Stocks Supported as Chip Makers and AI-Infrastructure Companies Rally

The S&P 500 Index ($SPX) (SPY) today is up +0.18%, the Dow Jones Industrials Index ($DOWI) (DIA) is up +0.01%, and the Nasdaq 100 Index ($IUXX) (QQQ) is up +0.25%.  December E-mini S&P futures (ESZ25) are up +0.16%, and December E-mini Nasdaq futures (NQZ25) are up +0.23%. 

Stock indexes shook off early losses today and are moving higher, with the S&P 500 and Nasdaq 100 posting new record highs on strength in semiconductor and AI-infrastructure stocks.  Gains in stocks are limited due to higher bond yields as hawkish Fed commentary pushed the 10-year T-note yield to a 2-week high of 4.145%.

Stock indexes are holding near record highs as they consolidate last week’s rally that pushed the S&P 500, the Dow Jones Industrials, and the Nasdaq 100 to new record highs.  Stocks rallied last week on the view that a weakened US labor market with contained inflation will allow the Fed to keep cutting interest rates. The price of gold is up more than +1% today at a new all-time high as dovish global central banks, geopolitical risks, and trade tensions have boosted demand for the metal as a store of value and as a safe-haven.

Today’s minor US economic news was supportive of stocks after the Aug Chicago Fed national activity index rose +0.16 to a 5-month high of -0.12, stronger than expectations of -0.15.

Fed comments today were on the hawkish side and negative for stocks.  St. Louis Fed President Alberto Musalem said he sees limited room for additional Fed interest rate cuts amid elevated inflation and believes rates are now “between modestly restrictive and neutral.” Also, Atlanta Fed President Raphael Bostic said he sees “little reason” for the Fed to cut interest rates further as he is concerned about elevated inflation and does not see inflation returning to 2% until 2028.

The price of Bitcoin (^BTCUSD) today is down by more than -2% at a 1.5-week low, driven by long liquidation pressures.  According to data from Coinglass, more than 407,000 traders liquidated positions over the past twenty-four hours. 

Rising corporate earnings expectations are a bullish backdrop for stocks.  According to Bloomberg Intelligence, more than 22% of companies in the S&P 500 provided guidance for their Q3 earnings results that are expected to beat analysts’ expectations, the highest in a year.  Also, S&P companies are expected to post +6.9% earnings growth in Q3, up from +6.7% as of the end of May. 

The markets this week will focus on any fresh trade or tariff news.  On Tuesday, the Sep S&P manufacturing PMI is expected to fall -1.1 to 51.9.  Also, Fed Chair Powell speaks on the economic outlook at an event at the Greater Providence Chamber of Commerce.  On Wednesday, Aug new home sales are expected to decline by -0.3% m/m to 650,000.  On Thursday, weekly initial unemployment claims are expected to increase by +3,000 to 234,000.  Also, Aug core (ex-defense and aircraft) capital goods new orders are expected to slip -0.1% m/m.  In addition, Q2 GDP is expected to be unrevised at +3.3% (q/q annualized). Finally, Aug existing home sales are expected to fall -1.4% m/m to 3.96 million.  On Friday, Aug personal spending is expected to be up by +0.5% m/m and Aug personal income is expected to be up by +0.3% m/m.  Also, the Aug core PCE price index, the Fed’s preferred inflation gauge, is expected to rise by +0.3% m/m and +2.7% y/y.  Finally, the University of Michigan’s Sep US consumer sentiment index is expected to remain unchanged at 55.4.

The markets are pricing in a 91% chance of a -25 bp rate cut at the next FOMC meeting on Oct 28-29. 

Overseas stock markets today are mixed.  The Euro Stoxx 50 is down by -0.37%.  China’s Shanghai Composite closed up +0.22%.  Japan’s Nikkei Stock 225 closed up +0.99%.

