September 28th Market Overview

Happy Monday

Oil rose on Trump's rejection of Iran's offer, then fell fast on reports he'd trade sanctions relief for nuclear concessions.

Stocks came off their lows with it but in general we are closing red, with yields at fresh highs. I'll take a small dip on a day like this.

Let’s dig in...

Today's Big Picture

1. The 10-Year Yield Hits a 19-Year High 
   
   The 10-year Treasury yield hit its highest level since 2007. The 30-year sits a hair below its 2004 peak. Traders are betting on Fed rate hikes while the Iran war keeps energy expensive. Still, the S&P 500 now trades at 19 times expected earnings, down from 22, as profit estimates rise.
   

2. Trump Puts Sanctions Relief on the Table
   
   A US official told CNN and Axios that Trump would ease sanctions and release Iran's frozen funds for "concrete progress" on its nuclear program. Oil fell fast on the news, then won some of it back. The two sides are still far apart, since Iran wants the Strait of Hormuz and the US blockade dealt with first. November Brent still trades more than $7 over December, a sign buyers are scrambling for oil now.
   

3. Software Stocks Fall as Meta Moves In 
   
   Software stocks fell after Meta launched a business selling Muse and its other AI tools straight to companies. MongoDB took the biggest hit after Meta hired away its CEO, CJ Desai, to run it. MongoDB reaffirmed its guidance, so the selling was about losing its leader. Meta slipped too, giving back a little of a big September.

Market Overview

Index Performance (10 year T-bill today)

Stock Spotlight

Kodiak Sciences $KOD ( ▲ 177.43% )  
had a monster day after its eye drug Zenkuda passed a late-stage trial for wet macular degeneration.

Snowflake $SNOW ( ▼ 2.05% )  
fell after announcing a $3.5 billion sale of convertible notes, debt that can turn into stock.

SpaceX $SPCX ( ▼ 0.55% )  
got Starship into Earth orbit for the first time, engine hiccup and all. The stock edged lower anyway.

NetEase $NTES ( ▲ 5.1% )  
got named Morgan Stanley's top pick among its peers. The bank thinks its new game, Ananta, will be a blockbuster and a big growth driver next year.

Big Name Updates

Nvidia $NVDA ( ▲ 2.14% )  
rose after adding $150 billion to its buyback, the biggest in US history. It sees $40 billion in revenue per gigawatt of AI capacity with its next chip, Rubin, versus $18 billion with Hopper.

Boeing $BA ( ▼ 4.58% )  
fell after confirming a 737 MAX software glitch that can disable a navigation feature on some aborted landings. It could slow approval of the bigger MAX 10, which the CEO said this month could come "very soon."

Amazon $AMZN ( ▼ 1.01% )  
is the worst Magnificent Seven stock this month, and Meta's Muse is a big reason. Amazon blocked Muse from shopping its site, protecting an ad business that did $19.8 billion last quarter.

Oracle $ORCL ( ▼ 2.74% )  
fell again, adding to last week's losses after problems surfaced at its debt-funded New Mexico data center.

Intel $INTC ( ▼ 5.9% )  
fell with most chip stocks after an OpenAI model escaped its sandbox and got online.

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

Other Notable Company News

Citigroup $C ( ▼ 1.48% )  
teamed up with Coinbase $COIN so its institutional clients can pay in stablecoins.

Home Depot $HD ( ▼ 0.63% )  
and Lowe's $LOW are having a rough September. Higher mortgage rates are slowing building, and renovators are sticking to cheaper jobs.

Teleflex $TFX ( ▲ 4.6% )  
got upgraded to buy at Bank of America, which sees upside to earnings.

SK Hynix $SKHY ( ▼ 4.62% )  
fell on reports that its Solidigm unit plans to go public, a move investors are questioning.

NIO $NIO ( ▲ 0.14% )  
is bringing Geely into Nio Power, its battery-swapping and charging business.

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Sector Watch

Bond Market

The 2-year yield is rising faster than the 10-year, so the gap between them keeps shrinking. When the 2-year ends up on top, a recession has often followed.

Evercore ISI says stocks have peaked about nine months after that flip on average, and we're not there yet.

• Higher yields knocked gold down hard. A bond paying this much makes a metal that pays nothing tougher to hold.

Policy Watch

Fiscal & Trade

The US and China will cut tariffs on about $30 billion of each other's goods. On the US side, 1,619 export items made the list, including farm goods, seafood, wood, cosmetics and medical devices. China's side covers 77 categories, including fish hooks, sleeping bags, microwaves and toys.

• Trump announced Mesabi Metallics' $15 billion Iowa steel plant, which would be the largest in US history. Production is set to start in 2030, with about 1,750 permanent jobs.
  

• Trump floated a diesel export ban again Sunday. Goldman says each week of a ban would cut about 25 cents a gallon off $6.50 diesel. A longer ban would push gasoline up once storage fills, and Energy Secretary Wright said last week it wouldn't work.

International

Iran's foreign minister, Abbas Araghchi, says his country is ready to fight again but hasn't given up on talks. Mediators meet each side separately early this week and are pushing Iran for a nuclear concession to revive ceasefire talks.

• Saudi Arabia restarted oil loading at Yanbu, its Red Sea port, after patching the East-West pipeline. The pipeline is running about 3.5 million barrels a day, half its capacity, on a route that avoids Hormuz.
  

• Japan's top currency official, Atsushi Mimura, told markets to take last week's US-Japan warning on the yen seriously. Tokyo is ready to step in if the yen falls too far.

What to Watch

Trump Meets Anthropic Tuesday

Trump had dinner with Anthropic CEO Dario Amodei on Sunday and meets the company again Tuesday. Amodei wants AI development to slow down, and Trump says he's for "let's go and let's win." Any hint of new safety rules would matter for Nvidia and the rest of the AI trade.

Inflation Data Wednesday

The PCE report is the Fed's preferred inflation gauge, and it lands alongside GDP and the ADP jobs report. A cool core number would give yields room to come off these highs.

Micron Earnings Wednesday

Micron is the week's big chip report. Listen for what it says about demand for memory in AI data centers.

Thanks for reading - you are now the more informed 🙂

- John

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