The Dow Jones rose 1.08%, the S&P 500 rose 0.33%, and the Nasdaq rose 0.08%. The chip index fell 0.88%, while the S&P healthcare sector hit a record high, with Eli Lilly leading the gains with a rise of over 3%. CoreWeave closed up 5.94%. NVIDIA fell 1.84%, Intel fell 2.80%, and Nike rose more than 5%. WTI rose 3% while Brent crude slightly declined; gold rebounded driven by safe-haven demand and a weakening dollar. The yield on 10-year U.S. Treasury bonds fell by more than 12 basis points.
NVIDIA CEO Jensen Huang publicly endorsed CoreWeave, and tech stocks rebounded from their initial heavy losses at the close of trading. The S&P 500 index ended a three-day decline. Funds shifted from AI hardware to defensive sectors, with the Dow Jones index rising by more than 1%.
The U.S. PPI data and consumption data released on the same day remained strong, but risk aversion sentiment drove U.S. Treasury bonds higher, with U.S. oil prices hitting a one-month high.
All three major U.S. stock indices closed higher: the Dow Jones Industrial Average rose 1.08%, the Nasdaq Composite Index rose 0.08%, and the S&P 500 Index rose 0.33%.
The Philadelphia Semiconductor Index fell 0.88%, with the decline narrowing significantly from the opening of trading, but it was already the seventh consecutive trading day of losses. CoreWeave reversed from a loss of over 8% during the session to close up 5.94%. NVIDIA fell 1.84%, Intel fell 2.80%, while Nike led the gains with a rise of over 5%.
Jensen Huang said to Bloomberg at an event in Stockholm that the capabilities of CoreWeave are improving every day, and the financing costs are actually declining. He does not believe that this data center operator needs NVIDIA's assistance.
As tech stocks were sold off, investors seeking safety pushed up the price of U.S. Treasury bonds, with the yield on 10-year Treasuries falling by more than 12 basis points. Following the CPI released on Wednesday, the U.S. PPI for September, also released on Thursday, exceeded expectations and recorded the largest month-on-month increase in over four years, indicating that potential inflationary pressures remain strong. Retail sales data also surpassed expectations.
Tech stocks tumbled at the opening, but Jensen Huang single-handedly pulled the market back from the brink.
On Thursday, the three major U.S. stock indices ended higher, but the process was one of climbing back from deep declines. AI The financing chain for infrastructure continued to influence market sentiment for the third consecutive trading day, with the Nasdaq Composite Index falling as much as 1.4% at the start of the session, and the Philadelphia Semiconductor Index once dropping more than 4%.
The lowest point of the market appeared not long after the opening. AI The hardware chain started the day with the largest decline, with Dell Technologies falling more than 10% at one point during the session, narrowing to a 6.9% drop by the end of trading; Qunteng fell by 9%, Applied Materials and Seagate fell more than 3%; the Coherent sector in the optical communications sector also fell more than 7% at one point during the session.
By the close of trading, it was clear that funds had shifted from semiconductors to finance, consumer goods, and pharmaceuticals; among the components of the Nasdaq index, Microsoft rose by more than 1%, and Qualcomm rose by 3.35%. The performance of artificial intelligence on that day still fell far short of expectations.
Mag7 Stocks once again perform poorly.
The storage sector experienced the most significant reversal. Micron Technology tumbled more than 6% at one point during the session, but closed up 1.87% at $931.24; SanDisk and Western Digital also saw initial declines of over 5% and 4%, respectively, although their losses narrowed significantly towards the end of the session. The storage concept index opened lower but then moved higher, closing close to its opening level.
Another source of pressure comes from Anthropic. Sources revealed that the revenue of this AI company increased to $16.8 billion in the third quarter, but the growth rate has made some traders skeptical about whether the previous increases by chip manufacturers were well-founded. The company is preparing for the largest initial public offering (IPO) in history and plans to invest over $500 billion in chips and infrastructure over the next decade.
Dan Ives, from Wedbush, believes that this round of AI pullback represents a clear buying opportunity.
