Market Snapshot

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📉 Banana Bits

• Semiconductor selloff drags Wall Street lower as rising Treasury yields pressure high-growth tech stocks.

• Oil closes at a three-week high as U.S.-Iran peace hopes fade.

• Global bond markets put governments on notice over fiscal, inflation risks

• Home Depot beats quarterly sales and profit estimates on resilient repair and maintenance demand.

Market News

Stocks Slide as Tech Selloff and Rising Yields Pressure Wall Street

Wall Street extended its pullback Tuesday, with the S&P 500 falling 0.69% to 7,691.76, the Nasdaq Composite dropping 1.33% to 26,289.71, and the Dow slipping 0.22% to 53,343.40. Technology took the biggest hit, with the PHLX Semiconductor Index tumbling 5% as rising Treasury yields pressured high-growth stocks. Fading hopes for a Middle East peace agreement pushed oil higher and added to inflation concerns, sending the 30-year Treasury yield to its highest level since 2007 and the 10-year yield to its highest since January 2025. Energy, healthcare, and consumer staples bucked the selloff, but semiconductor weakness was enough to pull the major indexes lower.

The selloff was particularly rough for memory-chip companies, with Sandisk falling around 10% as investors became more cautious about the AI trade after its huge run this year. Meanwhile, Home Depot topped second-quarter sales and profit estimates as steady demand for repair and maintenance projects helped offset continued weakness in big-ticket remodeling. Sales rose 5.7% to $47.86 billion, while adjusted EPS of $4.92 also beat expectations. Shares still slipped 0.1% on the day as investors remained cautious about the housing backdrop. Investors are now looking ahead to Walmart's results and Wednesday's release of the Fed's July meeting minutes for more clues on consumer strength and the rate outlook. For now, Wall Street isn't panicking, but investors are clearly becoming more selective about which stocks they're willing to own at today's high valuations.

Peel Take: Three straight S&P 500 declines aren't a disaster, but the reasons behind them matter. AI stocks have been priced for nearly perfect growth, so higher Treasury yields and any doubts about future demand give investors an excuse to take profits quickly. Add expensive oil and rising borrowing costs, and the market suddenly has more to worry about than whether the next AI company beats earnings. The bigger question now is whether this is simply investors taking profits after a huge run or the beginning of a broader pullback. For now, strong earnings are keeping the market from looking too shaky, but the days of every AI stock automatically going up may be getting harder to justify..

What's Ripe

Targa Resources (TRGP) 7.14% 

• Targa jumped 7.14% to $297.77 after announcing new 20-year integrated midstream agreements with ExxonMobil and plans for three new natural-gas processing plants in the Permian Delaware.

• The deal gives Targa additional exposure to growing U.S. natural-gas infrastructure demand while the broader energy sector also benefited from higher oil prices Tuesday.

• Peel Take: Turns out AI's appetite isn't limited to chips. Data centers need enormous amounts of reliable power, and Targa is positioning itself directly in the infrastructure feeding that demand. On a day when AI hardware got crushed, one of AI's less glamorous energy beneficiaries was busy hitting a record high.

Mastercard (MA) 2.14% 

• Mastercard gained 2.14% to $574.31, outperforming both the S&P 500 and Dow on a rough day for the broader market.

• Financial stocks generally held up better than tech Tuesday, and Mastercard traded on above-average volume while Visa and several major banks also finished higher.

• Peel Take: Mastercard didn't need some huge announcement to win Tuesday. Sometimes relative strength is the story. With investors selling expensive AI names, established financial companies with steady businesses suddenly looked a lot more attractive.

What's Rotten

Credo Technology (CRDO) 13.03%

• Credo plunged about 13% as networking and semiconductor stocks got hammered, helping push the Philadelphia Semiconductor Index down roughly 5%.

• Rising Treasury yields pressured valuations across high-growth technology stocks, while thin August trading conditions may have amplified some of the sector's volatility.

• Peel Take: Yesterday’s AI darling can become today’s punching bag very quickly. Nothing fundamentally collapsed at Credo overnight, but when yields jump and investors start cutting exposure to expensive growth stocks, the biggest winners usually have the most air underneath them.

Sandisk (SNDK) 9.01%

• Sandisk dropped roughly 9%, reversing much of Monday's 8.9% rally as memory-chip stocks suffered a sharp selloff.

• Micron, Western Digital and other memory names fell alongside it as investors worried that higher financing costs could eventually slow the massive buildout of AI data centers.

• Peel Take: Sandisk basically went from hero to zero in 24 hours. Monday investors couldn't buy memory stocks fast enough; Tuesday they couldn't sell them fast enough. That's a good reminder that the AI trade is still alive, but expectations are so high that even a small change in sentiment can produce a very big move.

🧠 Technical Trip

Interview Q&A from Citi

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🦈 Deal Dispatch

M&A, IPOs, And Other Notable Transactions

• Francisco Partners agrees to acquire Weave for approximately $650 million.

• BioMarin agrees to acquire Alesta Therapeutics for $275 million upfront, plus up to $215 million in milestones.

• KKR makes $9 billion takeover bid for energy distributor UGI, WSJ reports

• Blue Ridge Bankshares to be acquired by N.C. company in $448M deal

Student Success Corner

Banana Brain Teaser

Previous

A pump can fill a tank in 3 hours. Because of a leak in the bottom of the tank, it takes 3.5 hours to fill. If the tank is full, how long would it take the leak to empty it?

Answer: 21 hours

Today

A company’s EBITDA increases by 20%, but its EV/EBITDA multiple falls from 10x to 8x. Assuming everything else stays the same, by what percentage does the company’s enterprise value change?

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Happy Investing,
Chris, Elie, Mitchell, Fernanda, Nick, & Patrick

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