Rotation, not rebound: Dow +1.1%, NOW +6.14%, AMAT -3.72%; PPI 6.3%

Thursday was a rotation, not a rebound. The Dow rose 1.1% to 52,177.69 and 66 of the 100 stocks and funds we track rose. Yet the Nasdaq Composite added only 0.1% to 26,713.03, because the chip-equipment names, Intel and Cisco fell again while software, healthcare and consumer names took the money. Underneath it the bond market did something unusual: September producer prices rose 1.3% on the month and 6.3% on the year, the hottest since 2022, and the 10-year yield fell about 12 basis points to 5.06% anyway. Overnight Korea’s Kospi closed up 4.11% as CoreWeave calmed, Indonesia’s market fell about 11% after MSCI moved to reclassify it, and TSMC guided fourth-quarter revenue above $52 billion. Import prices land at 8:30 a.m. ET, industrial production at 9:15, Travelers and four regional banks report before the open, and it is monthly options expiration.

The bond market bought through the hottest PPI since 2022

The Bureau of Labor Statistics reported the producer price index up 1.3% in September from August and 6.3% from a year earlier, against a Dow Jones consensus of 0.6% and 5.5% and August’s 5.6%, per CNBC and UPI. Those are the largest monthly and annual increases since March 2022 and December 2022. Gasoline rose 20.3% in the month and accounted for about half the headline increase, but core producer prices, excluding food and energy, rose 0.7% on the month and 5.0% on the year, the highest since January 2023, so the energy story is again not the whole story. It landed a day after Wednesday’s CPI, which ran 3.7% on the year against 3.6% expected, and the Fed meets October 27–28.

Retail sales, out at the same time, rose 0.8% in September against 0.3% expected, with August revised up to 1.3% from 1.1%, per the Census Bureau via Advisor Perspectives and InvestingLive. Gas station sales rose 6.4% and did most of the lifting: excluding them, sales rose 0.2%, and the control group that feeds GDP rose 0.1% against 0.3% expected, per TheStreet and Babypips. Read together, the two reports describe consumers paying more for fuel and buying slightly less of everything else.

That is how a 1.3% PPI print produced a bond rally. The 10-year yield fell about 12.8 basis points to close near 5.06%, its biggest one-day drop in over a year, per Investing.com, after trading below 5.04% intraday, and the 2-year eased about 5 basis points to near 4.75%, per Saxo; early Friday the 10-year was back near 5.09%, per Benzinga. The long-dated Treasury fund TLT rose 1.37% to $79.97 from $78.89 on 86.5 million shares, and the gold fund GLD rose 1.79% to $382.71 from $375.99, reversing Wednesday’s 1.49% fall, with gold futures at $4,209 early Friday per Benzinga. On Wednesday the long end rallied while the front end rose; on Thursday both fell together, which reads as the market treating a gasoline-driven PPI and a soft control group as a growth problem more than an inflation problem. The equal-weight S&P 500 rose 1.36% and the Russell 2000 1.38%, per Saxo, against 0.3% for the cap-weighted index, the kind of day falling yields tend to produce for the companies that borrow.

The AI trade split: software rose, chip equipment fell, CoreWeave bounced

ServiceNow (NOW) rose 6.14% to $148.57 from $139.98 on 17.6 million shares, the largest gain among the large-cap software names we track, after TD Cowen raised its target to $165 from $140 and kept a Buy rating, per Invezz; the stock was quoted at $147.78 after hours. Salesforce (CRM) rose 4.57% to $246.74 from $235.95 and Adobe (ADBE) 4.57% to $251.67 from $240.68, with HubSpot, Workday, Asana and Workiva also up, per StockStory. Shopify (SHOP) rose 3.27%, MongoDB (MDB) 2.86%, and Oracle (ORCL) recovered 3.00% to $134.47 from $130.55 on 31.3 million shares after Wednesday’s 8.83% fall, trading as low as $127.60 before turning. Microsoft (MSFT) rose 1.08% to $539.44 and IBM (IBM) 2.74%. The names sold on Wednesday as AI-infrastructure proxies were mixed: Cloudflare (NET) fell another 2.47% to $316.32, CrowdStrike (CRWD) 1.89%, Palo Alto Networks (PANW) 1.27%, Datadog (DDOG) 1.14%, and Snowflake (SNOW) closed unchanged at $335.07, so the buying went to the application-software names with the least exposure to data-centre spending.

