September 25th Market Overview

Happy Thursday

Third day lower even with solid economic data.

That's telling something about how far we stretched on this run.

With Jobless claims beat, GDP revised higher, the market's more worried about what 4.17% rates mean for all those AI valuations. Friday's inflation print will settle whether this is just a breather or something bigger IMO.

P.S. Market Breadth tool will be live Sunday for all premium subs. I’m so excited for that.

Let's dig in...

Today's Big Picture

Economic data beats, rates climb 
Jobless claims dropped to 218,000, beating the 235,000 estimate. Q2 GDP got revised up to 3.8% from 3.3%. Durable goods orders bounced on aircraft demand.
 
The 10-year Treasury yield hit 4.17% as investors questioned whether the Fed needs to cut rates when the economy looks this solid.

AI deals face scrutiny Oracle
 $ORCL ( ▼ 2.7% ) dropped after getting a sell rating from analysts questioning whether AI infrastructure contracts create recurring revenue or just one-time buildouts. The company sold $18B in bonds to fund data center construction. Tesla fell as European registrations dropped 37% in August.

Intel chases investment Intel 
Intel rose on reports it approached Apple for funding. The chipmaker already secured $5B from Nvidia and gave the U.S. government a 10% stake in its turnaround effort.

Market Overview

U.S. Stock indexes, past three sessions

Stock Spotlight

Oracle $ORCL ( ▼ 2.7% ) Rothschild initiated coverage with a sell rating, predicting a 40% pullback. Analysts believe markets overestimate how AI deals boost core cloud business. The company sold $18B in bonds to finance AI infrastructure.

Intel $INTC ( ▲ 4.44% ) 
Reports emerged the chipmaker approached Apple $AAPL for investment. This follows Nvidia $NVDA committing $5B and the U.S. government taking a 10% stake in the turnaround effort.

CarMax $KMX ( ▼ 1.62% ) 
Earnings came in at 64 cents versus $1.04 expected. Revenue hit $6.59B against $7.01B forecasted. The used car retailer continues facing affordability pressures.

Tesla $TSLA ( ▲ 4.02% ) 
European registrations fell 37% in August. The broader EU battery-electric market reached 15.8% share year-to-date, but Tesla keeps losing ground to competition.

Big Name Updates

Starbucks $SBUX ( ▼ 0.53% ) 
Announced a $1B restructuring closing stores and cutting 900 non-retail jobs. Costs include $150M in severance, $400M in asset write-downs, and $450M in lease charges.

Google $GOOGL ( ▲ 0.31% ) 
Secured warrants for 24M Cipher Mining $CIFR shares through a $7B AI hosting deal. Google is backstopping $1.4B in lease obligations for the Texas data center project.

IBM $IBM ( ▲ 1.02% ) 
HSBC used IBM quantum computers to predict bond market behavior, highlighting the company's enterprise compute and quantum progress.

Eli Lilly $LLY ( ▲ 1.39% ) 
Halted its diabetes trial combining bimagrumab with Zepbound. The move raises questions about the $2B Versanis acquisition from 2023.

Chevron $CVX ( ▼ 0.35% ) 
Signed to build the $610M Nitzana pipeline connecting Israel's Leviathan field to Egypt.

Other Notable Company News

Centrus Energy $LEU ( ▼ 2.19% ) 
Plans a multi-billion-dollar Piketon plant expansion adding 300 operations jobs and 1,000 construction jobs. The company raised $1.2B via notes and secured $2B in utility commitments.

Delta Air Lines $DAL ( ▲ 0.81% ) 
Will replace auxiliary power units on 300+ Airbus A320 jets after toxic-fume incidents linked to bleed-air systems.

Lululemon $LULU ( ▲ 2.49% ) 
Needham downgraded to hold, citing tough competition and Street numbers too high for FY26.

Micron $MU ( ▲ 0.28% ) 
China's YMTC is preparing to enter the DRAM market, including HBM chips for AI processors. The state-backed company may dedicate part of its Wuhan fab to DRAM.

Sector Watch

Bond Market

The 10-year Treasury yield jumped to 4.17% after today's strong economic data made aggressive Fed cuts look less necessary. When jobless claims beat estimates and GDP gets revised higher, bond traders start questioning whether the Fed needs to help a healthy economy.

Tomorrow's PCE inflation report will determine if rates keep climbing or if this was just a one-day move.

Policy Watch

PCE inflation Friday determines the Fed's next move. 
A cool reading below 2.5% could revive growth stocks and bring rates back down. A hot print above 3% keeps the pressure on and might delay December's expected rate cut.

Government shutdown deadline is September 30. 
Democrats want healthcare funding, Republicans want a clean bill. The Office of Management and Budget already told agencies to prepare layoff plans. A shutdown would delay key economic data releases and create immediate market volatility.

Fed independence battle reaches the Supreme Court. 
Former Fed chairs are backing Governor Lisa Cook's fight against Trump's removal attempt. The case could determine how much control future presidents have over monetary policy.

Meanwhile, the Swiss National Bank held rates steady after six cuts, showing global central banks are getting cautious about tariff impacts. Trump also floated using tariff money to help farmers - a plan that could affect consumer prices if it expands.

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What to Watch

PCE inflation at 8:30 AM Friday
A reading below 2.5% could spark a tech rally and bring the 10-year yield back toward 4%. Above 3% keeps rates elevated and extends the value rotation.

Costco earnings after the bell 
Listen for management commentary on tariff impact, membership renewal rates, and whether they're seeing consumer behavior changes. The stock trades at premium valuations, so any weakness could hit hard.

Credit spreads if shutdown talks fail
Investment-grade spreads typically widen 10-15 basis points during shutdown uncertainty. High-yield could see 25+ basis points if talks collapse over the weekend.

Thanks for reading 🙂

- John

Today’s Sponsor

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