AI Optimism and Corporate Actions Shape Stock Trading 08/01/2026

HOT stories for today

Market wrap:

• U.S. equities retreated from record highs on Wednesday as early-year market leaders lost momentum. The S&P 500 slipped 0.34% to close at 6,920.93, while the Dow Jones Industrial Average fell 466 points, or 0.94%, to 48,996.08. Both benchmarks had touched fresh all-time highs earlier in the session. The Nasdaq Composite bucked the trend, rising 0.16% to 23,584.27. Financials and energy, among the strongest performers at the start of 2026, led the declines, each sliding more than 1%. Major banks, including JPMorgan Chase, Bank of America, and Wells Fargo, ended lower, while Exxon Mobil, Chevron, and ConocoPhillips weighed on the energy sector.
• Oil prices also dropped after President Donald Trump said Venezuela’s interim authorities would transfer as much as 50 million barrels of crude to the U.S., stoking concerns about rising supply. Separately, weaker-than-expected U.S. job data added to the cautious tone. Since late 2025, investors have increasingly shifted toward cyclical and value stocks as doubts grew over how quickly some Big Tech companies can generate returns from heavy spending on artificial-intelligence infrastructure. That rotation has helped the Dow outperform both the S&P 500 and the Nasdaq in recent months.

Big Tech Sees Valuation Reset as AI Bets Start to Pay Off

• Valuations across Big Tech have compressed in recent months, driven more by rising earnings expectations than by falling share prices, underscoring the market’s shifting view of artificial-intelligence spending. Forward price-to-earnings ratios for the S&P 500’s information technology sector have dropped to about 26 from 31.8 at the end of October, according to LSEG data, even as sector prices are down only about 4%. The forward multiple for the broader S&P 500 has eased to roughly 21.9 from 23.3. The decline comes despite months of headlines focused on weakness in megacap tech stocks.
• Since late October, the tech sector has lagged the broader market, but analysts have steadily lifted profit forecasts,  particularly for companies most exposed to AI infrastructure, data centers, and semiconductor demand. Upward revisions to earnings estimates have been especially pronounced among chipmakers and AI-linked hardware suppliers, where demand for accelerators, memory and networking gear continues to exceed expectations. In several cases, those revisions have more than offset share-price declines, pulling valuation multiples sharply lower. The pattern highlights a key shift since late 2025: investors are no longer rewarding AI spending on hype alone, but on evidence of monetization and margin expansion. As a result, Big Tech’s recent derating reflects improving fundamentals rather than a broad loss of confidence — even as scrutiny around the pace and returns of AI investment intensifies.

Stocks on the move:

• Mobileye (MBLY): Shares jumped about 11% after the self-driving technology company said it would acquire humanoid robotics maker Mentee for $900 million.
• GameStop (GME): The stock rose 2% after the retailer detailed a compensation package for Chief Executive Officer Ryan Cohen that includes targets to grow the company into a $100 billion business.
• Strategy (MSTR): Shares of the bitcoin-treasury firm climbed 5% after MSCI abandoned plans to exclude digital-asset treasury companies from its indexes.
• Chevron (CVX): The energy major gained about 1% after the Financial Times reported the company is preparing a bid for some of Lukoil’s assets alongside private-equity firm Quantum Capital.

Watchlist: MBLY, STZ, NVDA, SNDK, MU, CVX, JPM, AAPL, TSLA

Key Economic Events Today:

EST time

08:30 am: USD Unemployment Change
08:30 am: USD Trade Balance
10:00 am: USD Final Wholesale Inventories
03:00 pm: USD Consumer Credit



Earnings

BMO ( Before Market Open): RPM International (RPM), TD Synnex (SNX), Acuity INC (AZYI)
AMC (After Market Close): WD-40 Company (WDFC), Tilary Brands (TLRY)



The TEFS Analyst team wishes you a successful day!