’s operational prowess leading to much-improved sales.
“With further mitigation expected in the fiscal year, management does not expect any incremental operating margin pressure from tariffs (on full year basis),” Citi analyst Paul Lejuez said. “However, pricing is now cited as a mitigation tool (it wasn’t previously), which leaves us cautious. Third quarter to date comps are seemingly at least as strong as 2Q at Gap and Old Navy, but margin headwinds from tariffs into the first half of 2025 limit EPS upside. We view risk/reward as balanced.”
Earnings estimates on Gap for this year and next have already begun to trend lower, according to Yahoo Finance data.
Brian Sozzi is Yahoo Finance’s Executive Editor and a member of Yahoo Finance’s editorial leadership team. Follow Sozzi on X @BrianSozzi, Instagram, and LinkedIn. Tips on stories? Email brian.sozzi@yahoofinance.com.
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