Market Review: August 20, 2026

Closing Recap

Thursday, August 20, 2026

US equity futures were pretty much flat overnight with no big excitement to push investors in either direction…until WMT missed its comp store sales expectations and posted its weakest sales growth in 6 years, then the sellers emerged and even dragged down QQQ again. WMT was having its worst day since 2022, but traders just needed the spark to put away the buy tickets more broadly. By mid-morning, stocks remained in the red with breadth favoring decliners by 15:8 as small caps underperformed with IWM (-0.96%) versus SPY (-0.30%) and QQQ (-0.49%). SPY breadth favored decliners by 10:9 while QQQ breadth favored decliners by 11:9. On a sector basis, Energy (+1.33%), Materials (+0.55%) and Technology (+0.48%) were outperformers among S&P sector ETFs, while the Wal-Mart effect had Health Care (-0.89%), Consumer Staples (-1.42%) and Consumer Discretionary (-1.62%) pacing the underperformers with 6 sectors gaining versus 5 declining.

In sentiment today, the weekly AAII bull-bear spread dipped to -4.4% this week from -3.2% last week with bulls rising from 34.7% to 35.5% but bears climbing from 37.9% to 39.9%. On the Fear and Greed Index scale, though, we remained in the Greed range at 57/100 versus last week’s 66 (Greed), but up from last month’s 37 (Fear). As earnings wind down, investors will be searching for the next catalyst and likely will turn back to the economic data and Fed speculation. Sentiment likely will remain mixed as uncertainty rises.

Heading into the final hour of trading, it was looking like buyers were on strike. The QQQ fell for a 5^th straight day and Smallcaps led the declines in what was a fairly broad pullback.  Breadth remained solidly negative at just over 2:1 decliners and only 2 sector ETF’s were in the green: Real Estate and Energy. No major earnings are expected so tomorrow it could be a classic summer Friday.

• Philadelphia Fed business conditions for August surges to 47.4, topping consensus 25.0 and vs July 41.4, while prices paid index (inflation) for August falls to 40.9 vs July 53.9; new orders index August 30.1 vs July 37.0; employment index August 27.9 (highest since April 2022) vs July 10.0; six-month business conditions August 73.6 vs July 34.4; Philadelphia Fed six-month capital expenditures outlook August 48.2 vs July 30.1.
• July leading economic indicators (LEI) rose +0.2% vs. consensus +0.1% while June leading economic indicators revised to (-0.1%).

• WTI crude gained overnight to extend yesterday’s rise as no clear future for control over the Strait of Hormuz has been established and fighting continues in pockets across the region. Absent specific OPEC action, the ongoing uncertainty and seemingly endless conflict likely will keep a floor under oil for now. October WTI crude settled +$2.44/bbl, or +2.89%, at $86.83.

• Sporting Goods retail: shares of DKS, NKE both under pressure after British sportswear and fashion retailer JD Sports (JDSPY) cut its profit outlook after a slump in Q2 sales in its key North American market; said Q2 comp sales fell (-3.1%) in the 13 weeks to August 1, having fallen (-2.5%) in its first quarter. They were down (-6.8%) in North America and (-2.7%) lower in Europe; also highlighted a "highly promotional" market.
• Consumer Products: in beauty sector, a day after EL shares jumped on earnings and raised guidance, shares of COTY decline today after Q4 adj EPS loss (-$0.02)misses est. loss (-$0.01) as Q4 revs rose only 1% y/y to $1.27B but did tops est. $1.19B; guides Q1 EPS $0.11-$0.13 below est. $0.14 and guided Q1 revenue to decline by a low- to mid-single-digit percentage on a like-for-like basis and announced CFO change.
• Online retail: BABA posted a 75% fall in profits for the June quarter as AI spending weighed on the tech giant’s results. Capital expenditure was up 75% to 67.7 billion Chinese yuan ($10 billion), primarily driven by uneven timing of customer purchases, an increase in CPU-compute capacity and higher prices across a broad range of chip components; Alibaba Cloud external revenue accelerated 45% to RMB48.44B.
• Off price/discount retail: TJX was downgraded to Neutral from Buy at Citi, which flags a disappointing Marmaxx Q2 comparable sales gain of just 1% as a sign of fashion execution risk at the stock’s current multiple

