Core Viewpoint - Small-cap U.S. stocks may be experiencing a resurgence after a prolonged period of underperformance, with recent data indicating potential positive trends for small-cap investors [1] Performance Summary - The iShares Russell 2000 ETF (IWM) has increased by 6.3% over the past month, compared to a 2% gain in the SPDR S&P 500 ETF Trust (SPY) [2] - Year-to-date, SPY is up approximately 10%, while IWM has advanced about 5.7% [2] - Early-year weakness in small caps was largely attributed to President Trump's tariff announcements, which adversely affected smaller companies [2] Market Dynamics - Bank of America's client flow data indicates near-record demand for small-cap stocks, with clients purchasing $1.5 billion worth of small and micro-cap stocks and ETFs in the past week [3] - The Federal Reserve is expected to cut interest rates in September, with a 97.6% probability of a 25-basis point cut, which could benefit small-cap stocks and ETFs [4] Earnings Analysis - For the small-cap S&P 600 index, Q2 earnings are up 8.6% year-over-year, with revenues increasing by 3.4% [5] - 61.1% of small-cap companies beat EPS estimates, and 72.4% exceeded revenue estimates [5] - In comparison, S&P 500 companies reported a 12.4% increase in earnings and 6.0% higher revenues, with 79.9% beating EPS estimates [6] Valuation Insights - The Russell 2000 is currently trading at a P/E ratio of 32.75, up from 27.79 a year ago, indicating that small caps are not cheap and may be overvalued [8][9] - The Nasdaq 100 Index has a P/E ratio of 32.97, while the S&P 500 Index is at 25.15, reflecting a relative valuation perspective [9] Economic Context - U.S. GDP grew by 3.3% in Q2 2025, rebounding from a 0.5% decline in Q1, driven by stronger consumer spending and private investment [10] - Job openings fell to 7.181 million in July, below expectations, which may signal potential weakness in the labor market [11] Investment Opportunities - Value and blend small-cap ETFs have outperformed growth ETFs over the past month, with notable performers including: - Invesco S&P SmallCap 600 Pure Value ETF (RZV) – Up 11.0% - Invesco S&P SmallCap Value with Momentum ETF (XSVM) – Up 9.9% - iShares US Small Cap Value Factor ETF (SVAL) – Up 9.1% [12]

Core Insights - Hewlett Packard Enterprise (HPE) reported revenue of $9.14 billion for the quarter ended July 2025, reflecting an 18.5% increase year-over-year [1] - The earnings per share (EPS) was $0.44, down from $0.50 in the same quarter last year, but exceeded the consensus estimate of $0.43 [1] - The reported revenue surpassed the Zacks Consensus Estimate of $8.78 billion, resulting in a revenue surprise of +4.07% [1] Financial Performance Metrics - Revenue from Financial Services was $886 million, exceeding the average estimate of $870.59 million, with a year-over-year change of +0.8% [4] - Revenue from Corporate Investments and other was $194 million, slightly below the average estimate of $199.88 million, showing a significant year-over-year decline of -26% [4] - Revenue from Hybrid Cloud reached $1.48 billion, compared to the estimated $1.51 billion, marking a +14.2% increase year-over-year [4] - Server revenue was reported at $4.94 billion, surpassing the average estimate of $4.67 billion, with a year-over-year growth of +15.4% [4] - The elimination of intersegment net revenue and other was reported at -$98 million, slightly better than the estimated -$99.71 million, but showed a year-over-year decline of -25.8% [4] Earnings from Operations - Earnings from Operations in Financial Services were $88 million, exceeding the average estimate of $79.73 million [4] - Earnings from Operations in Hybrid Cloud were $87 million, below the average estimate of $90.8 million [4] - Earnings from Operations in Server were $317 million, slightly below the average estimate of $324.32 million [4] - Earnings from Operations in Corporate Investments and other were reported at -$14 million, in line with the average estimate of -$14.02 million [4] Stock Performance - HPE shares have returned +14.1% over the past month, outperforming the Zacks S&P 500 composite's +3% change [3] - The stock currently holds a Zacks Rank 2 (Buy), indicating potential for outperformance in the near term [3]

Eagle uh here on results. Gabrielle Fon Rouge has the results. Gabby.>> Yeah, American Eagle reporting revenues of um hold on, we still have it coming in now. Uh 1.28% billion on estimates of 1.24% billion and that's a big EPS beat 45 cents on 21 cents. Um so, um this has been a interesting quarter for American Eagle.It had a huge uh marketing campaign with Sydney Sweeney. Obviously, that had some blowback, but what the company said is that it's been their best to date. Um, something else that we're looking ...

