PCE day after a 12-year low in confidence and a split bond market
Consumer confidence hit its lowest since 2014 and the Fed's Williams cooled October hike bets. August PCE lands at 8:30 a.m. ET, Micron after the close.
The bond market is pulling in two directions, and today’s inflation report is the tiebreaker. On Tuesday a Fed official talked down the odds of an October rate hike, which pulled short-term yields lower, while long-term yields kept climbing. At 8:30 a.m. ET the Fed’s preferred inflation gauge arrives.
Weak data, a softer Fed and a split yield curve
The Conference Board’s consumer confidence index fell 6.7 points to 81.9 in September, its lowest since 2014, per U.S. News and Marketplace. Its expectations gauge fell to 63.6, a third straight monthly decline, and respondents mentioned prices, and fuel in particular, more than ever. Separately, August job openings came in at 7.079 million, down from 7.335 million the month before, per Investing.com.
New York Fed President John Williams then said he sees “no urgency” for another increase after this month’s hike, though he still thinks one more may be appropriate late this year, per Reuters and Bloomberg. Traders cut the chance of an October hike to about 50-50 from nearly 70% earlier in the day, per Reuters. The 2-year Treasury yield, the one most tied to Fed policy, fell 2.5 basis points to 4.90%.
The long end did not follow. The 30-year yield touched 5.61% during Tuesday’s session, which XTB put at its highest since 2002, and the 10-year held around 5.23%. In our feed the long-bond fund TLT fell another 0.50%. That is the disagreement worth noticing: a softer Fed helps short-term borrowing costs, but mortgages and long-term corporate debt price off the long end, which is still rising.
Stocks barely moved, but most still fell
The S&P 500 slipped 12.85 points to 7,670.84, the Nasdaq Composite fell 0.09% to 26,797.54 and the Dow lost 131.59 points, or 0.26%, to 51,349.92, per Yahoo Finance.
In our feed, 65 of the 100 stocks and funds we track fell and 34 rose, a weaker picture than the index moves suggest. The S&P 500 fund SPY fell 0.18%, the Dow fund DIA 0.22% and the small-cap fund IWM 0.36%, while the Nasdaq-100 fund QQQ rose 0.19% on a handful of large tech names.
Defensive names that usually hold up on weak data did not. Walmart (WMT) fell 1.78% and Johnson & Johnson (JNJ) 1.61%. The three big telecoms fell together: T-Mobile (TMUS) 2.08%, AT&T (T) 1.69% and Verizon (VZ) 1.50%. We did not find a single story behind the telecom move.
Carnival’s results lifted the cruise lines
Carnival (CCL) rose 13.47% to $25.14 after record third-quarter results. Adjusted earnings were $1.43 a share on record revenue of $8.43 billion, and the company raised its full-year adjusted earnings guidance to $2.24 a share from $2.22, despite a $150 million hit from higher fuel costs, per GuruFocus and Carnival’s filing.
The read-through was immediate. Royal Caribbean (RCL) rose 7.40% to $260.65 in our movers feed. It is a notable result given the day’s other headline: consumers say they are gloomier than at any point since 2014, yet they are still booking cruises at record rates.
Chips and AI names bounced, Apple did not
Monday’s chip selloff partly reversed. Applied Materials (AMAT) rose 5.19% to $512.01, which Investing.com tied to a Morgan Stanley note that raised its 2027 revenue and earnings forecasts. Arm (ARM) rose 3.65%, Broadcom (AVGO) 1.58% and Micron (MU) 1.05% ahead of its results tonight. Qualcomm (QCOM) was the exception, falling another 1.80%.
Oracle (ORCL) rose 3.91% to $137.79 after launching Fusion Claw, an AI agent product for business workflows, per The Motley Fool. Meta Platforms (META) recovered 3.24% to $738.79 after Monday’s 4.79% drop, helped by analysts raising their estimates, per MarketBeat. MongoDB (MDB) steadied, up 0.75%, as it held its Investor Day without a permanent chief executive.
Apple (AAPL) fell 2.66% to $329.40. Bank of America warned that AI assistants such as Meta’s Muse could pull shopping activity away from Apple’s ecosystem, though it kept its Buy rating, and reports said chief executive John Ternus is weighing changes to how the company is managed, per Yahoo Finance and Invezz.
Block (SQ) fell 4.06% to $73.32, the worst move in our feed. We did not find a company-specific story behind it.
Overnight
Japan’s Nikkei 225 rose about 2%, led by AI names such as Tokyo Electron and SoftBank Group, per XTB. South Korea’s KOSPI slipped 0.1% and Hong Kong’s Hang Seng was flat. China’s official manufacturing PMI came in at 50.1 for September, per investingLive.
Oil eased again. WTI crude traded near $89 a barrel, per investingLive and XTB, after reports that the US offered up to 40 million barrels from the Strategic Petroleum Reserve and that President Trump backs easing some Russia sanctions. Qatar’s mediation between the US and Iran has so far yielded little progress, per investingLive.
S&P 500 futures were up about 0.2% early, per XTB. Our feed has no Wednesday pre-market trades yet; in Tuesday’s after-hours session it had Oracle at $138.91 and Meta at $743.40, both a little above their closing prices.
What to watch today
- ADP private payrolls for September at 8:15 a.m. ET.
- The August PCE price index, with personal income and spending, at 8:30 a.m. ET. Forecasters expect core PCE at 3.2% year on year, per Yahoo Finance.
- Final estimate of second-quarter GDP at 8:30 a.m. ET.
- Weekly EIA crude oil inventories at 10:30 a.m. ET. The industry’s API survey showed a build of about 1 million barrels, per XTB.
- Several Fed officials are scheduled to speak.
- Micron reports fiscal fourth-quarter results after the close. Consensus earnings are $31.24 a share, per Yahoo Finance.
- Today is the last trading day of the third quarter.
- Later this week: Nike reports after Thursday’s close, and the September jobs report is Friday at 8:30 a.m. ET.
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.