Tuesday brought a busy mix of corporate earnings, economic reports and major financing developments as investors weighed signs of weakness among U.S. consumers against continued enormous spending on artificial intelligence.
Dick’s Sporting Goods delivered one of the day’s biggest corporate surprises, while Nvidia remained at the center of Wall Street’s attention ahead of its closely watched earnings report. New housing and consumer-confidence figures also provided fresh evidence that high borrowing costs and inflation remain significant challenges for American households.
Dick’s Sporting Goods Cuts Forecast as Foot Locker Struggles
Shares of Dick’s Sporting Goods plunged after the company reported weaker-than-expected second-quarter results and reduced its outlook for the year.
Dick’s reported quarterly net sales of $5.59 billion, below the approximately $5.65 billion analysts had expected. Adjusted earnings came in at $3.53 per share, compared with expectations of about $3.76.
The company lowered its full-year adjusted earnings forecast to between $11 and $12 per share and now expects annual sales of $21.9 billion to $22.2 billion.
A major problem has emerged at Foot Locker, which Dick’s acquired for about $2.4 billion. Management said older sneaker styles have not been selling as well as expected, forcing retailers to discount excess inventory.
Dick’s now expects Foot Locker comparable sales for the year to range from flat to a decline of 2%.
The warning spread beyond Dick’s. Shares of several athletic footwear companies, including Nike, Adidas, Puma and On Holding, fell as investors considered whether weaker sneaker demand could represent a broader industry problem.
Nvidia Earnings Could Set the Direction for the AI Trade
Although Nvidia does not report its latest quarterly results until Wednesday, the company was arguably the most closely watched stock on Wall Street Tuesday.
Analysts surveyed by LSEG expect Nvidia’s second-quarter revenue to nearly double from a year earlier to approximately $92.18 billion. Investors will be watching not only revenue and earnings, but also demand for Nvidia’s Blackwell processors and the transition to its next-generation Vera Rubin chips.
Vera Rubin shipments are expected to begin this autumn.
There is also growing attention on the enormous amount of financing behind the AI infrastructure boom. Major technology companies are expected to spend more than $730 billion this year on data centers and related infrastructure.
Nvidia has also become increasingly involved in financing the AI ecosystem itself. Reuters reported that the company recently helped arrange $500 billion in financing for customers building AI infrastructure and agreed to guarantee as much as $105 billion connected to OpenAI’s planned Ohio data-center lease.
Options markets are pricing in the possibility of roughly a 5.4% move in Nvidia shares following the earnings announcement, representing a potential swing of approximately $280 billion in market value.
U.S. Consumer Confidence Falls to Seven-Month Low
A new economic report Tuesday showed American consumers becoming increasingly nervous about the months ahead.
The Conference Board’s Consumer Confidence Index fell to 89.4 in August from a revised 90.2 in July. That was the lowest reading since January and below economists’ expectations.
The decline was driven primarily by worsening expectations about future business conditions and the labor market.
Consumers also expect inflation to remain elevated. Survey respondents projected prices would increase 5.8% over the next 12 months, up from an expectation of 5.6% in July.
The figures are important for businesses because consumer spending accounts for a large portion of U.S. economic activity. If households become increasingly concerned about jobs, incomes and prices, discretionary spending could weaken.
New Home Sales Drop Sharply
Housing provided another sign of economic pressure.
Sales of newly built single-family homes dropped 10.5% in July to a seasonally adjusted annual rate of 607,000 homes, according to government figures released Tuesday. That was the lowest level since January and below the 620,000 pace economists had expected.
The median price of a new home fell to $393,800, its lowest level in four years.
Mortgage rates remain one of the industry’s biggest problems. The average rate for a 30-year fixed mortgage was recently around 6.77%, making monthly payments substantially more expensive for buyers.
Only 5.2% of consumers surveyed by the Conference Board said they intended to purchase a home within the next six months, down from 6.5% in July.
Alibaba Raises $10.2 Billion for Artificial Intelligence
Alibaba is making another enormous bet on artificial intelligence.
The Chinese technology and e-commerce company launched a HK$80 billion, or approximately $10.2 billion, share placement to finance AI development. The company says the proceeds will go toward its full AI technology stack, including chips, computing infrastructure and AI models.
The offering represents the largest primary follow-on offering ever undertaken by a Hong Kong-listed company.
Alibaba Chairman Joe Tsai purchased another 720,000 Alibaba shares Tuesday for approximately HK$82 million. CEO Eddie Wu has also been buying shares, with the two executives acquiring more than HK$200 million worth over the past two days.
The purchases could be viewed as a signal of management confidence following the large discounted share sale.
Woodside Profit Rises as Company Pulls Back From Clean Energy Spending
Australian energy giant Woodside Energy reported a 7% increase in first-half underlying net profit to $1.33 billion.
At the same time, the company announced a major change in strategy.
Woodside abandoned plans to spend $5 billion on clean-energy projects by 2030 and dropped a longer-term Scope 3 emissions target as it shifts its focus toward its core oil and natural gas operations.
The company declared an interim dividend of 57 cents per share, up from 53 cents a year earlier, and maintained its 2026 production forecast of 174 million to 185 million barrels of oil equivalent.
Woodside’s decision reflects a broader reassessment taking place among some large energy companies as high energy prices and concerns about energy security increase the attractiveness of traditional oil and gas investments.
German Business Confidence Shows Signs of Recovery
There was somewhat better economic news from Europe.
Germany’s Ifo business climate index climbed to 88.8 in August from 86.7 in July, significantly better than the 87.2 economists had expected.
German GDP also grew 0.3% during the second quarter compared with the previous quarter, slightly stronger than an earlier estimate of 0.2%.
Business confidence improved across all sectors covered by the Ifo survey, providing another indication that Europe’s largest economy may finally be emerging from a prolonged period of weak growth.
Wall Street Watches Earnings and Inflation
U.S. stocks were modestly higher Tuesday afternoon as technology shares recovered from Monday’s decline. Nvidia, Meta and Micron were among the technology stocks trading higher, while Advanced Micro Devices climbed after receiving an analyst upgrade.
Dick’s Sporting Goods was the major exception, falling sharply following its earnings report and forecast reduction.
The next 24 hours could be considerably more important for markets.
Intuit is scheduled to report earnings after Tuesday’s closing bell, while Nvidia reports Wednesday. Investors will also receive the Federal Reserve’s preferred PCE inflation measure Wednesday.
Together, the corporate earnings and inflation report could help determine whether Wall Street’s technology rally regains momentum or investors become more cautious heading into September.