• Economy: CPI rose to 3.4% annually in July, a slowdown from June and in line with economists’ expectations. That could allow the Fed to keep interest rates steady for a little longer.
• Stocks: The S&P 500 and Nasdaq climbed after the tame inflation reading, while the Dow slowly sank to just below breakeven. But investors liked what they saw, pushing the CBOE Volatility Index below 15.
• Commodities: Oil prices inched higher after Iran-backed Houthi rebels killed six people in an attack in the Red Sea. Meanwhile, gold keeps recovering from its recent downturn, driven by big buying from four central banks—and one crypto company.

Tech

Illustration: Shannon May, Photos: Unsplash

There’s plenty to watch in the sky today, from a solar eclipse to a meteor shower. Wall Street, meanwhile, is focused on the clouds.

CoreWeave, one of the biggest names in the “neocloud” industry, reported better-than-expected second-quarter results as revenue jumped 112% year over year to $2.58 billion. The company also raised its full-year revenue outlook, with the midpoint of guidance implying 158% year over year growth.

Shares surged 19.96% this afternoon, extending a 30.48% gain this year before today.

Wait, what’s a neocloud? Neoclouds are cloud-computing companies that make money by renting out the massive amounts of computing power needed to train and run AI models. CoreWeave’s customers include Meta, Anthropic, and Caterpillar, all of which it added this year. This quarter, it also signed companies like Bentley Systems, Grammarly, and Isomorphic Labs as it works to diversify its customer base.

Nebius joins the frenzy

But CoreWeave isn’t the only company hitting stratospheric numbers.

Rival Nebius also blew past expectations. Second-quarter revenue reached $582 million—up 454% year over year—as sales from its core AI cloud business rose nearly sixfold from a year ago.

The strong results were driven by a surge in customer demand: Nebius closed four landmark deals last quarter, each with an average value of over $1 billion. Better yet, about 70% of Nebius’s second-quarter deals included upfront prepayments, and the company expects to collect more than $9 billion in customer prepayments this year.

Nebius has been somewhat of a Wall Street favorite this year. Shares were already up 176% in 2026 before today’s report, and climbed another 33.07% this afternoon.

Big builds, big bills

Investors are celebrating today, but both neoclouds remain unprofitable as they spend aggressively to expand their AI infrastructure and capitalize on strong demand.

CoreWeave increased its capex to between $35 billion and $39 billion this year, nearly three times its projected revenue of $12.4 billion to $13.2 billion. Even with an established customer base and more than $100 billion in its backlog, that’s a pretty hefty bill.

Nebius, meanwhile, spent about $5.7 billion on capex in the second quarter, but it’s increasingly getting customers to help pay for it. Upfront prepayments now cover roughly 50% to 60% of the associated capex, giving the company cash to expand without relying as heavily on outside financing.

As of right now, though, demand is so strong that this isn’t really a zero-sum game. Nebius says it could sell essentially all of its planned 2027 capacity today, while CoreWeave added another $25 billion of customer commitments just in the first weeks of Q3.

For today, at least, neoclouds are enjoying clear skies.—SY

      

From The Crew

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Stocks

🟢 What’s up

• SpaceX popped 9.65% as CEO Elon Musk outlined bullish growth projections for Starlink and AI demand at an employee meeting.
• Quantum computing company Quantinuum jumped 27.97% after topping estimates in its first earnings report since its IPO and announcing a partnership with Oracle.
• Lumentum Holdings climbed 13.63% on better-than-expected quarterly results, reinforcing demand for AI networking equipment.
• Wendy’s surged 14.7% following reports that Nelson Peltz’s Trian Fund Management is preparing a bid to take the company private.
• Super Micro Computer rallied 19.02% on an earnings beat and stronger-than-expected guidance.
• Cava Group advanced 14.24% after topping quarterly estimates, shrugging off recent food safety concerns.

🔴 What’s down

• Home Depot fell 3.12% after CEO Ted Decker took a temporary medical leave of absence.
• National Vision Holdings dropped 11.56% on full-year guidance that fell short of Wall Street expectations.
• Infrastructure consulting firm Aecom declined 8.96% as quarterly revenue fell 14% from a year earlier.
• Natural resource company United States Antimony tumbled 24.47% after cutting its full-year revenue outlook amid a sharp sales decline.
• Electric aircraft maker Beta Technologies sank 3.29% after management warned that losses will come in at the high end of its previous guidance.

Q&A of the day

An investor's guide to private credit

Illustration: Morning Brew Inc., Photos: Pitchbook

After months of alarming headlines, you may have a sense that something big is going on with private credit—but don’t know what it all means for you.

That’s understandable: Private credit is notoriously opaque, and one of the most complex areas of finance. Just as retail investors are closer than ever to getting access to private credit within their own portfolios, the asset class is facing even more scrutiny. Just the other day, we wrote about how funds overseen by major players like Blue Owl and Ares Capital Management are seeing their highest levels of default since 2021.

We spoke with two private credit experts at PitchBook, Senior Director of US Credit Research Kenny Tang and Senior Private Credit Analyst Sebastian Kian, to pick their brains about what they think of private credit now, and how to navigate the complex landscape.

