Chips carried the post-Fed rebound; banks and telecoms did not

The S&P 500 more than erased its Fed-day loss yesterday, but look at where the buying went: almost all of it into semiconductors, almost none into the banks that fell hardest. And the whole gain was in place before the first trade of the regular session.

A rebound that happened at the open

The S&P 500 rose 1.1%, the Nasdaq Composite 1.7% and the Dow 0.6%, according to the Associated Press. In our feed, SPY closed at $762.60, up 1.13%, and QQQ at $716.92, up 1.73%. DIA gained 0.61% and IWM 0.53%.

The detail worth noticing is the timing. SPY closed Wednesday at $754.05 and opened Thursday at $763.15 — then spent the session between $759.96 and $763.57 and closed slightly below where it opened. QQQ did the same, opening at $715.95 and closing at $716.92. The repricing happened overnight and in the first minutes; the regular session added essentially nothing.

Breadth recovered with it. 65 of the 100 stocks and funds we track rose. That is close to a mirror image of Wednesday, when 69 of them declined.

The bond market helped. The 10-year Treasury yield fell more than 7 basis points to 4.93% and the 2-year about 5 basis points to 4.67%, CNBC reported — giving back the post-decision rise and pulling the 10-year back under 5%. TLT, the long-bond fund, rose 1.11%. Brent crude also eased from the nearly $110 it touched earlier in the week, per AP.

Chips and AI power did the lifting

The leaders were concentrated in one industry. Arm (ARM) rose 8.57% to $264.90, after CEO Rene Haas said he was increasingly confident the company could convert more than $2 billion in customer demand for its new data-centre CPU into revenue. Intel (INTC) gained 7.67% to $108.80 on 148.9 million shares, again the heaviest volume in our feed by a wide margin. Advanced Micro Devices (AMD) rose 6.36% to $545.09 and Micron (MU) 5.50% to $977.50.

Micron’s move traces to Intel CEO Lip-Bu Tan, who said the memory shortage will get worse in 2027 and that memory prices have risen five to seven times. For a memory maker, a customer publicly complaining about scarcity is a statement about pricing power. Micron changed hands at $982.91 after hours.

Nvidia (NVDA) rose 2.54% and XLK, the technology fund, 2.25%. Oracle (ORCL) gained 5.19% to $150.59 on reports that OpenAI, one of its largest cloud customers, is in talks to raise money at a $1.2 trillion valuation.

The risk-appetite proxies that led Wednesday’s decline reversed too: Coinbase (COIN) rose 5.75% and Robinhood (HOOD) 5.16%, with Bitcoin higher.

One AI-power name shows how much of a first reaction can fade. Generac (GNRC) disclosed an agreement to supply Amazon with up to $8 billion of backup generators for data centres, with $2.4 billion expected to be delivered in 2027 and 2028, according to its SEC filing and Bloomberg. Amazon also received warrants to buy up to 1,693,745 Generac shares at $200.93.

The stock jumped as much as 45% in after-hours trading Wednesday, per Bloomberg. By Thursday’s regular session it opened at $229.50 and reached $231.89, then faded to close at $207.21 — still up 18.33% on the day and among the top gainers in our movers feed, but well off the first reaction.

The banks did not bounce, and telecoms kept falling

This is where the data disagrees with the “relief rally” headline. XLF, the financials fund, slipped 0.09% yesterday to $55.88, after falling 1.62% on Fed day. Berkshire Hathaway (BRK.B) fell 2.04%. A market that believed the hike was a one-day scare would have bought the sector it sold hardest; it did not.

Telecoms went the other way entirely. T-Mobile (TMUS) fell 5.57% to $166.45, closing within ten cents of its low of the day. Verizon (VZ) fell 2.87%, its second straight decline after dropping 3.28% on Wednesday. The coverage we found offers rate sensitivity — these are heavily indebted companies — and an earlier investor letter pointed to price competition from Verizon and AT&T, but no single catalyst for Thursday’s T-Mobile drop is confirmed. Treat the cause as unsettled.

Salesforce (CRM) fell 3.07% and Spotify (SPOT) 3.40%, both finishing near their lows.

Yesterday’s data: firm labour, split housing

Initial jobless claims fell 10,000 to 196,000 for the week ended September 12, the lowest since July, against a Reuters consensus of 208,000. The Labor Department’s four-week average fell to 203,250. Economists noted the Labor Day holiday likely distorted the week.

Housing starts fell 2.6% in August to a 1.28 million annual rate, but the split matters: single-family starts rose 7.6% to 918,000 while multifamily fell 21.7%. Building permits fell 2.7% to 1.394 million. The Philadelphia Fed manufacturing index eased to 37.8 from 47.4, still well above the 30.5 expected, but its prices-paid index rose eight points to 48.6 — price pressure moving the wrong way for a Fed that just hiked over inflation.

Overnight: Japan hiked too

The Bank of Japan raised its policy rate to 1.25% from 1.0%, a 31-year high and its first increase since June. The vote was 7-2, with two board members appointed by Prime Minister Sanae Takaichi dissenting.

Markets did not react the textbook way. The yen weakened past 157 per dollar rather than strengthening, and Japan’s 10-year government bond yield slipped, CNBC reported. The Nikkei 225 gained 1.9% to 65,332.57 in AP’s early read, with South Korea’s Kospi up 2.1% and Hong Kong’s Hang Seng 0.8%. In Europe, Bloomberg reported UK stock futures pointing lower.

Our own after-hours data showed little movement in the US: SPY traded at $762.08 after the close.

What to watch today

Quarterly expiration of stock options, index options and index futures, with the heaviest trading usually in the final hour, 3:00 to 4:00 p.m. ET. Citadel Securities estimated $6.2 trillion of US options exposure scheduled to expire today, as of August 27.
Industrial production and capacity utilization for August, 9:15 a.m. ET.
The Fed’s Michelle Bowman speaks at 9:30 a.m. ET.
The Conference Board leading economic index, 10:00 a.m. ET.
The yen near 157 per dollar after the Bank of Japan’s hike.
Generac at the open, after closing at $207.21 against Thursday’s $231.89 high.
XLF and T-Mobile at the open, the two groups that did not join Thursday’s rebound.
The 10-year Treasury yield, back at 4.93% from above 5%.

Not financial advice. iTrading Buddy summarizes publicly available market data and news; every figure above is sourced from the reporting available before the US open on the date shown. Verify anything you act on.