Market rescue rhetoric has not fixed the AI financing chain, and bond yield spreads remain in a difficult range.
Stocks can rebound with just one sentence, but bonds can't.
The credit spread of bonds maturing in 2029 briefly exceeded 1,050 basis points during trading, narrowing to 953 basis points at the close of trading, still remaining in a difficult range; Oracle's bond spread was reported at 320.8 basis points.
The credit spread of ultra-large cloud service providers has returned to its widest level since July, and a slight rebound in stocks occurred on the same day as the continued deterioration of credit conditions.
Steven Tseng, an interest rate strategist at Deutsche Bank in the United States, stated that yesterday there were strong inflation figures, and today there are robust producer price indices and retail sales, yet the market is reluctant to price in faster interest rate hikes by the Federal Reserve. He believes that concerns about growth will outweigh inflation, especially as bad news in the AI sector will start to snowball from now on.
Bank of America interest rate strategist Angelo Manolatos stated that risk-averse trading and concerns regarding AI are determining the price trend. The prediction from research institution Gartner is more straightforward: over 80% of new cloud service providers will ultimately go bankrupt.
Funds withdrawn from AI shifted towards defense; momentum stocks suffered their worst single-day performance in three months.
Most of today's stock market gains came from the rotation of defensive/value stocks, while cyclical stocks were sold off.
On Thursday, Nike rose 5.21% to $37.14, and Walmart increased by 1.47%. These two retail stocks supported most of the increase in the Dow Jones Index. Coca-Cola, known as the "American Maotai," also set new record highs during trading and at the close on Thursday.
Precious metals and cryptocurrency concept stocks led the gains, with Circle rising by 9% and Coinbase rising by 6%.
Also outperforming was the healthcare sector, with Eli Lilly rising by over 3% and leading the pharmaceutical stocks.
On the other hand, there is compression in momentum stocks. The high-beta momentum portfolio compiled by Goldman Sachs experienced its worst single-day performance in three months on that day, and the previously crowded short-selling momentum stock portfolio was forcibly liquidated.
The flow of funds provides a more accurate indication of the situation. Goldman Sachs' trading desk rated the overall activity of the day as 6 out of 10, but there were significantly more large sell orders: 40% of the large orders from mutual funds were directed towards selling, while the proportion of sell orders in the technology sector was as high as 70%. Hedge funds were extensively deleveraging, and during the opening phase, there was a concentrated buying back in the consumer sector.
The hotter inflation, the higher the bond market rises; U.S. long-term bonds outperform short-term bonds.
In September, the U.S. Producer Price Index rose 1.3% month-on-month and 6.3% year-on-year, both hitting the largest increases since 2022, with energy prices soaring 35.4% year-on-year as the main driving factor. Retail sales in September increased by 0.8% month-on-month, higher than the expected 0.3%, and the number of people filing for unemployment benefits for the first time last week was 199,000, which is better than the expected 200,000. Logically, this set of data should push up yields.
The results are completely the opposite. As of 3:41 p.m. Eastern Time, the 2-year yield fell by 4.4 basis points to 4.753%, the 5-year yield fell by 8.8 basis points to 4.8989%, the 10-year yield fell by 9.6 basis points to 5.0892%, and the 30-year yield fell by 9.6 basis points to 5.4275%.
The 10-year yield once dipped to 5.04% during trading, hitting a low since September 23, and fell for the third consecutive trading day; the 2-year yield once dropped below 4.69%, reaching its lowest level since September 18.
Bids came from two directions. One is that after the financing risks associated with AI increased, funds shifted from stocks to government bonds. The other is that a large bulk purchase of ultra-long-term government bonds in the futures market pushed the yield of 30-year bonds to a intraday low, and the subsequent flattening of trading further strengthened the bull flattening pattern of the yield curve.
The trading volume of 10-year government bond futures was about 60% higher than the 20-day average, which, like on Wednesday, is seen as a sign that algorithmic trading accounts are covering their short positions. Molly Brooks, a securities interest rate strategist at TD, said that the market is becoming more accustomed to longer maturities, and the concerns surrounding AI overnight helped to push down yields.
