Stock Indexes Rebound as Investors Rotate Out of Chip Stocks
The S&P 500 Index ($SPX) (SPY) is up by +0.13% today, the Dow Jones Industrial Average ($DOWI) (DIA) is up by +1.04%, and the Nasdaq 100 Index ($IUXX) (QQQ) is down -0.57%. December E-mini S&P futures (ESZ26) are up +0158%, and December E-mini Nasdaq futures (NQZ26) are down -0.54%.
Stock indexes are mixed today, with the Nasdaq 100 dropping to a 3.5-week low. Stocks recovered from early losses today to trade mixed as bond yields fall and as investors rotate out of chip stocks into software and pharmaceutical companies.
The Nasdaq 100 is under pressure today as the rout in chipmakers and AI-infrastructure stocks spreads globally, with South Korea’s Kospi Index sinking more than -7% and China’s Shanghai Composite falling to a 14-month low. Today’s drop in chipmakers followed Anthropic PBC's disclosure of $16.8 billion in Q3 growth to prospective investors, figures that suggest growth has slowed even as it remains robust.
Stocks were also pressured today on rising US producer price pressures after the Sep PPI final demand rose +6.3% y/y, stronger than expectations of +5.4% y/y and the most in 3.75 years. Also, Sep PPI ex-food and energy rose +5.0% y/y, stronger than expectations of +4.4% y/y and the most in more than 3.5 years.
Other US economic news today was mixed, with Sep retail sales and the Oct Empire manufacturing survey rising more than expected and weekly jobless claims near expectations. However, the Oct Philadelphia Fed business outlook survey fell more than expected.
On the positive side, the slump in global equity markets has sparked a rally in government bond markets, knocking yields lower. The 10-year German Bund yield fell to a 5-week low today of 3.35%, and the 10-year T-note yield fell to a 3-week low of 5.04%.
US weekly initial unemployment claims rose by +1,000 to 199,000, close to expectations of 200,000.
US Sep retail sales rose +0.8% m/m, stronger than expectations of +0.3% m/m, and Sep retail sales ex-autos rose+0.9% m/m, stronger than expectations of +0.5% m/m.
The US Oct Philadelphia Fed business outlook survey fell by -16.9 to 20.9, weaker than expectations of 28.0.
The US Oct Empire manufacturing survey of general business conditions rose +17.9 to a 4.75-year high of 25.5, stronger than expectations of 12.0.
Stocks and bonds got some support today after San Francisco Fed President Mary Daly said she thinks rate hikes are likely needed, just not immediately, and that she would hold interest rates steady at the October 27-28 FOMC meeting.
Stocks have support from the prospect of solid quarterly earnings results starting this week. Goldman Sachs on Monday raised its three-month view on global equity markets to overweight from neutral, saying. “Earnings growth remains supportive for equities and the recent valuation de-rating has improved asymmetry into the third-quarter earnings season.” According to data compiled by Bloomberg Intelligence, Q3 S&P 500 earnings are expected to climb by +25% from a year earlier, up from a July estimate of 22%. As of today, 38 of the S&P 500 companies have reported results, with 82% beating estimates.
Nov WTI crude oil prices (CLX26) are up more than +1% today at a 3-week high. Crude prices are supported by risks to global oil supplies as Yemen's Houthi rebels continue drone and missile attacks across Saudi Arabia, including energy infrastructure. Also, Iranian attacks on shipping attempting to transit the Strait of Hormuz have increased in recent weeks, threatening a rebound in energy supplies from the Middle East.
Markets are discounting a 27% chance of a +25 bp Fed rate hike at the next FOMC meeting on October 27-28.
Overseas stock markets are lower today. The Euro Stoxx 50 is down -0.53%. China's Shanghai Composite fell to a 14-month low and closed down -1.59%. Japan's Nikkei-225 Stock Average dropped to a 4-week low and closed down sharply by -4.90%.
Interest Rates
December 10-year T-notes (ZNZ6) are up by +27 ticks today. The 10-year T-note yield is down -11.3 bp to 5.073%. Dec T-notes rallied to a 3-week high today, and the 10-year T-note yield fell to a 3-week low of 5.035%. Today’s selloff in global equity markets has boosted safe-haven demand for T-notes. Also, dovish comments from San Francisco Fed President Mary Daly were bullish for T-notes when she suggested she would support holding interest rates steady at the October 27-28 FOMC meeting.
Hawkish US economic news today is bearish for T-notes after US Sep producer prices and Sep retail sales rose more than expected, and the Oct Empire manufacturing survey's general business conditions rose to a 4.75-year high.
