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Market Overview – 9/11 Effect + Rate Cut Bets Drive Record Highs
U.S. equities extended their “Patriot Day” tradition of institutional support. The S&P 500 surged through the 6,550 resistance to an intraday high of 6,593, closing at a fresh record. Nasdaq and Dow followed.
- Inflation Data: August CPI matched expectations: 2.9% y/y (prior 2.7%), 0.4% m/m; core CPI 3.2% y/y, 0.3% m/m. Slightly hot but seen as no barrier to a September Fed cut. Futures fully price three 25-bp cuts by year-end.
- Labor Market: Weekly jobless claims rose to 263k (vs. 235k exp.), continuing claims 1.939M, underscoring cooling employment and reinforcing the case for easing.
- 9/11 Support: Large funds avoided heavy selling on the patriotic date, and persistent AI/chip strength underpinned sentiment.
Market Structure – Big-Cap Tech Leads a “Structural Bull”
- Valuation: S&P 500 forward P/E 23x (95th percentile vs. 10-yr avg 18x); Nasdaq 100 forward P/E 28x. Mid- and small-caps remain cheaper but under-owned, with flows concentrated in mega-cap tech.
- Sector Rotation:
- AI/Semiconductors: Philadelphia SOX index higher, led by Lam Research and Micron.
- Defensive Health Care: Insurers rallied as quiet hedges.
- Other Sectors: Flat to negative, with isolated event-driven pops.
- Volatility: VIX slid to 14.7 with record-high VIX short positions. S&P sits in a “positive gamma” zone, but next week’s FOMC, VIX settlement, and OPEC events could spark turbulence.
Key Movers – AI Power & Event-Driven Surges
- Oracle (ORCL): After a 43% spike on its $455B AI backlog (incl. $300B from OpenAI), shares eased slightly. Long-term conversion risk remains, but AI demand narrative holds.
- NVIDIA (NVDA): Remains the AI compute anchor (~$4T market cap), continuing to rise with the sector.
- OpenDoor (OPEN): Soared 79.5% (from $0.50 to $10.50 in two months) on a new CEO (ex-Shopify COO), founders returning to the board, and an AI-driven real estate pivot with $40M funding—likened to GameStop/AMC squeezes.
- Red Cat (RCAT): Jumped on NATO recognition of its Black Widow drone for U.S. Army reconnaissance.
- Centene (CNC): Gapped up after reaffirming FY guidance and reporting rising high-grade memberships, but remains ~40% below early-July levels.
- Rubrik (RBRK): Strong earnings (subscriptions +55% y/y, FCF up) met with profit-taking after a 3x rally from IPO.
- Klarna IPO: Fell 6.7% day two after CEO warned of AI overspending, bucking the current AI hype.
- Figure IPO: Gained 24.5% on debut but enthusiasm was muted amid cooling new-issue sentiment.
- SOCO: Rebounded 17.6% on U.S. digital-asset policy optimism and technical oversold bounce.
- Digital Realty (DLR): +6% yesterday on AI data-center tailwinds; lofty valuation warrants caution.
Outlook – Rate-Cut Support, Watch Event Risk
- Short Term: Fed meeting next week + heavy VIX shorts = potential volatility despite strong AI/soft-landing narrative.
- Medium Term: Post-cut pullbacks could be buy-the-dip opportunities as liquidity loosens and the dollar softens.
- Long Term: A structural bull market endures, led by AI & semiconductors; remain selective outside these core lanes.
Takeaway: September 11 encapsulated patriotic bid + Fed-cut anticipation + AI mania. Focus on AI leaders and avoid overvalued laggards to thrive in this structural bull.
