September Nasdaq 100 E-Mini futures (NQU26) are up +0.39% this morning as investors continued piling into chipmakers and other AI-linked stocks.
Chip and AI infrastructure stocks advanced in pre-market trading, extending yesterday’s rally fueled by falling bond yields and Nvidia’s upbeat outlook. Nvidia CEO Jensen Huang said on Thursday that the company anticipates selling twice as many chips in the coming year. Intel (INTC) was up over +2%, while Marvell Technology (MRVL) and Sandisk (SNDK) were up more than +1%.
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The price of WTI crude fell over -1% on Friday, declining for a third consecutive day as prospects for restored Saudi Arabian pipeline flows eased immediate supply concerns. Meanwhile, investors shifted their focus to the next round of diplomacy over the U.S.-Iran war, with U.S. President Donald Trump reportedly set to meet with Gulf leaders next week on the sidelines of the UN General Assembly in New York.
Market participants are now awaiting the Federal Reserve’s industrial production report and comments from Fed officials.
In yesterday’s trading session, Wall Street’s major indices closed sharply higher as Treasury yields tumbled on lower oil prices and growing confidence in the Fed’s ability to rein in inflation. Chip and AI infrastructure stocks climbed, with Arm Holdings (ARM) surging over +8% and Intel (INTC) rising more than +7%. Also, the Magnificent Seven stocks advanced, with Nvidia (NVDA) and Tesla (TSLA) gaining over +2%. In addition, Generac Holdings (GNRC) jumped more than +18% and was the top percentage gainer in the S&P 500 after the company announced a long-term agreement to supply Amazon with generators for its data centers. On the bearish side, Fluence Energy (FLNC) tumbled over -15% after the company cut its full-year revenue guidance.
Economic data released on Thursday were mixed. The number of Americans filing initial jobless claims in the past week unexpectedly fell by -10K to an 8-week low of 196K, compared with expectations of 207K. Also, the U.S. Philly Fed manufacturing index fell to 37.8 in September, but came in above expectations of 31.3. In addition, U.S. August pending home sales unexpectedly rose +0.3% m/m, stronger than expectations of -0.2% m/m. At the same time, U.S. August housing starts unexpectedly fell -2.6% m/m to 1.275 million, weaker than expectations of 1.320 million, and building permits, a proxy for future construction, fell -2.7% m/m to 1.394 million, weaker than expectations of 1.400 million.
“Ultimately, we expect that the economic data will hold greater sway over the direction of Fed policy,” said Ian Lyngen at BMO Capital Markets.
Meanwhile, U.S. rate futures have priced in a 55.4% chance of a 25-basis-point rate hike and a 44.6% chance of no rate change at the October FOMC meeting.
Today, investors will focus on U.S. industrial production and manufacturing production data, set to be released in a couple of hours. Economists project industrial production to rise +0.3% m/m and manufacturing production to rise +0.3% m/m in August, compared with July’s figures of +0.2% m/m and +0.2% m/m, respectively.
The Conference Board Leading Economic Index for the U.S. will also be released today. Economists expect the August figure to rise +0.1% m/m following a +0.2% m/m gain in July.
In addition, market participants will parse comments from Fed Vice Chair for Supervision Michelle Bowman and Kansas City Fed President Jeff Schmid later today.
On top of that, Wall Street is bracing for a quarterly event known as “triple-witching,” during which derivatives contracts linked to equities, index options, and futures expire, prompting traders collectively to either roll over their current positions or initiate new ones.
In the bond market, the yield on the benchmark 10-year U.S. Treasury note is at 4.96%, up +0.51%.
The Euro Stoxx 50 Index is down -0.54% this morning, pointing to a downbeat end to a turbulent week. Telecommunication stocks led the declines on Friday, weighed down by a more than -8% drop in Airtel Africa (AAF.LN) after Bloomberg reported that its unit Airtel Money was considering trimming the size of its London IPO. Food and beverage stocks also slid, with Nestle (NESN.Z.EB) falling over -2% after Russia took control of the company’s local assets. In addition, energy stocks declined amid the drop in oil prices. Limiting losses, technology stocks advanced. The benchmark index was on track for a weekly loss. A European Central Bank survey showed on Friday that Eurozone consumers slightly raised their inflation expectations last month, likely reflecting a renewed surge in fuel prices driven by the escalating Middle East conflict. Separately, data showed that U.K. monthly retail sales unexpectedly rose in August, supported by online spending. Meanwhile, ECB Vice President Boris Vujcic told Reuters in an interview published Friday that market expectations for further ECB rate hikes are being driven largely by higher energy prices, but policymakers will consider a much broader range of economic indicators when deciding their next moves. In corporate news, Orange (ORA.FP) slid over -4% after Morgan Stanley downgraded the stock to Underweight from Equal Weight.