European government bond yields are moving lower today. The 10-year German bund yield fell to a 5-week low of 3.353% and is down -7.4 bp to 3.392%. The 10-year UK gilt yield fell to a 1.5-week low of 5.301% and is down -7.8 bp to 5.346%.
Eurozone Aug industrial production fell -0.5% m/m, weaker than expectations of no change and the biggest decline in 7 months.
ECB Governing Council member Martins Kazaks said the ECB can afford to take its time adjusting interest rates, despite persistent energy price rises that are set to keep consumer price growth elevated, as the recent surge in government bond yields may start to weigh on economic activity.
UK Aug manufacturing production rose +1.2% m/m, stronger than expectations of no change and the largest increase in 9 months.
Markets are discounting a 9% chance of a +25 bp ECB rate hike at the ECB’s next meeting on October 29.
US Stock Movers
Chipmakers and AI-infrastructure stocks are falling today on demand concerns after Anthropic disclosed Q3 revenue growth that likely slowed from the previous quarter. The iShares Semiconductor ETF (SOXX) is down more than -1% at a 1-month low. Lam Research (LRCX) is down more than -5%, and Applied Materials (APLD), Seagate Technology Holdings Plc (STX), and Western Digital (WDC) are down more than -4%. Also, Advanced Micro Devices (AMD) and Intel (INTC) are down more than -3%, and Marvell Technology (MRVL), KLA Corp (KLAC) and SanDisk (SNDK) are down more than -2%.
Cloud infrastructure stocks are under pressure today on debt concerns after credit-default swaps have priced in a more than 50% chance that CoreWeave could default on its debt within the next five years. Arista Networks (ANET) is down more than -6%, and Applied Digital (APLD) is down more than -5%. Also, Nebius Group NV (NBIS) and Lumentum Holdings (LITE) are down more than -3%, and CoreWeave (CRWV) is down more than -1%.
Software stocks are climbing today as investors rotate out of chip stocks into software. Intuit (INTU) is up more than +6%, and Autodesk (ADSK), Workday (WDAY), Adobe Systems (ADBE), and ServiceNow (NOW) are up more than +5%. Also, Salesforce (CRM) is up more than +4%, Thomson Reuters (TRI) is up more than +3%, and IBM (IBM) is up more than +2%.
Defensive pharmaceutical stocks are climbing today amid the broader market slump. Eli Lilly (LLY) is up more than +5%, and Amgen (AMGN), Merck & Co (MRK), Gilead Sciences (GILD), Alnylam Pharmaceuticals (ALNY), Ionis Pharmaceuticals (IONS), Regeneron Pharmaceuticals (REGN), and Jazz Pharma Plc (JAZZ) are up more than +3%. Also, Vertex Pharmaceuticals (VRTX) and Biogen (BIIB) are up more than +2%, and Pfizer (PFE) is up more than +1%.
FMC Corp (FMC) is down more than -33% after cutting its Q3 adjusted Ebitda forecast to a loss of -$510 million to -$565 million, after previously expecting a profit of$120 million to $140 million.
Rocket Lab (RKLB) is down more than -9% to lead losers in the Nasdaq 100 after announcing that it will delay the launch of its inaugural Neutron medium-lift rocket until sometime in 2027.
Penske Automotive Group (PAG) is up more than +7% after entering a deal to be taken private for $212 a share in cash by Penske Corporation and Mitsui.
International Paper (IP) is up more than +6% to lead gainers in the S&P 500 after the Financial Times reported that private equity firms Lone Star and Atlas Holdings are exploring bids to acquire the company.
Kimberly-Clark (KMB) is up more than +4% after reporting preliminary Q3 net sales of $4.13 billion, above the consensus of $4.10 billion.
Walmart (WMT) is up more than +2% after Deutsche Bank upgraded the stock to buy from hold with a price target of $136.
Commercial Metals (CMC) is up more than +2% after reporting Q4 net sales of $2.66 billion, better than the consensus of $2.54 billion.
Earnings Reports (10/15/2026)
Alcoa Corp (AA), Bank of New York Mellon Corp/The (BNY), Charles Schwab Corp/The (SCHW), First Horizon Corp (FHN), Interactive Brokers Group Inc (IBKR), JB Hunt Transport Services Inc (JBHT), Marsh & McLennan Cos Inc (MRSH), PNC Financial Services Group Inc (PNC), Prologis Inc (PLD), US Bancorp (USB).
On the date of publication, Rich Asplund 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.