Market Overview
U.S. equities extended Wednesday’s losses as all three major indexes closed lower, weighed by high valuations, Fed policy uncertainty, and rising risk-off sentiment around tariffs and a potential U.S. government shutdown.
- Macro Backdrop: Q2 GDP grew at an annualized 3.8% (vs. 3.3% expected) while Core PCE was revised up to 2.6%, sustaining inflation pressure. August PCE data due tomorrow may shape Fed rate expectations. Government shutdown risk climbed to 65% (Polling Markets) as funds rotated into the dollar and Treasuries.
- Technical Setup: The S&P 500 tested its monthly moving average and closed with a long lower shadow doji, signaling dip buying interest. A small gap remains and may be filled depending on the PCE print.
Key Sectors & Events
Tariffs & Supply Chain: The U.S. launched a Section 232 national security probe into imports of robots, industrial machinery, and medical devices. Treasury Secretary Bessent urged reshoring of chip manufacturing to reduce reliance on Taiwan’s 99% share of high-end chips, a tailwind for Intel.
Intel & Apple: Bloomberg reported early-stage talks on potential investment and foundry collaboration to diversify Apple’s supply chain and align with “Made in America” policy. Intel shares rallied; TSMC remains secure near term given process leadership.
AI & Compute Power:
- Crwv: Expanded OpenAI collaboration to $22.4B; CEO sold $82M in stock, but AI compute demand remains strong, holding the 10-day MA.
- Oklo: Fell 16% intraday as U.S. delayed coal-plant retirements, reducing short-term nuclear demand.
- Crypto Miners: Ethereum weakness dragged MSTR (-9%) and UPXI (-14%) ahead of the Oct. 1 Senate crypto-tax hearing.
EV & Semis: Tesla’s August EU sales -37% y/y; U.S. -7% y/y. Musk’s $1B buy supports sentiment as Q3 deliveries loom. CRDO and ALAB retreated on insider selling and concerns that the Nvidia-Intel tie-up could squeeze third-party interconnect providers.
Other Movers: CIFR to issue $800M convertible bonds for a $3B Google data center; IREN to invest $670M in Nvidia/AMD GPUs, target $500M 2026 revenue. Freeport-McMoRan’s Indonesian copper mine shutdown may create a 500k-ton supply gap. CarMax missed Q2 estimates on weak auto demand.
Outlook & Strategy
Markets are in a consolidation phase with funds rotating toward core themes—AI and semiconductors—while trimming stretched valuations. Watch August PCE, Intel-Apple developments, and crypto-tax hearings for near-term catalysts. Preferred approach: accumulate quality AI/semiconductor names on pullbacks near key moving averages (e.g., CRDO, ALAB) and avoid chasing high-beta rallies.
