The S&P 500 Index ($SPX) (SPY) on Thursday closed up +0.85%, the Dow Jones Industrials Index ($DOWI) (DIA) closed up +1.36%, and the Nasdaq 100 Index ($IUXX) (QQQ) closed up +0.60%. September E-mini S&P futures (ESU25) rose +0.81%, and September E-mini Nasdaq futures (NQU25) rose +0.60%.
Stock indexes settled higher on Thursday, with the S&P 500, the Dow Jones Industrials, and the Nasdaq 100 all posting new record highs. Stocks rallied after Thursday’s as-expected Aug CPI report and an unexpected surge in weekly jobless claims to a 3.75-year high knocked bond yields lower and cemented expectations for Fed rate cuts. The 10-year T-note yield fell to a 5-month low of 3.99%.
US weekly initial unemployment claims unexpectedly rose by +27,000 to a 3.75-year high of 263,000, showing a weaker labor market than expectations of a decline to 235,000.
US Aug CPI increased to +2.9% y/y from +2.7% y/y in July, right on expectations. Aug CPI ex-food and energy rose +3.1% y/y, unchanged from July and right on expectations.
Market focus this week will be on any trade or tariff news. On Friday, the University of Michigan’s Sep US consumer sentiment index is expected to slip -0.2 to 58.0.
The markets are now pricing in a 100% chance of a -25 bp rate cut and a 9% chance of a -50 bp rate cut at the upcoming FOMC meeting on Sep 16-17. After the fully expected -25 bp rate cut at the Sep 16-17 meeting, the markets are discounting a 97% chance of a second -25 bp rate cut at the Oct 28-29 meeting. The markets are now pricing in an overall -72 bp rate cut in the federal funds rate by year-end to 3.61% from the current 4.33% rate.
Overseas stock markets on Thursday settled higher. The Euro Stoxx 50 closed up +0.47%. China’s Shanghai Composite rose to a 1-week high and closed up +1.65%. Japan’s Nikkei Stock 225 rallied to a new all-time high and closed up +1.22%.
Interest Rates
December 10-year T-notes (ZNZ5) on Thursday closed up by +2.5 ticks. The 10-year T-note yield fell by -4.3 bp to 4.002%. T-notes climbed to a 5-month high on Thursday, and the 10-year T-note yield dropped to a 5-month low of 3.992%. T-note prices whipsawed higher Thursday after US Aug CPI came in right on expectations, but weekly initial unemployment claims unexpectedly soared to a 3.75-year high, a dovish factor for Fed policy and cementing expectations for at least a 25 bp rate cut at next week’s FOMC meeting. The markets are now pricing in an overall -71 bp rate cut in the federal funds rate by year-end to 3.61% from the current 4.33% rate.
T-notes fell back from their best levels Thursday after the S&P 500 rallied to a new record high, which curbed safe-haven demand for T-notes. Also, weak demand for the Treasury’s $22 billion auction of 30-year T-bonds weighed on T-note prices as the auction had a bid-to-cover ratio of 2.38, below the 10-auction average of 2.41.
Concerns about Fed independence are negatively impacting T-note prices due to President Trump’s attempt to fire Fed Governor Cook and Stephen Miran’s intention to hold a Fed Governor position while remaining technically in his White House role on the Council of Economic Advisors.
European government bond yields on Thursday were mixed. The 10-year German bund yield rose +0.5 bp to 2.657%. The 10-year UK gilt yield fell to a 4-week low of 4.596% and finished down -2.6 bp to 4.606%.
As expected, the ECB kept its deposit facility rate unchanged at 2.00% and said, “Inflation is currently around the 2% medium-term target and the Governing Council’s assessment of the inflation outlook is broadly unchanged.”
The ECB raised its 2025 Eurozone GDP estimate to +1.2% from a June forecast of +0.9% and maintained its 2025 Eurozone inflation ex-food and energy estimate at 2.4%.
ECB President Lagarde said the ECB now sees growth risks in the Eurozone as more balanced and the disinflationary process is over, signaling the ECB is done cutting interest rates.
Swaps are discounting a 4% chance for a -25 bp rate cut by the ECB at the October 30 policy meeting.
US Stock Movers
Micron Technology (MU) rose more than +7% to lead semiconductor stocks higher after Citigroup raised its price target on the stock to $175 from $150. Also, Lam Research (LRCX) closed up more than +7% and Applied Materials (AMAT) closed up more than +4%. In addition, KLA Corp (KLAC) and ON Semiconductor (ON) closed up more than +2%, and ASML Holding NV (ASML), ARM Holdings Plc (ARM), NXP Semiconductor (NXPI), GlobalFoundries (GFS), and Qualcomm (QCOM) closed up more than +1%.
Home builders and home building suppliers are climbing today after the 10-year T-note yield fell to a 5-month low, which will lower mortgage rates and is supportive of housing demand. Builders FirstSource (BLDR) closed up more than +4%. Also, PulteGroup (PHM), Lennar (LEN), DR Horton (DHI), and Toll Brothers (TOL) closed up more than +2%.
Warner Bros Discovery (WBD) closed up more than +28% to lead gainers in the S&P 500 and Nasdaq 100 on reports that Paramount Skydance is preparing a bid to acquire the company.
Red Cat Holdings (RCAT) closed up more than +30% after the drone company said its Black Widow system had been approved and added to the NATO Support and Procurement Agency catalog.
Oxford Industries (OXM) closed up more than +26% after reporting Q2 adjusted EPS of $1.26, stronger than the consensus of $1.18.
Revolution Medicines (RVMD) closed up more than +13% after reporting “highly encouraging initial clinical results” in a Phase 1 trial of daraxonrasib in treating pancreatic cancer.
Centene (CNC) closed up more than +9% after forecasting full-year adjusted EPS of $1.75, better than the consensus of $1.64.
Thermo Fisher Scientific (TMO) closed up more than +3% after Barclays upgraded the stock to overweight from equal weight with a price target of $550.
Celsius Holdings (CELH) closed up more than +2% after Goldman Sachs initiated coverage of the stock with a buy recommendation and a price target of $72.
Oracle (ORCL) closed down more than -6% to lead losers in the S&P 500 on reports that the Ellison family backs the offer by Paramount Skydance to purchase Warner Bros Discovery. Larry Ellison is chairman and co-founder of Oracle.
Avidity Biosciences (RNA) closed down more than -11% after announcing it intends to offer $500 million in shares of its common stock in an underwritten public offering.
Boeing (BA) closed down more than -3% to lead losers in the Dow Jones Industrials after CEO Ortberg said the company is falling behind schedule to get its 777X aircraft certified with regulators next year, risking another delay in the program that’s already well behind its original timeline.
Netflix (NFLX) closed down more than -3% to lead losers in the Nasdaq 100 after Chief Product Officer Kim announced she is leaving the company.
Advanced Micro Devices (AMD) closed down more than -2% after Erste Group downgraded the stock to hold from buy.
Earnings Reports(9/12/2025)
Compass Diversified Holdings (CODI), EVI Industries Inc (EVI), Immersion Corp (IMMR), Kestra Medical Technologies Ltd (KMTS), Mercurity Fintech Holding Inc (MFH), Triller Group Inc (ILLR), Value Line Inc (VALU).
On the date of publication, Rich Asplund did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
