Stock Indexes Post New Record Highs on AI Optimism

The S&P 500 Index ($SPX) (SPY) on Monday closed up +0.44%, the Dow Jones Industrials Index ($DOWI) (DIA) closed up +0.14%, and the Nasdaq 100 Index ($IUXX) (QQQ) closed up +0.55%.  December E-mini S&P futures (ESZ25) rose +0.40%, and December E-mini Nasdaq futures (NQZ25) rose +0.50%. 

Inventory indexes prolonged their bull run on Monday and settled increased, with the S&P 500, Dow Jones Industrials, and the Nasdaq 100 posting new report highs.  Energy in semiconductor and AI-infrastructure shares lifted the broader market on Monday.  Positive factors in shares have been restricted resulting from increased bond yields as hawkish Fed commentary pushed the 10-year T-note yield to a 2-week excessive of 4.15%.

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Inventory indexes proceed to publish new report highs on the view {that a} weakened US labor market with contained inflation will permit the Fed to maintain slicing rates of interest.  The value of gold rose greater than +1% Monday to a brand new all-time excessive as dovish world central banks, geopolitical dangers, and commerce tensions have boosted demand for the steel as a retailer of worth and as a safe-haven.

Monday’s minor US financial information was supportive of shares after the Aug Chicago Fed nationwide exercise index rose +0.16 to a 5-month excessive of -0.12, stronger than expectations of -0.15.

Fed feedback immediately have been on the hawkish facet and damaging for shares.  St. Louis Fed President Alberto Musalem mentioned he sees restricted room for extra Fed rate of interest cuts amid elevated inflation and believes charges are actually “between modestly restrictive and impartial.” Additionally, Atlanta Fed President Raphael Bostic mentioned he sees “little cause” for the Fed to chop rates of interest additional as he’s involved about elevated inflation and doesn’t see inflation returning to 2% till 2028.  As well as, Cleveland Fed President Beth Hammack mentioned, “I feel that we must be very cautious in eradicating financial coverage restrictions” to keep away from overheating the economic system.

The value of Bitcoin (^BTCUSD) on Monday fell greater than -2% to a 1.5-week low, pushed by lengthy liquidation pressures.  In response to knowledge from Coinglass, greater than 407,000 merchants liquidated positions over the previous twenty-four hours. 

Rising company earnings expectations are a bullish backdrop for shares.  In response to Bloomberg Intelligence, greater than 22% of firms within the S&P 500 supplied steering for his or her Q3 earnings outcomes which are anticipated to beat analysts’ expectations, the very best in a yr.  Additionally, S&P firms are anticipated to publish +6.9% earnings progress in Q3, up from +6.7% as of the top of Could. 

The markets this week will deal with any recent commerce or tariff information.  On Tuesday, the Sep S&P manufacturing PMI is anticipated to fall -0.8 to 52.2.  Additionally, Fed Chair Powell speaks on the financial outlook at an occasion on the Larger Windfall Chamber of Commerce.  On Wednesday, Aug new residence gross sales are anticipated to say no by -0.3% m/m to 650,000.  On Thursday, weekly preliminary unemployment claims are anticipated to extend by +2,000 to 233,000.  Additionally, Aug core (ex-defense and plane) capital items new orders are anticipated to slide -0.1% m/m.  As well as, Q2 GDP is anticipated to be unrevised at +3.3% (q/q annualized). Lastly, Aug current residence gross sales are anticipated to fall -1.3% m/m to three.96 million.  On Friday, Aug private spending is anticipated to be up by +0.5% m/m and Aug private earnings is anticipated to be up by +0.3% m/m.  Additionally, the Aug core PCE worth index, the Fed’s most well-liked inflation gauge, is anticipated to rise by +0.2% m/m and +2.9% y/y.  Lastly, the College of Michigan’s Sep US shopper sentiment index is anticipated to stay unchanged at 55.4.

The markets are pricing in a 90% likelihood of a -25 bp price lower on the subsequent FOMC assembly on Oct 28-29. 

Abroad inventory markets on Monday settled combined.  The Euro Stoxx 50 closed down -0.30%.  China’s Shanghai Composite closed up +0.22%.  Japan’s Nikkei Inventory 225 closed up +0.99%.