The chip-equipment and networking names fell for a third day. Applied Materials (AMAT) fell 3.72% to $430.01 from $446.63, after Wednesday’s 3.79% and Tuesday’s 6.69%; Intel (INTC) fell 2.80% to $95.37 from $98.12 on 146.6 million shares, trading as low as $90.02 before recovering most of the day’s loss, and was at $94.63 after hours; Nvidia (NVDA) fell 1.84% to $217.23 from $221.30 on 126.8 million shares and was quoted at $216.71 after hours; AMD (AMD) fell 1.50% to $562.23 from $570.82 after touching $530.09, and was at $553.50 after hours. Tesla (TSLA) fell 1.29%, Broadcom (AVGO) 0.55% and Texas Instruments (TXN) 0.55%. Cisco (CSCO) fell 3.34% to $109.85 from $113.64 on 21.0 million shares on its own news: the company disclosed an actively exploited zero-day in its Secure Email Gateway, its second security flaw this month, per Benzinga and WealthAwesome. The technology fund XLK fell 0.65% and the Nasdaq-100 fund QQQ 0.13% to $728.00, having opened at $718.55.

Here is where the data disagrees with the “AI sell-off” headline. Micron (MU) rose 1.87% to $931.24 from $914.13 after trading as low as $858.00, ending a three-day decline; Qualcomm (QCOM) rose 3.35% to $178.40 and Arm (ARM) 2.85% to $244.79 after opening at $228.87. CoreWeave, the company whose debt started the week’s selling, closed up 5.9% at $69.69 after Nvidia’s Jensen Huang said at a Bloomberg event in Stockholm that the company’s finances are improving, its borrowing costs are falling and Nvidia does not need to backstop it, per Benzinga, FXStreet and Bloomberg; Nvidia holds 47.2 million shares, about 10% of the company. The credit market was less convinced: CoreWeave’s five-year credit default swaps hit a record 1,194.5 basis points and its 2032 bonds traded around 78 cents on the dollar, yielding just over 16%, per TradingKey and Reuters via Vantage Markets, and CNBC reported the swaps at distressed levels. And the manufacturer at the bottom of the chain keeps raising its numbers: TSMC, which reported record third-quarter revenue of $46.72 billion and net income of NT$763.06 billion, up 68.7%, guided fourth-quarter revenue to $52.3 billion to $54.3 billion, lifted its full-year 2026 growth forecast to 44% in US dollar terms and kept capital spending at $60 billion to $64 billion, per its SEC filing and the Motley Fool call transcript. Its gross margin slipped 1.3 points to 66.4% on the 2-nanometre ramp. Orders at the foundry are accelerating while the equity market sells the equipment that fills them; that gap is the thing to watch into next week’s earnings. Taiwan’s Taiex fell 3.4% on Thursday and added 0.3% on Friday, per Saxo and Reuters.

Where the money went: healthcare, consumer, fintech and the banks

The healthcare fund XLV rose 1.86% to $177.19 on a selective list. Eli Lilly (LLY) rose 3.55% to $1,251.61 from $1,208.74 after trading as high as $1,275.88, Thermo Fisher (TMO) 3.46% to $696.49, UnitedHealth (UNH) 2.79% to $406.67 from $395.62 and Abbott (ABT) 1.66%, with Quartz attributing Lilly’s move to money leaving tech. But Merck (MRK) fell 1.48% to $145.19 after Wednesday’s 3.80% gain, Johnson & Johnson (JNJ) 0.25%, AbbVie (ABBV) closed 0.03% lower and Pfizer (PFE) rose 0.79%, so the “defensive bid” was concentrated in the growth names within healthcare, not the sector.

