Wall Street Buzz: Stocks, Bonds, and the AI Surge

The Closing Numbers

Monday’s Market Recap:
The wild world of Wall Street saw the S&P 500 ($SPX) gain +0.36%, the Dow Jones ($DOWI) dip -0.14%, and the tech-heavy Nasdaq 100 ($IUXX) rise +0.78%. Not a bad day for NASDAQ lovers!

A Shoutout to Chipmakers

Advanced Micro Devices (AMD) stole the show by soaring over 23%. This surge is thanks to a jaw-dropping deal with OpenAI, sprinkling some extra magic in the AI sector. The tech giant’s collaboration on AI infrastructure is worth billions, keeping the AI dream alive for investors.

Bond Yields and Financial Nerves

The rise of bond yields did throw a bit of shade. The 10-year T-note yield nudged up 4 bps to 4.16%, limiting stock gains. Meanwhile, Verizon Communications took a 5% tumble, adding some gray clouds over the Dow Jones.

Government Shenanigans

We’re diving into week two of a US government shutdown. The delay means some key economic reports like last Friday’s payrolls are in limbo. If this shutdown lingers, it could delay the release of the October 15 inflation data. Bloomberg estimates that 640,000 federal workers could face furloughs, winkling up jobless claims.

Global Political Shifts

Political dynamics weren’t just shaking in the US. France saw uncertainty bloom as Prime Minister Lecornu resigned amid President Macron’s cabinet reshuffle. On the other side of the globe, Japan might see Sanae Takaichi as the next leader. She’s known for her easy fiscal and monetary policies.

The Flight to Safe Havens

Investors, uncertain about the political landscape, are cashing into safe havens. Both gold and Bitcoin broke records on Monday. This rush is part of the “debasement trade,” as wary investors flee fiat currencies for more tangible assets.

Looking Ahead: A Week in Focus

Attention will be glued to developments on tariffs and the government shutdown. Wednesday, we peek into the FOMC meeting minutes, while Thursday has Fed Chair Powell speaking at a Fed Community Bank Conference. Friday’s University of Michigan Consumer Sentiment Index is expected to slip slightly.

Corporate Earnings Outlook

The chatter on the Street shows rising expectations. Over 22% of S&P 500 companies expect to beat Q3 earnings projections. Despite optimism, Q3 profit growth seems to be the smallest in two years, at +7.2%.

What’s Happening Overseas?

International stocks had a mixed Monday. Euro Stoxx 50 fell -0.35%, Japan’s Nikkei surged to a record high, and China chilled out with their Lunar New Year break.

The Bond Scene

Interest rates weren’t ones to be left behind. European yields climbed, with Germany’s 10-year bund yield up +2.1 bps. Meanwhile, UK’s 10-year gilt hit a weekly high. In the States, a large $119 billion of Treasury auctions looms.

Movers and Shakers

Notable Losses

• AppLovin slipped over -14%, amid SEC data-collection probes.
• Abercrombie & Fitch took a -7% hit thanks to a downgrade by JPMorgan.
• Verizon and AT&T saw declines amidst leadership changes.

Quick Updates on Earnings

Here’s who to watch on your earnings radar:

• McCormick & Co Inc/MD (MKC)
• Penguin Solutions Inc (PENG)
• TuHURA Biosciences Inc (HURA)

Disclaimer

The opinions here are those of the writer and are for informational purposes only. The disclosure policy has more details.

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