Stock futures mixed as October begins, Micron reports strong earnings
On Thursday, Dow futures plummeted to a three-month low as inflation concerns and soaring government debt drove Treasury yields to multi-decade peak levels, according to Reuters. Meanwhile, Micron Technology's strong earnings results bolstered chip stocks. Over the past few weeks, stock movements have mirrored bond yields as investors grappled with the Federal Reserve's monetary policy direction amidst rising energy costs due to the Middle East conflict.
The Treasury Department's attempts to stabilize the market through increased long-term bond buybacks have had limited success, as European and Japanese markets face debt worries. The 10-year and 30-year bond yields reached their highest levels since 2002, at 5.32% and 5.66%, respectively, following the worst quarterly performance for Treasuries since 1994.
Analysts attribute the relative stability of US equities to confidence in the AI trade, with Micron Technology's forecast of quarterly revenue exceeding market expectations and a $32 billion supply agreement commitment contributing to this sentiment. However, Micron's stock fell approximately 1% in premarket trading, reflecting investor expectations, while broader sector stocks gained.
Other chip stocks such as Lam Research, Applied Materials, Nvidia, and Advanced Micro Devices also saw modest gains. Meanwhile, the CBOE's VIX index, a measure of market fear, hit a two-week high at 16.84 points. Wall Street experienced a tumultuous September, with both the S&P 500 and Dow logging monthly declines, although this month typically underperforms.
Despite this, AI enthusiasm helped the Nasdaq 100 index post gains. Recent softer-than-expected inflation data has reduced expectations of an interest-rate hike this month, with a 63% chance of a hold according to the CME Group's FedWatch Tool, but a December hike remains a possibility. Policymakers like Thomas Barkin, Christopher Waller, Philip Jefferson, Michelle Bowman, and Lorie Logan may provide further insights into the policy trajectory.
Later in the day, data on jobless claims and the Institute for Supply Management's manufacturing activity report will be released.
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