October 15th Market Overview

Happy Thursday

Alrighty it’s been a busy two days. Some folks probably noticed I have been MIA past 2 days. My first child was born yesterday so I figured I was due for a day off. I

nvestors sold chip stocks again and moved the money into gold and old-school Dow names like Home Depot and UnitedHealth. The Dow had a good day even with a second rough inflation report in two days. To me, that says people haven’t given up on stocks. They’re just getting pickier for now.

Let’s dig in...

Today's Big Picture

1. Money Left Chips for the Rest of the Market

The iShares Semiconductor ETF fell for an eighth straight day, its longest losing streak since 2015. Buyers moved into drug makers and food companies instead, and healthcare stocks hit a record high. More than half the S&P 500 now sits above its long-term trend, up from four in ten in September. That’s a healthier market than one riding on a few chip giants.

2. Investors Want to Know Who Pays for AI

The 20 most valuable AI and chip stocks worldwide have shed more than $1 trillion this week. With Treasury yields near their highest since the early 2000s, borrowing to build data centers isn’t cheap anymore. The cost to insure CoreWeave $CRWV debt hit a record, pricing in better-than-even odds of default within five years. The stock bounced anyway after Nvidia CEO Jensen Huang said CoreWeave’s borrowing costs are actually falling.

3. Inflation Ran Hot, Yields Fell Anyway

Wholesale prices rose at the fastest monthly pace since 2022, more than double what economists expected. Normally that sends bond yields higher. This time the tech selloff scared money into Treasurys instead. Odds of an October rate hike fell below one in three, down from nearly a coin flip Wednesday.

Market Overview

Index Performance

Stock Spotlight

Sandisk $SNDK ( ▼ 2.66% )  
, the S&P 500’s best performer this year, fell again on fears of a memory chip glut. China’s ChangXin Memory claims a breakthrough that packs more data onto each chip. Elon Musk posted that China will make “a LOT of RAM in 2028.”

Rocket Lab $RKLB ( ▼ 6.64% )  
spent the whole day in the red after pushing its Neutron rocket’s first launch to 2027. A manufacturing problem with a propellant dome caused the delay, and other space stocks fell with it.

Charles Schwab $SCHW ( ▼ 2.86% )  
earned $1.62 a share, a penny above estimates, as new accounts and client borrowing kept growing. The stock fell anyway on worries that higher rates will squeeze financial firms.

Lennar $LEN ( ▲ 6.03% )  
led homebuilders higher as falling yields raised hopes for cheaper mortgages. The stock is still down about a quarter this year.

Big Name Updates

Apple $AAPL ( ▼ 0.12% )  
topped $5 trillion in market value for the second time, right in the middle of a tech selloff. It hasn’t had to spend billions on AI data centers, and that’s working in its favor this week.

Nvidia $NVDA ( ▼ 1.54% )  
slid with the chip group. Baird’s Ted Mortonson said Wall Street is “tiring of the Bank of Nvidia,” and of AMD and Broadcom too.

Taiwan Semiconductor $TSM ( ▼ 1.84% )  
posted its sixth straight quarter of record profit, and the stock still fell. CEO C.C. Wei said there’s “no ceiling” on profitability, but big gains won’t come overnight.

Walmart $WMT ( ▲ 1.68% )  
got upgraded to buy at Deutsche Bank, which thinks today’s inflation will push more shoppers its way. The bank also expects margins to improve in 2027.

Nike $NKE ( ▲ 5.37% )  
helped carry the Dow and led an apparel rebound, with Lululemon $LULU close behind. Both still trade at about a fifth of their record highs, so one good day barely dents the damage.

Other Notable Company News

Bank of America $BAC ( ▲ 0.56% )  
got an upgrade from Baird, which called the post-earnings selloff overdone. Baird’s $62 target sits well above Wednesday’s $51 close.

PNC Financial $PNC ( ▼ 0.4% )  
is passing on big acquisitions for now. CEO Bill Demchak said a large deal could destroy a lot of value and slow the bank’s AI push.

U.S. Bancorp $USB ( ▲ 1.94% )  
reported higher profit, helped by more loans on its books.

UBS $UBS ( ▲ 1.38% )  
is preparing to leave Switzerland if Swiss lawmakers pass tougher capital rules, the Wall Street Journal reported.

Southwest Airlines $LUV ( ▲ 3.76% )  
is swapping its A-List tiers for Silver, Gold and Platinum on Jan. 1. It’s also opening its first airport lounges, called Icon, in four cities.

Blue Chips
MarketBeat lists “7 Blue-Chip Stocks to Add To Your Forever Portfolio”

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Sector Watch

Bond Market

Treasury yields had their biggest one-day drop since February. Mortgage rates held steady this week, ending a seven-week climb.

Policy Watch

Fed

The Fed meets later this month, and on the data alone, this week made the case for another hike stronger. Glenmede’s Jason Pride said the argument for holding steady rested on inflation staying mostly in energy. Wednesday’s consumer price report showed it spreading across most of what people buy.

• Retail sales beat forecasts in September, but take out gas stations and spending barely grew.

Middle East

Oil reversed an early drop and finished the day higher. The Gulf isn’t really calming down.

• A Singapore-registered ship was sunk in the Strait of Hormuz. Iran says it’s “counting the moments” until it can strike U.S. warships.

• The U.S. is reportedly weighing use of the “mother of all bombs” as Iran vows to fight on.

• The International Energy Agency warned diesel supplies could stay tight well into next year. New attacks on Saudi Arabia threaten the recovery in oil supply.

What to Watch

Warsh Speaks Tonight

Fed Chair Kevin Warsh talks with International Monetary Fund chief Kristalina Georgieva in Bangkok at 11:30 p.m. ET. Listen for whether he calls inflation an energy problem or something broader. That answer sets the tone for bonds Friday morning.

Tesla’s Roadster Reveal

Tesla unveils its long-delayed Roadster today at a SpaceX test site near Waco, Texas. Musk has said for years it would hit 60 mph in under a second and might even fly. Reservation holders have waited since 2017, so watch for a firm price and delivery date.

Regional Banks Report Friday

Truist $TFC and M&T Bank $MTB report Friday. Watch loan growth, the clearest read on whether high rates are slowing borrowers down.

Thanks for reading - you are now the more informed 🙂

- John

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