U.K. Retail Sales, U.K. Core Retail Sales, Germany’s PPI, and Eurozone’s Current Account data were released today.
U.K. August Retail Sales rose +0.5% m/m and +2.4% y/y, stronger than expectations of -0.2% m/m and +1.9% y/y.
U.K. August Core Retail Sales rose +0.6% m/m and +2.7% y/y, stronger than expectations of -0.2% m/m and +1.9% y/y.
The German August PPI rose +1.1% m/m and +4.6% y/y, stronger than expectations of +0.6% m/m and +4.1% y/y.
Eurozone’s July Current Account came in at 27.6 billion euros, weaker than expectations of 30.7 billion euros.
Asian stock markets today closed in the green. China’s Shanghai Composite Index (SHCOMP) closed up +0.94%, and Japan’s Nikkei 225 Stock Index (NIK) closed up +1.38%.
China’s Shanghai Composite Index closed higher today as sentiment improved ahead of next week’s meeting between Chinese leader Xi Jinping and U.S. President Donald Trump. Real estate stocks jumped on Friday. Semiconductor and other AI-related stocks also climbed, tracking gains among their regional peers. The benchmark index notched a modest weekly gain. AI is widely expected to be a key topic at the U.S.-China summit, while hopes are also high that the meeting could lead to an extension of the bilateral trade truce set to expire in November. Bloomberg reported that the U.S. is expected to delay announcing excess-capacity tariffs on China until after the summit. A Goldman Sachs survey showed that 46% of offshore and 38% of onshore investors expect Chinese equities to rise following the summit. Meanwhile, the yuan rose to its strongest level against the dollar in more than four years on Friday, supported by the country’s strong exports and the central bank’s backing. Elsewhere, Reuters reported on Friday that chipmaker CXMT is gearing up to enter the rapidly growing flash memory chip market dominated by Samsung Electronics and other foreign competitors. In corporate news, EVE Energy climbed over +6% after announcing that one of its units signed an agreement to supply batteries to Fluence Energy Global Production.
Japan’s Nikkei 225 Stock Index closed sharply higher today, led by gains in the tech sector. Chip-related stocks rallied on Friday, tracking overnight gains in their U.S. peers. Memory chipmaker Kioxia Holdings surged over +9% and chip testing equipment maker Advantest climbed about +6%, providing the biggest boost to the Nikkei. The benchmark index received additional support from a sharp drop in the yen after the Bank of Japan raised interest rates in a split vote. Friday’s rally helped the Nikkei notch a solid weekly gain. The BOJ raised its benchmark interest rate by a quarter percentage point to 1.25% on Friday, bringing it to the highest level since 1995, in a widely anticipated move. However, two board members, Toichiro Asada and Ayano Sato, both appointed by Prime Minister Sanae Takaichi, voted against the hike, signaling opposition to a faster pace of rate increases that is already the quickest in more than three decades. The central bank reiterated in its statement that it would continue raising rates if its outlook for the economy and inflation materializes. Governor Kazuo Ueda said at the post-meeting press conference that “the stage for setting policy has changed,” adding that the BOJ needed to prevent inflation from overshooting its target and damaging the economy. Data released on Friday, hours before the BOJ decision, showed that Japan’s core consumer inflation eased for the first time in four months in August, largely due to the impact of government subsidies. Still, economists expect inflation to pick up in the coming months as the impact of higher oil prices feeds through with a lag and food inflation remains elevated. The Nikkei Volatility Index, which takes into account the implied volatility of Nikkei 225 options, closed down -13.93% at 24.23.
The Japanese August National Core CPI rose +1.7% y/y, weaker than expectations of +1.8% y/y.
Pre-Market U.S. Stock Movers
Chip and AI infrastructure stocks advanced in pre-market trading, extending yesterday’s rally. Intel (INTC) was up over +2%, while Marvell Technology (MRVL) and Sandisk (SNDK) were up more than +1%.
Cryptocurrency-exposed stocks climbed in pre-market trading as Bitcoin rose more than +2%. Strategy (MSTR) was up over +3%, while Coinbase Global (COIN) and MARA Holdings (MARA) were up more than +2%.
You can see more pre-market stock movers here
Today’s U.S. Earnings Spotlight: Friday - September 18th
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On the date of publication, Oleksandr Pylypenko did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
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