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Briefing.com Summary:
*There is some cooling off in the semiconductor space after a hit start to the week.
*Oil prices are firm, and Treasury yields are higher.
*Microsot is benefiting from a brokerage upgrade to Buy from Hold.
The trading week (just two days old) has gone well for the mega-cap stocks and very well for the semiconductor stocks. The Vanguard Morningstar Mega-Cap Growth ETF (MGK) is up 2.9%, and the VanEck Semiconductor ETF (SMH) is up 6.0%. Both will be forgiven if they see some backing and filling today on some profit-taking interest.
The rest of the market has done just okay. The equal-weighted S&P 500 is up only 0.2% for the week, but a gain is better than a loss any day of the week.
At the moment, it looks as if the major indices will start today's session on a soft note. The S&P 500 futures are down nine points and are trading 0.1% below fair value, the Nasdaq 100 futures are down 63 points and are trading 0.1% below fair value, and the Dow Jones Industrial Average futures are down 166 points and are trading 0.3% below fair value.
The usual suspects—rising oil prices and higher bond yields—are sharing the blame for the lack of buying interest. WTI crude futures are up 0.7% to $91.17/bbl; the 2-yr note yield is up five basis points to 4.80%; and the 10-yr note yield is up two basis points to 4.99%. There is a $70 billion 5-yr note auction today. Results will be announced at 1:00 p.m. ET.
Although diplomatic efforts are afoot to try to tame the U.S-Iran standoff, the reality remains that a solution is still elusive. Accordingly, supply concerns for energy and derivative products persist.
The lack of buying interest so far today, however, may just be a case of taking a pause after a hot start and waiting to see if participants pursue buy-the-dip efforts or elect to take a breather ahead of tomorrow's Trump-Xi meeting.
Both leaders are reportedly aligned with not slowing down AI development. Beyond that, it is unclear if any meaningful economic outcomes will result from the meeting or if the takeaways will be more PR worthy than anything else.
There hasn't been much in the way of corporate press releases to excite the masses, although some speculative energy is building in the quantum stocks after IonQ (IONQ) said it has demonstrated the industry's first end-to-end real-time quantum error decoder.
We'll let others "in the know" explain why that is so exciting, but those who know "know," and many of the quantum stocks have a nice bid in them in pre-market trading.
Microsoft (MSFT), for its part, has attracted a bid after Stifel upgraded the stock to Buy from Hold and set a $575 price target. Shares of MSFT are up 0.8%, which is providing some influential support.
An economic calendar devoid of notable data so far this week will have something to share today. The preliminary September S&P Global U.S. Manufacturing PMI (prior 53.9) and Services PMI (prior 56.5) will be released at 9:45 a.m. ET. Earlier, the MBA Mortgage Applications Index was reported to be down 1.5% week-over-week (prior -4.1%), with refinance applications down 3% and purchase applications down 1%.
Higher mortgage rates were to blame, something that KB Home (KBH) also cited in reporting fiscal Q3 results that featured a 20% year-over-year decline in revenues and an operating margin of 5.2% that was down from 8.1% in the same period a year ago.
