Article published at 9:20 a.m. CT.
JJ Kinahan is Senior Vice President, Head of Retail Expansion and Alternative Investment Products at Cboe Global Markets, Inc. (Cboe).
Key Takeaways:
- 10-year yield taps 5.34% overnight
- Micron shares get little respect
- Accenture shares look to recover year-to-date losses
Hello to the fourth quarter, a historically robust period for trading, especially after a third quarter challenged by market blips. Typically, a handful of drivers move the markets, such as holiday spikes in consumer spending, year-end institutional rebalancing and portfolio window dressing, and the so-called Santa Claus rally in the last five days of the year, coupled with the first two days of the next year.
This is considered a seasonal adjustment, but always remember, past performance does not guarantee future results. Wall Street analysts are weighing a handful of headwinds at the onset of the fourth quarter, including higher bond yields, uncertainty about the direction of interest rates and ongoing geopolitical conflicts. There are also the mid-term elections as one more potential volatility driver.
Speaking of Treasury bonds, the third quarter was a tough one for all yields, but particularly the 10-year, according to Reuters. Considered the standard for global borrowing and asset prices, the 10-year yield added 87.1 basis points and hit 5.34% overnight. That’s its highest since early 2002, besting Wednesday’s 2007 peak, Reuters reported. It’s sitting at 5.31%.
In early trading, the markets were fighting to find solid ground after moving to the upside in pre-market trading. The Nasdaq Composite was hugging the flat line while the S&P 500 Index fell 0.24%. The Dow Jones Industrial Average lost its battle, falling 0.44%. The markets closed mixed Wednesday, with the Nasdaq as the only one to end in the green, closing higher by 0.24% to snap its five-day streak of losing ground. The S&P 500 closed to the downside by 0.25% and the Dow gave back 0.86%. WTI crude closed in the low $90-per-barrel range.
Micron shares are moving 1.1% to the downside, underscoring how artificial intelligence (AI) expectations can be so off the chart. As noted yesterday, the implied move after its earnings release was 6.5% in either direction, which obviously didn’t happen despite the chip maker’s 380% leap in revenue on a year-over-year basis. Traders appeared concerned that its gross margins guidance would drop to 86.25% in this quarter, falling from 87% in its fiscal fourth quarter. As Barron’s reported, “It’s hardly a crisis.” It also illustrates how some stocks have to over-outperform – if there is such a thing – to get Wall Street’s blessings.
Elsewhere, Accenture shares are tracking 23.5% to the upside after the professional services firm reported earnings that handily outpaced Wall Street’s expectations. Guidance was above expectations too, helping the shares recover from a 33.8% fall year-to-date.
Constellation Energy shares are higher by 3.34% after Amazon inked a 20-year power purchase deal to support expanding Maryland’s nuclear plant. The pact will lead to more than $3 billion in infrastructure, according to Constellation. Amazon shares are up by 0.65%.
Alphabet rolled out an advanced AI model, Gemini 4 Argon, that is helping juice its shares by 0.73% in early trading.
On a nostalgic note, Conagra Brands said it will do away with its Celeste frozen pizza business to redirect resources elsewhere among its brands. Shares are down 1.8%.
Happy Trading!
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