Consumer discretionary did better than the defensives. Nike (NKE) rose 5.21% to $37.14 from $35.30 on 46.4 million shares with no company news, per Yahoo Finance; Home Depot (HD) rose 4.31% to $308.24 from $295.51, Airbnb (ABNB) 4.32%, Starbucks (SBUX) 3.89%, Uber (UBER) 2.86%, McDonald’s (MCD) 1.76% and Disney (DIS) 1.55%; the consumer discretionary fund XLY rose 1.71%, and Saxo counted retail up 3.68%. Walmart (WMT) rose 1.47% to $117.87 on 32.0 million shares after opening at $120.00, 3.3% above Wednesday’s $116.16 close, and trading as high as $121.38; we found no report explaining the opening gap or the fade. The staples that rose Wednesday gave some back: PepsiCo (PEP) fell 0.69% and Costco (COST) 0.41%, while Procter & Gamble (PG) rose 0.35% and Coca-Cola (KO) 0.24%.

The fintech and crypto-linked names that fell hardest on Wednesday rebounded as a group. Affirm (AFRM) rose 7.67% to $75.92 from $70.51, the largest gain among the 100 names we track, after Wednesday’s 9.47% fall; Roblox (RBLX) rose 7.55% to $51.13 from $47.54; Reddit (RDDT) 7.24% to $159.36 from $148.60; Coinbase (COIN) 6.32% to $183.81 from $172.89, and Robinhood (HOOD) 2.88% to $103.99 after trading as low as $94.52. PayPal (PYPL) rose 1.89% and Block (SQ) fell 1.31%. Bitcoin was at $82,168 early Friday, up 1.1%, per Benzinga. These are the same risk-appetite names that were sold on Wednesday, and they have moved with yields in both directions this week.

Financials rose with the curve. The financial fund XLF rose 1.38% to $55.27. BlackRock (BLK) rose 4.38% to $1,120.78 from $1,073.79, Wells Fargo (WFC) 2.29% to $82.75, American Express (AXP) 2.25%, Mastercard (MA) 2.17%, Visa (V) 2.13% to $399.75, Goldman Sachs (GS) 1.43% to $891.28, Citigroup (C) 0.77%, Bank of America (BAC) 0.60% to $51.70 after Wednesday’s 4.76% fall, Morgan Stanley (MS) 0.33% and JPMorgan (JPM) 0.07% to $335.53. BNY Mellon rose 3.2% and Marsh McLennan 4.6% after their reports, per Saxo, while Interactive Brokers beat at $0.69 a share against $0.67 expected on $1.91 billion of revenue and fell about 2%, extending this week’s pattern of beats that close lower.

The laggards were the long-duration industrials and energy. Caterpillar (CAT) fell 1.78% to $735.64 from $748.98 after trading as low as $704.01, a third straight decline, Prologis (PLD) 2.70%, Exxon (XOM) 1.32% to $174.68, Chevron (CVX) 1.23% to $219.32 and the energy fund XLE 1.58%, with Brent at $105.38 and WTI at $97.39 early Friday, per Benzinga. Breadth: 66 of the 100 stocks and funds we track rose. The other 34 of the 100 fell, after 59 decliners on both Tuesday and Wednesday. The S&P 500 fund SPY rose 0.28% to $771.79 from $769.60, the Dow fund DIA 1.08% to $521.18 and the small-cap fund IWM 1.37% to $275.08. For the week through Thursday the S&P 500 is down 0.9% and the Nasdaq 2.4%, per AP.

In the movers feed, the gainers were housing- and mortgage-linked: Better Home & Finance (BETR) rose 32.45% to $10.76, Zillow (Z) 11.07% to $31.46 on 13.2 million shares, Dream Finders Homes (DFH) 13.60% to $8.44 and TransUnion (TRU) 10.69% to $74.11, on the day the 10-year fell 12 basis points. Kyndryl (KD) rose 12.10% and Appian (APPN) 14.00% with the software group. We did not find company news for these.

