Market Overview – Higher Yields Cap Rebound
U.S. equities opened higher on Wednesday but faded through the session, with the S&P 500, Nasdaq, and Dow ending slightly lower.
- Treasury Pressure: Despite last week’s Fed rate cut, the 10-year yield climbed after a weak $70 B 5-year auction.
- Corporate Debt Supply: Oracle announced a six-tranche $18 B bond sale, adding to liquidity concerns and pushing yields higher, weighing on big-cap tech.
Key Corporate & Macro Highlights
Oracle’s Leverage for AI Ambitions:
Plans to issue $18 B of bonds to fund “future investments,” following bold claims of multi-hundred-billion OpenAI orders and TikTok acquisition rumors. Elon Musk quipped that Oracle is “promising giant deals, then borrowing and letting investors foot the bill.”
Implication: Returns hinge on an AI-application boom; otherwise debt risk rises. Stock holds above $290.
Alibaba–Nvidia Alliance Ignites China Tech:
Alibaba will integrate Nvidia’s Physical AI into Alibaba Cloud and expand its $380 B AI infrastructure across Brazil, France and other regions. Shares surged 8%, boosting Baidu and JD.com.
ARK’s Cathie Wood bought $21 M of Alibaba and Baidu, likely anticipating the deal.
Short Interest: Alibaba ADR shorts rose to 41.85 M shares—potential squeeze fuel.
Other Movers:
- Micron: Beat earnings (EPS $3.03 vs $2.77) but fell on profit-taking after a steep pre-earnings rally; CEO said HBM customers grew to six and 2025 supply is “sold out.”
- Nvidia: Slight dip; some compare it to the 1999 tech bubble, but profits and AI demand remain strong; $160 is key support.
China ADR Momentum & “Message-Driven” Risks
- Pony.ai: Climbed near record highs after ARK buying; GS raised PT to $27.7 but chart signals short-term pullback.
- WeRide: Added to the Nasdaq Golden Dragon Index, attracting capital but showing reversal wicks near its 200-day MA.
- Broader Chinese tech rallied on policy optimism, though fundamentals vary and gains remain news-driven.
Market Technicals & Sentiment
- VIX & Index Both Down: Unlike earlier “VIX up with S&P up,” today’s VIX and indexes fell together, signaling calm profit-taking, not panic.
- S&P 500: Closed below its 5-day but above the 10-day MA; next buy zone sits near the monthly 6,520–6,550 range.
Stock-Specific Notes
- ALAB: Plunged on fears that an Intel–Nvidia partnership could bypass its interconnect chips.
- Marvell: Jumped after a $5 B repurchase plus $1 B accelerated buyback, testing its 200-day MA.
- Upstart: Dropped below its 200-day amid concerns it must keep loans on its balance sheet, blurring its “tech platform” model; heavy short interest (27.7%) adds pressure.
Outlook & Strategy
AI infrastructure remains the long-term driver, but high valuations call for caution.
- U.S. Equities: Prefer buying on dips to 6,520–6,550 support; avoid chasing.
- China ADRs: Focus on policy catalysts but beware “headline rallies.”
- Key Watches: Oracle bond-sale progress, Alibaba–Nvidia partnership details, and Micron’s post-earnings trade.