Curiosity Charges

December 10-year T-notes (ZNZ5) on Monday closed down by -1.5 ticks.  The ten-year T-note yield rose by +1.4 bp to 4.141%.  T-note costs immediately gave up an early advance and fell to a 2-week low, and the 10-year T-note yield rose to a 2-week excessive of 4.149%.  T-note got here below stress Monday on hawkish feedback from St. Louis Fed President Alberto Musalem, Atlanta Fed President Raphael Bostic, and Cleveland Fed President Beth Hammack, who mentioned they see restricted room for extra Fed rate of interest cuts.  Monday’s rally within the S&P 500 to a brand new report excessive has additionally curbed safe-haven demand for T-notes.  Provide pressures are bearish for T-notes because the Treasury will public sale $211 billion of T-notes and floating price notes this week, starting with Tuesday’s $69 billion public sale of 2-year T-notes. 

European authorities bond yields on Monday have been combined.  The ten-year German bund yield rose to a 2.5-week excessive of two.762% and completed up by +0.1 bp at 2.748%.  The ten-year UK gilt yield fell from a 2-week excessive of 4.724% and completed down by -0.3 bp at 4.712%.

Swaps are discounting a 2% likelihood for a -25 bp price lower by the ECB at its subsequent coverage assembly on October 30.

US Inventory Movers

Utilized Supplies (AMAT) closed up greater than +5% to guide semiconductor and AI-infrastructure shares increased and gainers within the Nasdaq 100 after Morgan Stanley upgraded the inventory to obese from equal weight with a worth goal of $209. Additionally, Lam Analysis (LRCX), Seagate Know-how Holdings Plc (STX), and Western Digital (WDC) closed up greater than +4%, and Nvidia (NVDA) closed up greater than +3%.   As well as, ASML Holding NV (ASML), KLA Corp (KLAC), and Marvell Know-how (MRVL) closed up greater than +2%, and Superior Micro Gadgets (AMD), Micron Know-how (MU), and Qualcomm (QCOM) closed up greater than +1%.

Teradyne (TER) closed up greater than +12% to guide gainers within the S&P 500 after Susquehanna Monetary raised its worth goal on the inventory to $200 from $133.

Apple (AAPL) closed up greater than +4% to guide gainers within the Dow Jones Industrials after Wedbush raised its worth goal on the inventory to $310 from $270. 

MBX Biosciences (MBX) closed up greater than +101% after reporting its once-weekly canvuparatide met the principle objective in a Part 2 research to deal with power hypoparathyroidism. 

Metsera (MTSR) closed up greater than +61% after Pfizer agreed to purchase the corporate for about $4.9 billion, or $47.50 per share. 

Sarepta Therapeutics (SRPT) closed up greater than +7% after BMO Capital Markets upgraded the inventory to outperform from market carry out with a worth goal of $50.

Helmerich & Payne (HP) closed up greater than +4% after Barclays upgraded the inventory to obese from equal weight with a worth goal of $25.

FactSet Analysis Techniques (FDS) closed up greater than +3% after UBS upgraded the inventory to purchase from impartial with a worth goal of $425.

NiSource (NI) closed up greater than +3% after its Indiana unit, Nipsco, agreed to offer electrical service to an undisclosed “giant, investment-grade” firm knowledge heart. 

Lennar (LEN) closed down greater than -4% to guide residence builders decrease, after Raymond James downgraded the inventory to underperform from market carry out. DR Horton (DHI), PulteGroup (PHM), and Toll Brothers (TOL) closed down greater than -1%. 

Cryptocurrency-exposed shares retreated Monday after the worth of Bitcoin fell greater than -2% to a 1.5-week low.  Technique (MSTR), Coinbase World (COIN), Bit Digital (BTBT), MARA Holdings (MARA), and Riot Platforms (RIOT) closed down greater than -2%.

Kenvue (KVUE) closed down greater than -7% to guide losers within the S&P 500 after the Washington Put up reported the Trump administration plans to hyperlink the energetic ingredient within the firm’s Tylenol treatment to autism. 

Keurig Dr Pepper (KDP) closed down greater than -4% to guide losers within the Nasdaq 100 after BNP Paribas Exane downgraded the inventory to underperform from impartial with a worth goal of $24. 

Match Group (MTCH) closed down greater than -5% to guide relationship app makers decrease after Meta Platforms mentioned it’s including new options to Fb Courting that assist customers “skip the swipe.”

Amer Sports activities (AS) closed down greater than -4% on information that Chinese language authorities launched an investigation after a fireworks present in Tibet sponsored by the corporate’s subsidiary Arc’teryx sparked considerations in regards to the present’s affect on the setting.   

United Airways Holdings (UAL) closed down greater than -1% after knowledge from Cirium, an aviation analytics firm, confirmed European deliberate air journey bookings to the US this fall are down -11% from final yr. 

Earnings Studies(9/23/2025)

AAR Corp (AIR), AutoZone Inc (AZO), Micron Know-how Inc (MU), MillerKnoll Inc (MLKN), Worthington Enterprises Inc (WOR).

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