Stocks Turn Mixed as Bond Yields Climb

The S&P 500 Index ($SPX) (SPY) today is down -0.10%, the Dow Jones Industrials Index ($DOWI) (DIA) is down -0.22%, and the Nasdaq 100 Index ($IUXX) (QQQ) is up +0.08%.  December E-mini S&P futures (ESZ25) are down -0.12%, and December E-mini Nasdaq futures (NQZ25) are up +0.06%.

Stock indexes gave up an early advance today and turned mixed after bond yields moved up from early declines and rose, sparking long liquidation in equities.  Additionally, the shutdown of the US government for a second day today is weighing on market sentiment. 

Stocks initially moved higher today, with the S&P 500 and Nasdaq 100 posting new all-time highs, and the Dow Jones Industrial Average reaching a one-week high.  Strength in chip makers and AI-infrastructure stocks is supporting the broader market today as investors rush to get exposure to artificial intelligence.  Also, positive carryover from today’s rally in European stocks to a new record high is underpinning US equities.  Stocks are climbing today despite the US government being shut down for a second day.  

The government shutdown means a delay in government reports, including today’s weekly jobless claims report and Friday’s monthly payroll report. A prolonged shutdown could also delay the government’s inflation data, scheduled for release on October 15. 

The White House has warned that if the government shutdown lingered, it would trigger widespread dismissals of employees in government programs that don’t align with President Trump’s priorities.  Bloomberg Economics estimates that 640,000 federal workers will be furloughed during a shutdown, which would expand jobless claims and push the unemployment rate up to 4.7%.

Today’s report from private firm Challenger, Gray & Christmas signals ongoing weakness in the US labor market.  US Sep Challenger job cuts fell 25.8% y/y to 54,064.  Employers have announced plans to cut 946,426 jobs so far this year (Jan-Sep), the most for the same comparable period since 2020.  For January through September, US-based employers announced plans to add almost 205,000 jobs, the weakest year-to-date stretch since 2009.

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 are pricing in a 100% chance of a -25 bp rate cut at the next FOMC meeting on Oct 28-29. 

Market focus this week will be on any new trade or tariff news. On Friday, if the US government reopens, Sep nonfarm payrolls are expected to increase by +51,000, and the Sep unemployment rate is expected to remain unchanged at 4.3%.  Also, Sep average hourly earnings are expected to increase by +0.3% m/m and +3.7% y/y.  Finally, the Sep ISM services index is expected to slip -0.2 to 51.8.

Overseas stock markets today are higher.  The Euro Stoxx 50 rallied to a new record high and is up +1.24%.  China’s Shanghai Composite did not trade and is closed for the week-long Lunar New Year holiday.  Japan’s Nikkei Stock 225 closed up +0.87%.

Interest Rates

December 10-year T-notes (ZNZ5) today are down -3 ticks.  The 10-year T-note yield is up +1.0 bp to 4.108%.  Dec T-notes came under pressure today after the S&P 500 climbed to a new record high, which reduced safe-haven demand for government debt securities.  Losses in T-notes are limited by carryover support from Wednesday, when the September ADP employment report unexpectedly declined for a second consecutive month.  The report boosted the chances of a Fed rate cut at the October 28-29 FOMC meeting to 100%, according to swaps markets.  The ongoing US government shutdown is also boosting safe-haven demand for T-notes. 

European government bond yields today are mixed.  The 10-year German bund yield is down -0.6 bp at 2.707%. The 10-year UK gilt yield is up +1.9 bp to 4.714%.

The Eurozone Aug unemployment rate unexpectedly rose by +0.1 to 6.3%, showing a weaker labor market than expectations of no change at 6.2%.

The UK DMP Sep 1-year CPI expectations unexpectedly rose +0.1 to a 2.75-year high of 3.5% versus expectations of no change at 3.4%. 

ECB Governing Council member Kazaks said, “If nothing significant happens, the ECB can keep interest rates where they are and the 2% rate is very appropriate.”

Swaps are discounting a 1% chance for a -25 bp rate cut by the ECB at its next policy meeting on October 30.

US Stock Movers

Chip makers and AI-infrastructure stocks moved higher on Wednesday, a supportive factor for the broader market.  ASML Holding NV (ASML), Advanced Micro Devices (AMD), Broadcom (AVGO), Marvell Technology (MRVL), and Microchip Technology (MCHP) are up more than +2%.  Also, Analog Devices (ADI), Lam Research (LRCX), Nvidia (NVDA), Applied Materials (AMAT), ON Semiconductor (ON), and Texas Instruments (TXN) are up more than +1%. 

Fair Isaac Corp (FICO) is up more than +24% to lead gainers in the S&P 500 after announcing a new program giving mortgage lenders the option to calculate and distribute FICO scores directly to customers.

AngioDynamics (ANGO) is up more than +9% after boosting its 2026 det sales forecast to $308 million-$313 million from a previous estimate of $305 million-$310 million, stronger than the consensus of $307.5 million. 

Stellantis NV (STLA) is up more than +6% after reporting Q3 auto deliveries rose +6%, the first quarterly sales gain in more than two years. 

Celanese Corp (CE) is up more than +5% after Citigroup upgraded the stock to buy from neutral with a price target of $53.

Starbucks (SBUX) is up more than +3% to lead gainers in the Nasdaq 100 after increasing its quarterly dividend by 1 cent to 62 cents per share.

Nike (NKE) is up more than +2% to lead gainers in the Dow Jones Industrials after KeyBanc Capital Markets upgraded the stock to overweight from sector weight with a price target of $90.

Charles River Laboratories International (CRL) is up more than +2% after Barclays upgraded the stock to overweight from equal weight with a price target of $195. 

Equifax (EFX) is down more than -7% to lead losers in the S&P 500, and TransUnion (TRU) is down more than -10% after Fair Isaac Corp announced a new program giving mortgage lenders the option to calculate and distribute FICO scores directly to customers.

Occidental Petroleum (OXY) is down more than -5% after it agreed to sell its OxyChem petrochemical unit to Berkshire Hathaway for $9.7 billion, below analysts’ expectations of $10 billion.

Edison International (EIX) is down more than -4% after Jeffries downgraded the stock to hold from buy, citing a higher risk profile.

Bloom Energy (BE) is down more than -4% after Mizuho Securities downgraded the stock to neutral from outperform. 

AbbVie (ABBV) is down more than -3% after HSBC downgraded the stock to hold from buy.

Synopsys (SNPS) is down more than -2% after BNP Paribas Exane initiated coverage of the stock with a recommendation of underperform and a price target of $425.

Mondelez International (MDLZ) is down more than -1% after Berenberg downgraded the stock to hold from buy. 

Earnings Reports(10/2/2025)

AngioDynamics Inc (ANGO) and Golden Matrix Group Inc (GMGI).