The following conversation has been edited for length and clarity.

What are the current risks to the private credit market, and why are we seeing investors rush to withdraw capital from these funds?

Kian: Essentially, software risk is definitely showing up more and more within the underlying portfolios.

The underlying BDCs (business development companies) are hugely exposed to software, and our analysis showed that among the largest publicly traded BDCs, almost a quarter of their portfolio is software. If you separate software debt, that’s higher. The private credit firms have also started to cut their valuations for their software positions.

Retail investors definitely need to know a BDC like Sixth Street. They have high exposure to software, but others might be closer to average or below average.

Another risk is the amount of distressed debt these companies are taking on. We define “distressed” as the debt portion that is valued below $0.80 on $1. That portion suddenly jumped in the first quarter.

The third factor is the level of nonperforming loans. So these are borrowers that have either defaulted on their interest rate or are expected to default on their interest rate. That amount is also on the rise: We saw that around 4.5% of all the borrowers within the largest BDCs are now nonperforming borrowers.

Click here to keep reading and learn the ABCs of BDCs.

Housing market

Illustration: Shannon May, Photo: Adobe Stock

Home-shoppers are throwing in the towel on open houses and retreating to the beach this summer: Existing home sales sank 1.7% in July to a three-month low of 4.06 million, according to the National Association of Realtors.

This slump comes courtesy of soaring mortgage rates, which hit a one-year high of 6.81% for a 30-year fixed-rate loan in the last week of July, according to the Mortgage Bankers Association. And although rates have subsided a bit since then to 6.77%—causing a small uptick in mortgage applications—buyers still haven’t returned in full force.

Then there’s prices. The NAR found that the median sales price rose 2% year over year to $434,100—the highest of any July on record, trailing only June’s all-time high of $442,800.

In short: High prices and rising rates are a one-two punch punishing the housing market.

Even the industry’s giants can’t sugarcoat this slowdown. In an earnings call last week, Rocket CEO Varun Krishna called the quarter ending in June “one of the toughest spring housing markets in years.” Meanwhile, Zillow CFO Jeremy Hofmann noted that the mortgage market could dwindle by “low-to-mid-single digits.”

The K-shaped housing market: Sales of affordable starter homes fell 5.4% in May year over year, according to Zillow data, while luxury sales rose 6.2%. Essentially, the latest AI-minted millionaires are having zero trouble splurging on their digs, while the rest of America sits on the sidelines hoping for better days ahead.

Cloudy with a chance of higher rates

Mortgage industry software platform Optimal Blue expects 30-year rates to rise to 6.76% over the next three months before easing to 6.58% by the end of the year. Even so, rates will remain unpredictable as the Iran war drags on, bending to erratic oil prices and volatile inflation. Zillow Senior Economist Kara Ng notes, “From the affordability point of view, it’s going to get more challenging in the second half of the year.”

But there are a few bright spots. Goldman Sachs anticipates annualized existing home sales of 4.2 million in the second half of 2026—a slight 3% improvement over the first half of the year. Zillow’s latest forecast through June 2027 predicts that home prices will drop in roughly half of the 100 largest US metro areas. So depending on where you live, those painful price tags could ease up somewhere down the line.

And although spring is famed for being the housing market’s supposed “busy season,” fall is actually the best time to buy a home, with over 30% more listings, 30% fewer buyers, and $15,000 in savings on the typical house. This is particularly true for more affordable properties, since as Zillow’s Ng points out, “If you are financially qualified to buy a starter home, you are facing less competition and you’re more likely to get a price cut.”

In other words, by the time you’re sipping a pumpkin spice latte, you need to start hitting open houses again.—JD

      

News

• President Trump is considering a capital gains tax cut.
• Talk about bullish: Fundstrat’s Tom Lee said the S&P 500 will hit 8,000 by the end of August.
• The yen’s extended rut could trigger even more intervention from the US government.
• Norway’s sovereign wealth fund just boasted a record $184 billion profit for the first half of the year, thanks to a surprise investment in SpaceX.
• The US budget deficit climbed to its highest level since March 2021.
• SpaceX’s planned Terafab factory is five times larger than the world’s biggest building.

Calendar

Economic reports: CPI is in the rearview mirror, but its awkward cousin PPI will arrive tomorrow and let us know how wholesale inflation fared in July. Plus, we’ve got the usual weekly initial jobless claims report.

Earnings announcements: Applied Materials, Lenovo, Pandora, dLocal, and Intuitive Machines keep the earnings flowing.

recs

🤖 “Chipflation” is driving the price of memory chips higher. Morgan Stanley doesn’t see that stopping anytime soon—and says these four stocks will profit.

🧠 Everything you need to know about finance comes down to one question: What’s this money for?

📈 The average 401(k) balance is $351,242. To see how you compare to the rest of your peers, here’s a breakdown of average balances by age.

🏘️ Heads up, homebuyers: Houses are going for below asking price in these 38 US cities.

🪦 Estate sales have become a blood sport thanks to social media influencers profiting from a booming resale market.