Interest rate hikes have not seen a corresponding cooling in pricing. CME's interest rate futures indicate that traders are pricing in a 25-basis-point hike at the meeting on October 28th, with probabilities of a hike in December rising to 92%, and expectations of at least one hike before the end of the year approaching 90%.
Northlight Chris Zaccarelli, the Chief Investment Officer of Asset Management, believes that inflation data higher than expected for a second consecutive day means that the Federal Reserve will have to raise interest rates again this year, but he expects the action to occur in December.
WTI Settlement price approaches $98, Brent remains stagnant due to reserve releases
International crude oil prices showed divergent trends on Thursday, with US crude continuing to rise while Brent crude saw a slight decline.
On Thursday, the settlement price of WTI crude oil futures rose by 3.03% to $97.97, reaching its highest level since September 21st, with a intraday high of $98.32.
There were two major factors driving up U.S. oil prices on that day: partly due to hurricanes causing production halts in the Gulf of Mexico, which led to a significant unexpected reduction in domestic crude oil inventories in the United States; reports also indicated that the Trump administration was considering relaxing some sanctions against "shadow fleets" with the aim of increasing tanker supply and reducing crude oil transportation costs.
Kpler Matt Smith, the chief oil analyst for America, stated that production disruptions in the Gulf of Mexico, strong crude oil exports, and increased activity at refineries along the US Gulf coast have collectively led to a significant decline in inventories in Region PADD. This decline in this region accounts for nearly the entirety of the national inventory reduction.
Brent, however, presented a different scenario. The settlement price fell by 0.13% to $105.92, due to reports that emergency reserves would be utilized again, which partially offset the growing supply risks from the Strait of Hormuz to the Black Sea. Previously, the United States had persuaded the G7 to release 100 million barrels of crude oil and diesel reserves, and reached an agreement with Russia regarding diesel exports.
Due to the reduced transportation costs of crude oil in the United States, which has boosted demand, the recent trends of WTI crude oil and Brent crude oil are no longer synchronized.
As the release of emergency reserves helps to offset the increasing supply risks from the Strait of Hormuz to the Black Sea, Brent crude oil prices have slightly declined today.
The US dollar continues to decline from its 18-month high, while gold rebounds.
The US Dollar Index fell by 0.49%, closing at 102.055 at the end of the foreign exchange market session, continuing to retreat from its previous 18-month high. The euro rose against the dollar to 1.1212, and the pound sterling rose to 1.3272 following the unexpected growth in the UK's gross domestic product announced earlier. The dollar weakened slightly against the Japanese yen to 158.14.
Kit Jukes, the chief foreign exchange strategist at Societe Generale, believes that the US dollar is also affected by position adjustments. With the US dollar having risen significantly and the market already factoring in many expectations of interest rate hikes, some investors are beginning to look for opportunities for a pullback.
Precious metals rebounded accordingly. Spot gold closed at $4,155.75 in New York time, up 1.23%, with a intraday low of $4,100, once again crossing above the $4,100 mark; the December gold futures settlement price rose 1.54% to $4,147.70. Spot silver also increased by about 2.3%, trading around $56.9.
Zaner Metals Vice President and Senior Metal Strategist Peter Grant stated that after the consumer price index exceeded expectations, the market had largely anticipated a strong producer price index.
He pointed out that investors have begun to realize that the fiscal situation in the United States limits the Federal Reserve's policy space to some extent, and further substantial interest rate hikes would impose a heavy burden on the economy. This also explains why the relatively high inflation data has not been able to stop the rebound in gold prices.
Bitcoin briefly fell below $80,000 during trading, marking the first time in nearly a month, before finding support near that level and rebounding.
The market fluctuates wildly; instead of rushing to sell when the trend seems clear, it's better to be prepared in advance! OCO The "two-out-of-one" order allows you to deploy two related orders simultaneously. Once one of them is executed, the other will automatically cancel, enabling you to respond flexibly to various market trends.
Edit / stephen
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