Interest Rates

December 10-year T-notes (ZNZ5) today are down by -2 ticks.  The 10-year T-note yield is up by +0.8 bp to 4.135%.  T-note prices today gave up an early advance and turned lower on hawkish comments from St. Louis Fed President Alberto Musalem and Atlanta Fed President Raphael Bostic, who said they see limited room for additional Fed interest rate cuts.  Today’s rally in the S&P 500 to a new record high has also curbed safe-haven demand for T-notes.  Supply pressures are bearish for T-notes as the Treasury will auction $211 billion of T-notes and floating rate notes this week, beginning with Tuesday’s $69 billion auction of 2-year T-notes. 

European government bond yields today are lower.  The 10-year German bund yield fell from a 2.5-week high of 2.762% and is down -0.3 bp at 2.745%.  The 10-year UK gilt yield fell from a 2-week high of 4.724% and is down -1.5 bp at 4.700%.

Swaps are discounting a 2% chance for a -25 bp rate cut by the ECB at its next policy meeting on October 30.

US Stock Movers

Applied Materials (AMAT) is up more than +3% to lead semiconductor and AI-infrastructure stocks higher after Morgan Stanley upgraded the stock to overweight from equal weight with a price target of $209.  Also, Advanced Micro Devices (AMD), ASML Holding NV (ASML), Western Digital (WDC), Seagate Technology Holdings Plc (STX), and Lam Research (LRCX) are up more than +2%.  In addition, KLA Corp (KLAC) and Micron Technology (MU) are up more than +1%.

Teradyne (TER) is up more than +8% to lead gainers in the S&P 500 after Susquehanna Financial raised its price target on the stock to $200 from $133.

Apple (AAPL) is up more than +3% to lead gainers in the Dow Jones Industrials after Wedbush raised its price target on the stock to $310 from $270. 

Tesla (TSLA) is up more than +3% to lead gainers in the Nasdaq 100 after Piper Sandler raised its price target on the stock to $500 from $400. 

MBX Biosciences (MBX) is up more than +105% after reporting its once-weekly canvuparatide met the main goal in a Phase 2 study to treat chronic hypoparathyroidism. 

Metsera (MTSR) is up more than +62% after Pfizer agreed to buy the company for about $4.9 billion, or $47.50 per share. 

Sarepta Therapeutics (SRPT) is up more than +11% after BMO Capital Markets upgraded the stock to outperform from market perform with a price target of $50.

FactSet Research Systems (FDS) is up more than +3% after UBS upgraded the stock to buy from neutral with a price target of $425.

NiSource (NI) is up more than +2% after its Indiana unit, Nipsco, agreed to provide electric service to an undisclosed “large, investment-grade” company data center. 

Helmerich & Payne (HP) is up more than +1% after Barclays upgraded the stock to overweight from equal weight with a price target of $25.

Lennar (LEN) is down more than -4% to lead home builders lower, after Raymond James downgraded the stock to underperform from market perform. DR Horton (DHI), PulteGroup (PHM), and Toll Brothers (TOL) are down more than -1%. 

Cryptocurrency-exposed stocks are under pressure today, with the price of Bitcoin down more than -2% at a 1.5-week low.  Strategy (MSTR) is down more than -3%.  Also, Coinbase Global (COIN), Bit Digital (BTBT), MARA Holdings (MARA), and Riot Platforms (RIOT) are down more than -2%.

Kenvue (KVUE) is down more than -4% to lead losers in the S&P 500 after the Washington Post reported the Trump administration plans to link the active ingredient in the company’s Tylenol medication to autism. 

Amer Sports (AS) is down more than -4% on news that Chinese authorities launched an investigation after a fireworks show in Tibet sponsored by the company’s subsidiary Arc’teryx sparked concerns about the show’s impact on the environment.   

United Airlines Holdings (UAL) is down more than -3% after data from Cirium, an aviation analytics company, showed European planned air travel bookings to the US this fall are down -11% from last year. 

Keurig Dr Pepper (KDP) is down more than -2% to lead losers in the Nasdaq 100 after BNP Paribas Exane downgraded the stock to underperform from neutral with a price target of $24. 

Earnings Reports(9/22/2025)

None.