Week ending August 15th, 2025
From Wall Street to Main Street
Highlights from the past week
Market / Macro Economic Summary Markets continued their upward trek as the Dow Jones led the way with a 1.7% weekly gain and the S&P 500 and Nasdaq followed with a 0.9% and 0.8% respectively. Last week's economic reports showed a mixed picture for inflation, offering a blend of relief and caution for investors. While the headline Consumer Price Index (CPI) remained steady at 2.7%, primarily due to falling gasoline prices, the core CPI, which excludes food and energy, rose to 3.1%. This increase was largely driven by rising services costs, including airfares and medical services, rather than the anticipated impact of tariffs. Additionally, a surge in wholesale prices raised concerns that businesses might begin passing on higher import costs to consumers. Despite these upticks, the overall inflation outlook remains manageable, and analysts believe the Federal Reserve may be poised to resume interest rate cuts in September, a possibility that could be confirmed by Fed Chair Powell's upcoming remarks at Jackson Hole this week. Markets might see a short-lived decline if Powell remains determined to keep the Federal Funds rate where they are. Company Specific / Micro Economic Summary Oklo (OKLO) Shares fell 4.53% in after-hours trading following its latest earnings report, reflecting investor concern over a larger-than-expected loss. The nuclear energy company reported an earnings per share (EPS) of -$0.18, missing the consensus analyst estimate of -$0.12 by a significant margin. As a pre-revenue company, Oklo's loss before income taxes in the second quarter was $24.3 million. Looking forward, management remains focused on development, with CEO Jake DeWitt highlighting federal actions accelerating momentum behind advanced nuclear technologies and stating, "We're starting today's update by highlighting a wave of federal actions that are accelerating momentum behind advanced nuclear technologies and how Oklo is extremely well positioned to benefit." Cisco (CSCO) Shares were down 1.5% as its latest quarterly report surpassed analyst expectations with strong revenue growth and a positive outlook, despite a complex economic environment. For its fiscal fourth quarter, the company reported adjusted earnings per share of 99 cents on $14.67 billion in revenue, both slightly beating estimates. Revenue for the quarter rose 7.6% year-over-year. Management also provided an optimistic forecast for the upcoming quarter and the full fiscal year, aligning closely with analyst expectations. A key driver of this performance was a 12% increase in networking revenue, while security revenue grew 9% but fell short of estimates. The report also highlighted Cisco's growing involvement in artificial intelligence (AI), with over $2 billion in AI infrastructure orders for the fiscal year, more than double its initial goal. CEO Chuck Robbins emphasized the company's commitment to AI, stating he does not believe it is a "fleeting trend." John Deere (DE) Stock declined by 7.95% in pre-market trading, despite the company's fiscal third-quarter results exceeding analyst expectations. The company reported an earnings per share (EPS) of $4.75, which was notably higher than the estimated $4.62. Revenue also came in strong at $10.6 billion, surpassing the consensus forecast of $10.35 billion. However, this positive performance was overshadowed by a 9% year-over-year decline in net sales and a reduced full-year profit outlook. CEO John May stated that the company has "matched production to retail demand, enabling our company and dealers to respond swiftly to market shifts and customer needs," indicating a focus on inventory management amid a challenging market. Applied Materials (AMAT) Shares experienced a sharp decline of over 10% following the release of its latest earnings report, a reaction driven by a weak outlook despite a beat on current quarter results. The company reported adjusted earnings per share (EPS) of $2.48, surpassing the consensus estimate of $2.36, and revenue of $7.3 billion, which also exceeded the forecast of $7.22 billion. However, investor concerns were focused on management's guidance for the next quarter, which projected lower revenue and profit due to "digestion of capacity in China" and "non-linear demand from leading-edge customers." Highlighting the challenges ahead, CEO Gary Dickerson noted, "We are currently operating in a dynamic macroeconomic and policy environment, which is creating increased uncertainty and lower visibility in the near term, including for our China business." Parting Thoughts We welcome an opportunity to discuss the above detail and wish you much success in the rest of your week! Regards, Erick J. Palacios, MBA Wealth/Fiduciary Advisor