The S&P 500 Index ($SPX) (SPY) today is up +0.67%, the Dow Jones Industrials Index ($DOWI) (DIA) is up +0.46%, and the Nasdaq 100 Index ($IUXX) (QQQ) is up +1.19%.  September E-mini S&P futures (ESU25) are up +0.63%, and September E-mini Nasdaq futures (NQU25) are up +1.19%. 

The prospects for additional Fed easing are lifting stocks today, with the S&P 500, Nasdaq 100, and Dow Jones Industrials posting new record highs.  Strength in semiconductor stocks today is a bullish factor for the overall market, led by a +25% surge in Intel after Nvidia agreed to invest $5 billion in the company and said the two will codevelop chips for PCs and data centers.

Stocks are also rallying on speculation that the Fed will tilt toward supporting the labor market, despite inflation risks.  Bond yields rose on Wednesday, and stocks turned mixed despite the Fed cutting interest rates by 25 bp and signaling another 50 bp of rate cuts by year’s end due to hawkish comments from Fed Chair Powell, who highlighted the risk of persistent inflation and signaled less support for deeper easing of Fed policy. 

Today’s US economic news was mostly better than expected, which pushed bond yields higher and is a negative factor for stocks.  The 10-year T-note yield rose to a 2-week high today at 4.14%.

Weekly initial unemployment claims fell by -33,000 to 231,000, showing a stronger labor market than expectations of 240,000.  

The Sep Philadelphia Fed business outlook survey rose by +23.5 to an 8-month high of 23.2, stronger than expectations of 1.7. 

Aug leading indicators fell -0.5% m/m, weaker than expectations of -0.2% m/m and the biggest decline in four months. 

The markets are pricing in an 86% chance of a -25 bp rate cut at the next FOMC meeting on Oct 28-29. 

Overseas stock markets today are mixed.  The Euro Stoxx 50 climbed to a 3.5-week high and is up sharply by +1.66%.  China’s Shanghai Composite fell from a 10-year high and closed down -1.15%.  Japan’s Nikkei Stock 225 rallied to a new record high and closed up +1.15%.

Interest Rates

December 10-year T-notes (ZNZ5) today are down by -9 ticks.  The 10-year T-note yield is up by +3.7 bp to 4.124%.  Dec T-notes gave up overnight gains today and dropped to a 2-week low, and the 10-year T-note yield rose to a 2-week high of 4.135%.

T-notes retreated today after weekly initial jobless claims fell more than expected and the Sep Philadelphia Fed business outlook survey rose more than expected to an 8-month high, hawkish factors for Fed policy. Also, rising inflation expectations are bearish for T-notes after the 10-year breakeven inflation rate today rose to a 2-week high of 2.408%.

T-notes initially moved higher today on the prospects of additional Fed easing.  After cutting the federal funds target rate by 25 bp on Wednesday, the Fed signaled another 50 bp of rate cuts by year’s end. 

Concerns about Fed independence are negatively impacting T-note prices due to President Trump’s attempt to fire Fed Governor Cook and Stephen Miran’s intention to hold a Fed Governor position while remaining technically in his White House role on the Council of Economic Advisors.

European government bond yields today are moving higher.  The 10-year German bund yield rose to a 2-week high of 2.726% and is up +4.3 bp to 2.718%.  The 10-year UK gilt yield is up +4.6 bp to 4.671%.

As expected, the BOE, in a 7-2 vote, kept its official bank rate unchanged at 4.00% and BOE Governor Bailey said that rate cuts need to be made “gradually and carefully.”

Swaps are discounting a 2% chance for a -25 bp rate cut by the ECB at its next policy meeting on October 30.

US Stock Movers

Intel (INTC) is up more than +25% to lead chip stocks higher and gainers in the S&P 500 and Nasdaq 100 after Nvidia agreed to invest $5 billion in the company and said the two will codevelop chips for PCs and data centers.  Also, KLA Corp (KLAC) is up more than +7%, and ASML Holding NV (ASML) and Applied Materials (AMAT) are up more than +6%.  In addition, Micron Technology (MU) is up more than +5%, and Marvell Technology (MRVL), ON Semiconductor (ON), and Lam Research (LRCX) are up more than +4%.   Finally, GlobalFoundries (GFS) is up more than +3%, and Nvidia (NVDA) is up more than +2% to lead gainers in the Dow Jones Industrials.

CrowdStrike Home (CRWD) is up more than +10% in the wake of an investor briefing where the company discussed its AI strategy and gave a preliminary fiscal 2027 outlook that several analysts see as strong. 

89bio (ETNB) is up more than +86% after Roche said it will acquire the company for $3.5 billion or $14.50 per share.   

IonQ (IONQ) is up more than +4% after signing a Memorandum of Understanding (MOU) with the US Department of Energy to advance the development and deployment of quantum technologies in space.   

AeroVironment (AVAV) is up more than +4% after Bank of America Global Research initiated coverage of the stock with a recommendation of buy and a price target of $300. 

Allstate (ALL) is up more than +4% after reporting Aug catastrophe losses of $168 million, down -8.7% m/m. 

CSX Corp (CSX) is up more than +2% after RBC Capital Markets upgraded the stock to outperform from sector perform with a price target of $39. 

Darden Restaurants (DRI) is down more than -9% to lead losers in the S&P 500 after forecasting 2026 adjusted EPS from continuing operations of $10.50 to $10.70, the midpoint below the consensus of $10.67.

Red Cat (RCAT) is down more than -8% after announcing it intends to sell shares of its common stock in an underwritten public offering.  o lead gainers in the Nasdaq 100 after Guggenheim Securities upgraded the stock to buy from neutral with a price target of $285.

ARM Holdings (ARM) is down more than -4% to lead losers in the Nasdaq 100, and Advanced Micro Devices (AMD) is down more than -3% on news that Nvidia will invest $5 billion in Intel and the two will co-design chips for PCs and data centers. 

Nucor (NUE) is down more than -4% after forecasting Q3 EPS of $2.05 to $2.15, well below the consensus of $2.59. 

FactSet Research Systems (FDS) is down more than -3% after reporting Q4 adjusted EPS of $4.05, below the consensus of $4.15, and forecasting 2026 adjusted EPS of $16.90-$17.60, weaker than the consensus of $18.30.

Cracker Barrel Old Country Store (CBRL) is down more than -2% after forecasting 2025 revenue of $3.35 billion-$3.45 billion, weaker than the consensus of $3.52 billion. 

Earnings Reports(9/18/2025)

Darden Restaurants Inc (DRI), Ennis Inc (EBF), FactSet Research Systems Inc (FDS), FedEx Corp (FDX), Golden Matrix Group Inc (GMGI), Lennar Corp (LEN), Scholastic Corp (SCHL).