Inventory Indexes Rally to New Document Highs on Fed Fee Lower Optimism

The S&P 500 Index ($SPX) (SPY) on Friday closed up +0.49%, the Dow Jones Industrials Index ($DOWI) (DIA) closed up +0.37%, and the Nasdaq 100 Index ($IUXX) (QQQ) closed up +0.70%.  December E-mini S&P futures (ESZ25) rose +0.42%, and December E-mini Nasdaq futures (NQZ25) rose +0.68%. 

Inventory indexes rallied on Friday, with the S&P 500, the Dow Jones Industrials, and the Nasdaq 100 posting new all-time highs.  The prospects for extra Fed rate of interest cuts have sparked risk-on sentiment in asset markets and supported shares.  Market volatility was close to regular on Friday regardless of the quarterly occasion referred to as triple-witching, as $5 trillion price of inventory choices, futures, and derivatives expired.  Larger bond yields on Friday restricted features in shares, because the 10-year T-note yield rose +2 bp to 4.13%.

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Minneapolis Fed President Neel Kashkari stated he supported the FOMC’s choice to chop rates of interest by 25 bp this week, and he has penciled in two extra cuts this yr.

President Trump spoke with Chinese language President Xi Jinping by phone on Friday to debate a framework settlement to shift management of TikTok’s operations from its Chinese language guardian, ByteDance Ltd, to a consortium of American buyers.  Mr. Trump stated he made progress on many necessary points and can meet Xi on the sidelines of the upcoming Asia-Pacific Financial Cooperation Summit in South Korea subsequent month.

Rising company earnings expectations are a bullish backdrop for shares.  In line with Bloomberg Intelligence, greater than 22% of firms within the S&P 500 offered steerage for his or her Q3 earnings outcomes which can be anticipated to beat analysts’ expectations, the very best in a yr.  Additionally, S&P firms are anticipated to submit 6.9% earnings progress in Q3, up from 6.7% on the finish of Might. 

The markets are pricing in a 92% likelihood of a -25 bp price lower on the subsequent FOMC assembly on Oct 28-29. 

Abroad inventory markets on Friday settled combined.  The Euro Stoxx 50 rose to a 4-week excessive and closed up by +0.03%.  China’s Shanghai Composite closed down -0.30%.  Japan’s Nikkei Inventory 225 fell from a brand new document excessive and posted a 1-week low and closed down -0.57%.

Curiosity Charges

December 10-year T-notes (ZNZ5) on Friday closed down by -7.5 ticks.  The ten-year T-note yield rose by +2.7 bp to 4.131%.  T-note costs right now prolonged Thursday’s losses and fell to a 2-week low, and the 10-year T-note yield rose to a 2-week excessive of 4.143%.  T-notes have been beneath strain Friday as a result of power in shares, which has curbed safe-haven demand for presidency debt securities.  Additionally, damaging carryover from Friday’s slide in European authorities bonds to 2-week lows is weighing on T-notes.  Dovish feedback on Friday from Minneapolis Fed President Neel Kashkari lifted T-notes off their lows when he stated he has penciled in two extra Fed price cuts this yr.

Issues about Fed independence are negatively impacting T-note costs as a result of President Trump’s try to fireplace Fed Governor Prepare dinner and Stephen Miran’s intention to carry a Fed Governor place whereas remaining technically in his White Home function on the Council of Financial Advisors.

European authorities bond yields moved greater on Friday.  The ten-year German bund yield rose to a 2-week excessive of two.753% and completed up +2.2 bp at 2.748%.  The ten-year UK gilt yield climbed to a 2-week excessive of 4.718% and completed up +3.9 bp at 4.715%.

German Aug PPI fell -0.5% m/m and -2.2% y/y, weaker than expectations of -0.1% m/m and -1.7% y/y, with the -2.2% y/y drop the most important year-on-year decline in 15 months.

UK Aug retail gross sales ex-auto gas rose +0.8% m/m, stronger than expectations of +0.7% m/m and the biggest improve in 5 months.

UK Aug authorities borrowing was 18 billion kilos ($24.4 billion), above estimates of 12.5 billion kilos and the very best borrowing for the month in 5 years.

ECB Governing Council member Centeno stated, “Progress within the Eurozone is under potential and inflation will quickly fall under our goal and keep there for a while.  I imagine that it’s extra seemingly than not that we’ve to ease financial coverage additional.” 

ECB Governing Council member Muller stated the ECB is working a barely accommodative financial coverage and at the moment has no motive to decrease borrowing prices any additional.

Swaps are discounting a 2% likelihood for a -25 bp price lower by the ECB at its subsequent coverage assembly on October 30.

US Inventory Movers

Power within the Magnificent Seven megacap expertise shares is supportive for the general market.  Apple (AAPL) closed up greater than +3% and Tesla (TSLA) closed up greater than +2%.  Additionally, Alphabet (GOOGL) and Microsoft (MSFT) closed up greater than +1%, Nvidia (NVDA) closed up +0.24%, and Amazon.com (AMZN) closed up +0.11%. 

Oracle (ORCL) closed up greater than +4% after Bloomberg reported the corporate is in talks with Meta Platforms for a cloud computing deal price about $20 billion.

Klaviyo Inc (KVYO) closed up greater than +4% after Morgan Stanley upgraded the inventory to chubby from equal weight with a worth goal of $50.   

CoreWeave (CRWV) closed up greater than +3% after Loop Capital Markets initiated protection on the inventory with a purchase advice and a worth goal of $165. 

Lincoln Nationwide (LNC) closed up greater than +3% after Morgan Stanley upgraded the inventory to chubby from equal weight with a worth goal of $58.   

FedEx (FDX) closed up greater than +2% after reporting Q1 adjusted EPS of $3.83, higher than the consensus of $3.59.

Warner Bros Discovery (WBD) closed up greater than +2% after CNBC reported a possible bid for the corporate from Paramount Skydance may very well be within the $22 to $24 a share vary. 

Scholastic Corp (SCHL) closed down greater than -12% after reporting a Q1 adjusted loss per share of -$2.52, a wider loss than the consensus of -$2.44.

Hess Midstream LP (HESM) closed down greater than -10% after saying it expects decrease capital spending in 2026 and 2027, citing suspension of early engineering actions on its Capa fuel plant and removing of the challenge from its ahead plan.

Cognizant Know-how Options (CTSH) closed down greater than -4% to guide IT consulting shares decrease after Bloomberg Information reported that President Trump will transfer to require a $100,000 payment for H-1B visa purposes.  In line with Bloomberg, almost half of H-1B visas went to outsourcing or staffing firms. 

Humana (HUM) closed down greater than -4% after Piper Sandler stated the corporate’s CMS star ranking restoration received’t happen till 2027, signaling improved high quality bonus funds wouldn’t occur till 2028.

Lennar (LEN) closed down greater than -4% after reporting Q3 income of $8.81 billion, under the consensus of $9.05 billion, and forecasting This autumn new orders of 20,000 to 21,000, weaker than the consensus of 21,047.

Intel (INTC) closed down greater than -3% after Citigroup downgraded the inventory to promote from impartial with a worth goal of $29.

Earnings Studies(9/22/2025)

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