• Construction & Engineering: AMTM won a $974 million Center Maintenance, Operations, and Engineering II contract at NASA’s Langley Research Center in Virginia as work covers operations, maintenance, and engineering support for key research infrastructure such as wind tunnels, labs, and utilities.
• Chemicals sector: NDSN reported Q3 EPS $3.25 above est. $3.09 while revs rose 10% y/y to $818M vs. est. $779.4M; Q3 EBITDA increased 10% to $262M; raises FY26 EPS view to $11.80-$12.00 from prior $11.30-$11.80 (est. $11.59) and boosts FY26 rev view to $3.035B-$3.075B, from $2.93B-$3.01B prior (est. $2.98B).
• Energy sector: WHD was downgraded to Neutral from Buy at Citigroup, but raised tgt to $75 from $67 as the company cited valuation for the downgrade, saying the stock’s 55% rally in 2026 limits further upside; RIG announces $300M contract for Ultra-deepwater drillship; contract expected to commence Q1 2027 with value of about $300M. Contract includes two years of priced options continuing work in India to early 2031
• Industrials metal sector: steel (STLD, NUE) and aluminum stocks (CENX) fell late Wednesday and carried over to today on reports the U.S. is likely to lower tariffs on Canadian Steel, Aluminum and autos as part of a trade framework being devised by the nations. The WSJ reported although the deal hasn’t been completed, the U.S. is considering a plan to lower tariffs on Steel and Aluminum from 50% to 25%, and decrease top-line tariffs on automobiles from 25% to 15%.

• Bank sector: more weakness in large cap banks (C, GS, MS, BAC, WFC, JPM) coming a day after BTIG’s strategist Jonathan Krinsky noted the BKX had risen for 13 consecutive weeks, the longest such streak on record, and warned that the group could be vulnerable to a pullback as September approached. Today, Raymond James CIO (Larry Adam) noted the financial sector was trading at about 2.3 times book value, near its highest level in the past 20 years. He highlighted the sector’s price-to-book ratio in a chart showing its valuation from 2006 through 2026. The ratio had climbed from lows of around 0.6 times during the global financial crisis to above 2 times in 2025 and 2026. The sector’s price-to-book ratio had reached roughly 2.3 times, putting it near the upper end of its two-decade historical range.
• Brokers & Exchanges: VIRT shares active after Bloomberg reported this morning that the company noted to explore $3.5B plus sale of Brokerage unit; BULL shares rise as Q2 adj EPS $0.12 topped consensus est. $0.05; Q2 revs rise 51% y/y to $198.8M vs. est. $183M; Q2 adj operating profit rose to $62.6M with 31.5% margin; said Q2 customer assets grew 79% y/y to $28.5B; registered users increased 13% to 28.2M.
• In Insurance sector: PGR was upgraded to Outperform, and ALL downgraded to Underperform at KBW Inc saying both are significantly outperforming their longer-term combined ratio targets, so it thinks investors will increasingly base their valuations on normalized earnings. In that context, KBW expects both ALL’s recently accelerating and PGR’s recently decelerating Y/ Y personal Auto PIF growth rates to stabilize soon, which should boost PGR’s multiple and pressure ALL’s. Separately, ALL announces July estimated catastrophe losses of $682M, $539M after-tax.

• MRK was upgraded to Overweight from Equal Weight at Morgan Stanley and raised tgt to $179 from $116 as the recent success for Merck pipeline cancer drugs leads the firm to raise its estimates, as now projects flat outer-year revenue for the company through the Keytruda patent cliff.
• MRNA and MRK shares pulling back/profit taking after shares surged around 177% on Wednesday on positive cancer therapy vaccine data with MRK that lifted the whole mRNA complex.
• RARE secured FDA accelerated approval for Genglycos, a gene therapy treating glycogen storage disease type Ia, with a $2.7M list price coming in roughly 33% above analyst expectations.

• Telecom/Tower sector: AMT and CCI were both upgraded to Overweight from Equal Weight in Towers at Barclays saying they turn positive on Towers given decade-low valuations combined with multiple catalysts that could cause an immediate Re-rating of shares. Barclays believes the pace of AT&T’s deployment in 2027 will be the biggest swing factor in American Tower’s domestic revenue in 2027. The company’s Europe and Africa exposure are also contributing to its above-peer growth in 2026, and this will continue in 2027.

• The data-center sector rebounds after recent pullbacks as backlash has been intensifying stateside as Pennsylvania became the latest state to impose strict rules on developers Tuesday (followed restrictions from Texas and New York recently), which has weighed heavily on IPPs (NRG, VST), HPC/data centers (CIFR, WULF, IREN, HUT) and others, but