Market Outlook & Earnings - The market is primarily driven by earnings, with raised earnings expectations leading to increased S&P targets for the current and subsequent years [3] - Corporates are demonstrating the ability to generate earnings and margins despite concerns about macro data and the labor market [4] - Earnings momentum is a key factor, with strong earnings performance in previous quarters suggesting a bullish market even amidst policy concerns [7] - The market's focus remains on the fundamentals of the corporate sector, particularly earnings growth [5] Future Growth Projections - Earnings growth for 2025 is projected to be 115%, exceeding previous expectations [4] - Earnings growth for 2026 is projected to be 134% [5] - By the end of 2026, the earnings increase is expected to be significant, with a potential 10% gain next year [16] - S&P target by the end of the year is 6400, possibly 6700, and 7400 by the end of next year [16] Risk Factors & Considerations - A primary risk is the potential decline in margin growth and free cash flow due to tariffs, which could impact the market's higher multiple regime [15] - Tariffs could negatively impact retail sector earnings, although recent retail earnings have exceeded expectations [9] - Bond yields globally could potentially trigger a 5-10% sell-off, which is considered a normal market fluctuation [17]

Market Reaction to Tariff Developments - The market had become increasingly comfortable navigating tariff-related uncertainty and believed fundamentals could survive even with tariffs [3] - Initial expectations of stocks soaring due to potential tariff relief were not met, with stocks declining and yields rising [2] - The market faces a "catch 22" situation, weighing the potential earnings boost from tariff removal against the loss of tariff-related revenue offsetting deficit numbers [5][6] Tariff Impact on Companies - Companies reported varying tariff impacts, with some mitigating more than feared, while others experienced delayed effects [6] - Some companies initially expecting significant tariff costs have revised their estimates downward [7] - Retailers are finding they can pass some tariff costs to consumers through price increases, contrary to initial expectations [9][10] - Tariff implementation is following a company-by-company path, making aggregate conclusions difficult [9][10] Future Outlook and Uncertainty - The market will continue navigating the ongoing tariff drama for the foreseeable future [10] - Removing tariffs raises questions about whether companies will roll back price increases for consumers, potentially spurring more spending and inflation [11] - Tariff discussions are reinvigorating uncertainty at a time when the market is trading at 25 times trailing earnings, making it sensitive to disruptive news flow [13] - A potential tariff drag on S&P 500 earnings could be as much as 5%, but this has been mitigated by tax reform measures [4]

Market Sentiment - Despite potential pullbacks and September's historical performance, the bull trend remains intact [2] - The market is not at an all-time high in terms of earnings, especially when considering the "MAG 7" stocks [3] - Upward revisions of earnings suggest a constructive outlook for the market [4][8] - Overall, the sentiment towards the market is positive, but subject to change based on future developments [11] Economic Indicators and Uncertainty - There is significant dispersion in GDP forecasts for the current quarter, ranging from 15% to 35% [8] - The second half of the year holds many questions, particularly regarding tariffs and their impact on consumers [10] - Unrecorded price increases add to the uncertainty surrounding the economic outlook [9] Valuation Metrics - Valuing stocks based on sales can be misleading; earnings are a more important metric [3][5] - Tech companies, particularly the "MAG 7," have high margins due to their business models and globalization [6] - Comparing tech companies to traditional industries like steel or auto companies can provide a misleading view of the market [7] Trade and Tariffs - The tariff development is likely to go to the Supreme Court and potentially back to Congress [4] - The Republican-controlled Senate's stance on tariffs will be a key factor [4][5] - The legality of tariffs and their impact on consumers remain significant concerns [10]

Financial Performance - Gap Inc reported second-quarter earnings of $0.57 per share, surpassing earnings estimates but falling short of revenue expectations at $3.73 billion [1] - The company is experiencing pressure from potential tariffs and weakness in its women's athletic wear subsidiary, Athleta, but steady performance from Banana Republic, Old Navy, and its namesake label is helping to manage costs [1] Stock Performance - Gap's shares have increased by 1.1% to $21.91 and are on track for their seventh win in eight sessions, marking a fourth consecutive weekly gain [2] - The stock is still recovering from a significant bear gap of 20.2% that occurred on May 30, and the 60-day moving average has shifted from resistance to support this week [2] Analyst Sentiment - Analysts are divided on Gap's outlook, with six out of 17 firms rating it a "buy" or better, while the rest recommend a "hold" [3] - Some firms, including Jefferies and Wells Fargo Securities, have issued bearish notes, while J.P. Morgan Securities and BofA Global Research have raised their price targets [3] Options Trading Activity - Options traders are showing a bearish sentiment today, with 14,000 puts traded, which is six times the typical volume for this time of day [4] - The weekly 8/29 21-strike put is a popular choice among traders, indicating new positions are being opened there [4]

Financial Projections - College football players are projected to earn $1.9 billion this season [1]

Combined, the world’s 10 highest-paid tennis players made an estimated $285 million over the past 12 months. https://t.co/mKsOMpkVZB https://t.co/eodc6iwEZS ...

Financial Projections - College football players are projected to earn $1.9 billion this season [1] Industry Overview - Report finds college football players' earnings [1]