Market Monitor News August 22 BMO - Coty Crumbles, Powell Looms: Wall Street Cautious Amid Mixed Signals

Caution Prevails as Wall Street Eyes Powell

The market’s mood on Thursday could best be described as a cautious shuffle.

With the highly anticipated Jackson Hole speech from Fed Chair Jerome Powell on deck, investors were in no mood to gamble. The Dow and Nasdaq both dipped by 0.3%, reflecting a mix of macroeconomic unease and individual stock storylines that sent ripples across the board.

Coty’s Collapse Dominates Corporate Headlines

Let’s talk about Coty (COTY | −21.6%). The cosmetics company got absolutely hammered, shedding over a fifth of its value after guiding for a steep decline in comparable sales, 6% to 8% for the current quarter, versus the 2.6% dip analysts expected.

And it doesn’t stop there. Q4 (fiscal) sales are expected to fall 5%, while consensus had been banking on flat results.

The outlook delay for any meaningful sales or earnings growth until at least early 2026 spooked investors. Citi cut its rating to ‘hold’ and slashed the price target to $4.25.

Walmart Beats Sales But Stumbles on Earnings

Walmart (WMT | −4.49%) also found itself on the back foot. The retail giant upgraded its full-year forecast after a solid sales performance, yet earnings disappointed due to legal claims and one-time costs. The market wasn’t in a forgiving mood, dragging the stock just below $98.

Despite the drop, analysts weren’t overly bearish. Walmart’s proactive stance on absorbing import tariffs to limit price pressure on consumers was noted positively, but the sting of earnings volatility lingered.

Zoom Zooms After Hours

Zoom Video Communications (ZM | +5.1% after hours) bucked the trend with an earnings beat and upbeat guidance. Revenue rose 4.7% YoY to $1.217 billion, beating expectations.

CEO Eric Yuan sounded confident, highlighting the strongest revenue growth in 11 quarters and raising the full-year outlook on both revenue and profit. Notably, high-spending clients (>$100K) rose nearly 9% YoY.

The market liked what it heard, sending the stock over 5% higher after the close. That’s a rare tech win on a day where the sector has generally been under pressure.

Gilead and CVS Tangle Over HIV Drug Pricing

Gilead (GILD | −2.18%) lost ground after CVS Health declined to include its new HIV prevention injection, Yeztugo, on its reimbursement list. Despite being a convenient biannual treatment, the $28,000/year price tag may be a dealbreaker. Analysts are concerned about slow uptake if insurers push back.

It’s a clear reminder that even medical innovation can be sidelined by harsh commercial realities and in the U.S., pricing is everything.

Macroeconomic Picture: PMI Surprises, Jobless Claims Disappoint

If we shift to the bigger picture, there was no shortage of conflicting signals.

The August PMI data showed U.S. manufacturing accelerating at its fastest pace in three years — 55.2 for manufacturing and 55.4 composite. That’s well above expectations and suggests underlying strength in the economy.

But not all was rosy: weekly jobless claims rose more than expected to 235,000, while the Philadelphia Fed index fell into contraction territory (from 15.9 to -0.3). And then there’s inflation, services prices keep creeping higher, making that Fed 2% target look like wishful thinking.

Translation? The case for immediate rate cuts just got murkier. Market odds for a September cut dropped from over 90% a week ago to just 65% now.

What’s Next? All Eyes on Powell

All this leads to one thing: Powell’s Jackson Hole speech today. Will he lean dovish and acknowledge the economic slowdown and election-year pressure? Or will strong data keep him hawkish, warning that inflation is still too sticky to cut just yet?

The market is pricing in at least two rate cuts this year, but a surprise in tone could easily tilt that expectation. Traders, investors, and journalists are all tuning in.

Final Thoughts

Between Coty’s faceplant, Walmart’s earnings hiccup, and Fed policy guesswork, Thursday’s session was a mixed bag. For now, caution rules the street.

But once Powell steps up to the mic, we’ll either see relief or recoil and possibly both in a single trading session.

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Kristoff - ChartMill

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