Asia rebounded, Indonesia fell 11%, Europe heads for its best week since August

Korea’s Kospi closed up 4.11% at 5,782.62 after falling as much as 6.5% on Thursday, per Saxo, with BigGo Finance crediting Huang’s CoreWeave comments for the opening rebound; Japan’s Nikkei 225 rose 1.80% to 65,584.61, Hong Kong’s Hang Seng 1.21% to 24,353.70 with the Hang Seng Tech index up 2.16%, China’s CSI 300 0.75% and Australia’s ASX 200 1.11%, per Saxo and Reuters. In China, Bloomberg reported that financial regulators met on Thursday to discuss stabilisation measures and urged companies and state funds to buy shares while guiding some investors to curb selling, citing people familiar with the matter; we found no official confirmation.

Indonesia was the exception. The Jakarta Composite fell about 11%, its largest drop since 1998, and trading was halted for close to two minutes after the open, after MSCI said it is consulting on reclassifying the market from emerging to standalone status, per Reuters, the Financial Times and Business Standard. Reuters reported investors bracing for outflows and currency pressure. An MSCI consultation is a proposal, not a decision.

Europe closed higher on Thursday despite its own chip sell-off: the Stoxx 600 rose 0.38% to 640.17 and the FTSE 100 1.1%, while ASML fell 5.7%, ASM International 8.6% and Infineon 8.0%, and Ericsson rose about 11% and AstraZeneca 3.2% on results, per Saxo. On Friday morning the Stoxx 600 was up about 0.3% at 641.75, more than 1% higher for the week and on course for its best week since August, helped by results from Schneider Electric and Aixtron, per Reuters via Investing.com; Bloomberg noted it is Europe’s biggest weekly outperformance of the S&P 500 since March. US futures were modestly higher at 2:24 a.m. ET, per Benzinga: S&P 500 futures up 0.15% at 7,802.75, Dow futures 0.20% at 52,537 and Nasdaq futures 0.05% at 30,158.50, with the VIX at 16.06.

What to watch today

September import and export prices at 8:30 a.m. ET. Consensus has import prices up 0.9% on the month after 0.7% and export prices up 1.0% after 0.6%, per Investing.com; import prices were up 7.0% on the year in August. After Wednesday’s CPI and Thursday’s PPI, this is the third inflation read of the week.
September industrial production at 9:15 a.m. ET, expected up 0.4% after a flat August, with manufacturing output up 0.3% after a 0.3% fall and capacity utilization at 76.5% from 76.3%, per Investing.com and Kaohoon.
Before the open: Travelers (TRV), consensus about $7.23 to $7.30 a share depending on the source; Truist (TFC) about $1.14; M&T Bank (MTB) about $4.93; Regions Financial (RF) about $0.66; Citizens Financial (CFG) about $1.39, per Kiplinger, Newsquawk and Earnings Whispers. Netflix reports Tuesday, October 20, after the close and Meta on October 21.
Monthly options expiration. Today is the third Friday of October; Saxo put the options-implied same-day move for the S&P 500 at 41.65 points, or 0.54%.
Baker Hughes rig count at 1:00 p.m. ET (603 total rigs last week, 462 oil), the federal budget statement at 2:00 p.m. ET (consensus a $34.7 billion deficit after $167.0 billion) and Treasury TIC flows at 4:00 p.m. ET, per Investing.com.
The after-hours quotes of Thursday’s chip losers: Nvidia at $216.71, AMD at $553.50, Intel at $94.63; ServiceNow at $147.78; and the 10-year back near 5.09% early Friday.
CoreWeave’s bonds and swaps after the 5.9% share rebound, with the 2032 notes near 78 cents and the five-year swaps at a record 1,194.5 basis points on Thursday.
Indonesia’s second session after the 11% fall, and any statement from MSCI on the consultation timetable.

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.