October 7th Market Overview

Happy Wednesday

Stocks took a step back from yesterdays new records. Rates on US gov’t bonds hit another high (highest in over 20 years this morning.)

Washington is paying more to borrow, so does everyone else. A strong bond sale this afternoon eased the pressure, and I’ll take a small dip after a record day.

Let’s dig in...

Today's Big Picture

1. Yields Hit 2002 Highs, Then Buyers Showed Up

Treasury yields hit their highest levels since 2002 this morning. Then the govt sold $39 billion of 10-year notes, and demand came in strong. Dealers, who have to bid, took an unusually small share, a sign investors want these bonds at current rates. The 10-year ended about flat, and that’s the most reassuring thing we learned today.

2. Fed Minutes Keep One More Hike on the Table

Minutes from the Fed’s September meeting show most officials expect one more rate hike by year end. They didn’t say when, and made no urgent case for the Oct. 28 meeting. Traders still see December as the likelier month. Investors took it in stride, and a boring Fed day is a good Fed day.

3. Gold and Bitcoin Both Lose Ground

Gold hit its lowest price since Aug. 3, as a stronger dollar made it pricier for overseas buyers. Bitcoin slipped under $83,000 as about $696 million in leveraged bets got wiped out, almost all of them bullish. Crypto data firm Glassnode says trading volume is unusually low. So borrowed money is moving prices more than new buyers are.

Market Overview

Index Performance

Stock Spotlight

Caterpillar $CAT ( ▼ 5.79% )  
was the worst stock in the Dow, with its steepest drop since late July. It’s still one of the year’s big winners, thanks to data centers buying its generators for power.

Webull $BULL ( ▼ 19.16% )  
had its worst day since April 2025 after a House committee called its China ties a national security risk. Webull says the report has “significant inaccuracies.”

Constellation Brands $STZ ( ▲ 2.01% )  
beat on sales and profit, fell early, then closed higher. Beer margins got squeezed, but CEO Nick Fink thinks the wine glut has “found bottom.”

Deere $DE ( ▼ 3.8% )  
fell after the Federal Trade Commission and Agriculture Department said they’re investigating the farm-equipment industry for anticompetitive conduct.

Big Name Updates

SpaceX $SPCX ( ▼ 2.48% )  
dipped on reports it plans to borrow $40 billion to buy Nvidia $NVDA chips. Societe Generale even listed the plan as one reason Treasury yields rose this morning.

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

Micron $MU ( ▲ 3.65% )  
climbed to about $1,086 after D.A. Davidson raised its price target to $3,000 from $2,100. The stock has already tripled this year.

Meta Platforms $META ( ▼ 2.38% )  
fell on worries that higher borrowing costs could slow AI spending. It’s still the best performer among the ten biggest S&P 500 stocks since mid-August.

Wells Fargo $WFC ( ▼ 1.79% )  
dropped a bit more than other big banks on a report that federal housing officials are investigating it. The probe covers its pledges to boost homeownership among Black Americans.

Other Notable Company News

Allstate $ALL ( ▼ 0.18% )  
earned a buy upgrade from HSBC, which says fears that AI shopping tools will disrupt its business are overblown.

Invesco $IVZ ( ▲ 0.38% )  
started at buy with a $41 target at UBS, which likes its ETF business, home of the QQQ.

Gold Fields $GFI ( ▼ 3.15% )  
fell with gold even after Morgan Stanley upgraded it and forecast gold averaging $5,050 an ounce in 2027.

Microsoft $MSFT ( ▲ 0.09% )  
will sell a $2,599 Surface Laptop Ultra with an Nvidia AI chip inside.

McDonald’s $MCD ( ▼ 0.78% )  
is being sued over an AI tool that recommends prices to its US franchisees.

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Sector Watch

Bond Market

Mortgage rates rose for a seventh straight week to their highest since November 2023, according to the Mortgage Bankers Association. Applications have now fallen five weeks in a row as buyers wait it out.

Policy Watch

Fed

The minutes had some good news in them. Officials see the job market close to full employment and said growth has picked up. But consumers now expect more inflation over the next year than at any point since May 2023, according to the New York Fed.

Fiscal & Trade

• Treasury Secretary Scott Bessent ramped up buybacks of older long-term bonds in August, but yields have barely budged. Fed staff even said uncertainty around the program may have added to the rise.

• A possible US diesel export ban would be “unwise,” said Chevron $CVX CEO Mike Wirth, who warned it could make supply worse.

International

France is one reason US yields have climbed. Worries about its finances pushed French yields up again, and ours have tended to follow. The euro slid to just under $1.12, near its weakest against the dollar since May 2025.

• Brent crude stayed above $100 a barrel after Houthi attacks on two Saudi airports.

• UK officials count at least nine attacks in the Strait of Hormuz this month, even as more oil gets through.

• Moving oil is getting expensive. A supertanker from the Gulf Coast to China was chartered for $76 million, ten times the prewar rate.

What to Watch

Thursday’s 30-Year Bond Auction

Tomorrow’s sale tests whether investors want to lock in today’s rates for three decades. A small dealer share would mean real demand is there, and that should help keep yields in check.

PepsiCo and Delta Earnings

PepsiCo $PEP reports Thursday with a fresh read on shoppers. Delta $DAL reports Friday, our first look at how airlines are handling Brent crude above $100.

The Gulf Coast Storm

A tropical storm could hit the Gulf Coast as a hurricane by Friday. Chevron $CVX is already moving nonessential workers off its offshore platforms. Any hit to Gulf production would show up in oil prices fast.

Thanks for reading - you are now the more informed 🙂

- John

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