Page One

Briefing.com Summary:

*The equity futures are up sharply, seizing on a number of rebound catalysts.

*WTI crude futures are back below $100/bbl.

*The 10-yr note yield has been unable to maintain a posture above 5.00%.

Interest rates rose and stock prices fell yesterday in the wake of Fed Chair Warsh's press conference, in which he struck a more hawkish tone than expected. That was then. What we see this morning is an equity futures market that is revved up because interest rates and oil prices are lower, and mega-cap stocks and AI infrastructure stocks are back in a command position.

Currently, the S&P 500 futures are up 97 points and are trading 1.4% above fair value, the Nasdaq 100 futures are up 478 points and are trading 1.7% above fair value, and the Dow Jones Industrial Average futures are up 639 points and are trading 1.4% above fair value.

What changed? We see four catalysts for the attitudinal shift.

1. Oil prices are sliding on hopes of a near-term improvement in supply conditions. WTI crude futures are down 2.6% to $99.81/bbl.
2. The 10-yr note yield has been unable to maintain a posture above 5.00% (currently 4.95%), taking a directional cue from oil prices and perhaps warming to the idea that the Fed's rate hike(s) will help temper inflation.
3. There is renewed momentum in the AI infrastructure trade after CoreWeave (CRWV) said it is contracting new compute capacity at higher prices, Yahoo! Finance reported Nebius (NBIS) is raising prices for its computing services, and Generac (GNRC) entered into a long-term supply deal with Amazon (AMZN) for up to $8 billion of generator purchases.
4. Mega-cap stocks are flexing some relative strength.

We won't call it a catalyst, more of a symptom of the pre-open tape, but there is some buy-the-dip trend following going on, too, that is probably driving some short-covering activity.

There is no question, with the early indications, that the stock market is primed to rally at the opening bell. Just how far it goes will likely depend on how far the Treasury market's rebound goes. If yields start pressing higher again, then some wind may be taken out of the rebound sails.

In any case, there is palpable rebound energy at the moment, notwithstanding a disappointing earnings report and outlook from homebuilder Lennar Corp. (LEN), President Trump signing a memorandum to identify and take steps to remove Canadian-origin goods from federal civil government procurement, and the Bank of Japan slated to follow through with a rate hike of its own tonight.

The Bank of England, for its part, voted 6-3 to keep its bank rate unchanged at 3.75%, but Governor Bailey warned a rate hike is possible if the Iran conflict is prolonged.

This morning's economic data fell along some familiar lines, reflecting a strong labor market, soft housing market activity, and ongoing inflation pressures for manufacturers.

• Initial jobless claims for the week ending September 12 decreased by 10,000 to 196,000 (Briefing.com consensus: 209,000). Continuing jobless claims for the week ending September 5 decreased by 39,000 to 1.730 million.
  • The key takeaway from the report is the remarkably low level of initial jobless claims, which suggests a low-firing environment.
• Housing starts declined 2.6% month-over-month in August to a seasonally adjusted annual rate of 1.275 million (Briefing.com consensus: 1.325 million), although single-unit starts were up 7.6%. Building permits declined 2.7% month-over-month to a seasonally adjusted annual rate of 1.394 million (Briefing.com consensus: 1.410 million).
  • The key takeaway from the report is that building permits—a leading indicator—were flat to down across all regions for single-unit dwellings.
• The Philadelphia Fed Index fell to 37.8 for September (Briefing.com consensus: 35.0) from 47.4 in August.
  • The key takeaway from the report is that the prices paid index jumped eight points to 48.6, while the prices received index hit its highest point (31.3) since April.

--Patrick J. O'Hare, Briefing.com