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U.S. equities ended a three-day slide with modest gains as cyclical stocks outperformed and semiconductors lagged. Tesla’s surge buoyed the auto sector while broader breadth remained weak.
- Technical View: The S&P 500 filled yesterday’s gap but stayed below its 5-day moving average; a weekly doji after seven consecutive weekly gains signals fading momentum. September is up 2.84%, outpacing July and August, but the historical “October volatility curse” looms.
- Flows & Positioning: Institutions de-leveraged and trimmed high-beta momentum names. Index strength relied on mega-caps such as Tesla and Apple, masking weakness in small- and mid-caps.
Macro & Policy Drivers
- PCE Data: August PCE matched expectations (headline +2.7% y/y, +0.3% m/m; core +2.9% y/y, +0.2% m/m). Inflation stayed steady and consumer spending was firm, reinforcing Q3 growth. Rate-cut bets hold: 89.8% for October, 65% for December.
- Tariff & Chip Rules: The U.S. will impose new tariffs Oct 1 (100% on branded drugs, 25% heavy trucks, 50% cabinetry/bath fixtures, 30% upholstered furniture). A rumored “1:1 chip production rule” could require U.S. output to match imports or face steep duties—benefiting domestic fabs like Intel and Micron while pressuring global supply chains. Philadelphia Semiconductor Index rose despite uncertainty.
Key Sectors & Stocks
Tech & Semis:
- Intel rallied on ongoing Apple/TSMC cooperation rumors; watch $30 as near-term support, upside beyond $35 carries chase risk.
- AMD remains range-bound after August highs; Cathie Wood trimming adds pressure amid “Intel + Nvidia” competition concerns.
- Oracle slid below $290 after Rothschild & Redburn initiated “Sell” with a $175 target, questioning its $60 B AI-cloud revenue goal.
Crypto & Fintech: AFRM, KLAR, CHYM, FIGR, UPST extended declines on valuation and credit-loss fears. CTA funds added shorts after key support breaks; a Q3 earnings rebound and a second 2025 Fed cut may be needed for recovery.
Commodities & Industrials:
- IREN dropped 9% on regulatory-probe chatter and a JPM downgrade.
- Copper: Freeport-McMoRan’s Indonesian mine stoppage may create a 500 k-ton global shortfall through 2027, boosting other copper names though FCX fell again.
- Boeing jumped on FAA easing 737/787 delivery limits and a $672 M Pentagon contract.
- Costco beat Q4 estimates but U.S. comps rose just 6% vs. 6.1% expected; long-term investors may prefer Walmart’s stronger 2025 YTD performance.
Outlook & Strategy
Mega-cap tech continues to prop up indexes while momentum and high-valuation plays bleed. Quarter-end rebalancing and the Q3 earnings gap could drive October volatility, historically a “danger month.”
- Focus: AI and semiconductors remain long-term core themes; accumulate on pullbacks near key moving averages.
- Caution: Avoid chasing high-beta fintech/crypto until after the next Fed cut and earnings clarity.
