Top 10 Stocks to Watch — Wednesday, August 5: Record Highs Into a Rate Hike

The S&P 500 closed Tuesday at 7,736.52, up 1.79%, its first record close in two months. The Dow added 1.71% to 54,085.88, clearing 54,000 for the first time, and the Nasdaq Composite led with 2.59% at 26,584.99. Palantir rose 29.5% and dragged the AI complex up behind it. By the bell, the argument that the AI trade had stalled in June looked retired.

Here is the part almost nobody is saying out loud. Fed funds futures are not pricing a cut at the September 16 meeting. They are pricing a hike. As of 6:45 a.m. ET the market implied a 57.1% probability the FOMC moves the target range up to 3.75% to 4.00%, against 42.9% for no change and effectively zero for a cut. July 29 held rates at 3.50% to 3.75% for a fifth straight meeting, but with three dissents, all of them wanting a hike, the most at a single meeting since September 2016. Equities are making records into a coin flip on tightening.

Futures are extending the move unevenly. At roughly 7:10 a.m. ET, S&P 500 futures were up 0.46% at 7,771.80 and Dow futures up 0.45% at 54,328.10, while Nasdaq 100 futures added only 0.15%. Tech is the laggard because AMD beat on revenue, earnings and guidance last night and still sold off roughly 8% pre-market on a gross margin miss. The 10-year yield sits at 4.617% and the 2-year at 4.204%, both flat. WTI is up 0.37% at $76.05 after collapsing more than 6% Tuesday on hopes the Strait of Hormuz reopens, and gold is up 1.84% at $4,229.20, an odd companion to record equity highs. The calendar feeds straight into the September question: ADP at 8:15 a.m. ET (consensus near 68,000 against 98,000 prior), ISM Services at 10:00 a.m. (54.5 against 54.0), EIA crude at 10:30 a.m., and Governor Lisa Cook at 4:05 p.m. A hot services print pushes hike odds higher, and this tape has not been stress-tested on that.

All prices below are pre-market prints captured between approximately 7:00 and 7:12 a.m. ET, with Tuesday's regular-session close for reference. These are watch candidates and scenarios, not recommendations. Pre-market tape is thin, and gaps fill more often than they hold.

1. $KTOS, Kratos Defense & Security Solutions

$57.20 pre-market, up 10.28%. Tuesday close $51.87, up 5.41%.

Kratos reported after Tuesday's close and it was a double beat with a raise underneath it. Revenue of $458.8 million rose 30.5% against consensus near $410.4 million, with 19.1% of that organic, and adjusted earnings of $0.21 per share cleared the $0.14 estimate. Consolidated backlog reached $2.084 billion as of June 28, up from $2.051 billion at the end of March, while the bid and proposal pipeline expanded to $15.0 billion from $14.3 billion. Full-year revenue guidance moved up to $1.75 billion to $1.81 billion, with organic growth now guided at 19% to 23%.

The award cadence is what makes this more than a good quarter. In the five weeks before the print, Kratos announced a roughly $36 million sole-source air defense missile contract on July 2, a roughly $100 million sole-source prime award for a ground-based Space Domain Awareness system on July 13, and a roughly $156 million sole-source counter-UAS IDIQ from the Department of Energy's National Nuclear Security Administration on July 21. Against all of that, the stock closed Tuesday 61% below its January 20 high of $134.00 and only 20% above a 52-week low of $43.09 set on July 30, six sessions ago.

Watch for: whether the gap holds above the $52.60 area, which is where the 50-day moving average sits. This is a mean-reversion setup, not a breakout, and the distance to the January high is the entire point. The risk is that the market has already decided the counter-UAS budget cycle is a 2027 story and keeps discounting the backlog.

2. $SNDK, SanDisk

$1,405.00 pre-market, down 1.58%. Tuesday close $1,427.62, up 10.84%.

The only name near the top of this list whose catalyst has not happened yet. SanDisk reports fiscal fourth quarter and full-year 2026 results after today's close, with the call at 4:30 p.m. ET, and follows it with an Investor Day on August 13. Everything else on the AI storage board has already printed. This one is still loaded.

The stock gained 10.84% Tuesday on a second consecutive up day, and the driver was substantive: SanDisk and SK Hynix jointly unveiled the first standard specification for High Bandwidth Flash at FMS 2026 in Santa Clara, with Google participating. That followed a Monday gain on a Morgan Stanley note giving the AI spending cycle an all-clear. The chart is the argument. SanDisk closed 39.4% below its June 22 high of $2,354.39 while sitting 67% above its 200-day moving average at $855.31 and roughly 16% below its 50-day at $1,704.83, which is a textbook post-parabolic consolidation.

Watch for: the fiscal 2027 capacity and pricing commentary rather than the quarter itself. NAND pricing is the entire story for this name, and management has a second microphone on August 13 to walk anything back or double down. A 1.6% pre-market fade into a print of this size is not weakness, it is people flattening risk.

3. $COMP, Compass

$13.54 pre-market, up 12.83%. Tuesday close $12.00.

Compass posted a record second quarter after Tuesday's close and then got chased by the sell side before this morning's open. Revenue of $4.3 billion rose 14% on a pro forma basis, adjusted EBITDA of $363 million was an all-time record for any second quarter, GAAP net income of $92 million more than doubled from $39 million, and free cash flow came in at $180 million. Brokerage gross transaction value grew 16% against roughly 6% for the broader market, which is the share-gain number that matters in a flat housing tape.

Third quarter guidance of $3.85 billion to $4.05 billion sits above the $3.77 billion consensus. Since the print, Wells Fargo raised its target to $13 from $12, Goldman Sachs to $12 from $10.50 and Barclays to $16 from $15, with UBS already at $17 from $12 five days ago. The technical picture is unusually clean: the pre-market print of $13.54 sits directly beneath a 52-week high of $13.96, and there is no overhead supply above that level.

Watch for: acceptance above $13.96. That level is the whole trade. A clean break puts the stock in territory with no sellers holding losses; a rejection there sets up a textbook double top and a gap fill back toward $12.60. The balance sheet is the standing risk, with $3.92 billion of debt against $694 million of cash in a business levered to transaction volumes.

The rest of this briefing is for paid members: the ad-tech small cap that raised both revenue and EBITDA guidance with nearly 10% of its float sold short, the networking name that just broke out above a 52-week high it set yesterday, the consumer lender with 31.85% short interest sitting on a guidance problem nobody is discussing, the $241 million company that just agreed to sell $1.33 billion of assets, the restaurant chain gapping through its 52-week high on a comp inflection, and the $141 billion name reporting after tonight's close that still trades 42% below its high.

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