MARKET WRAP

Stocks fell for a third straight session, with a noticeable pickup in intraday volatility, though the SPX eventually regained the 6600 level. Traders still seem to be a bit disappointed by the rebound in Treasury yields, while some recent high flyers like ORCL come back to earth. On the day: SPX -0.5%, QQQ -0.4% and IWM -1%.

Elsewhere, the US10YY touched 4.20%, a remarkable move since last week’s FOMC. It ended the day at 4.17%. Oil is back above $65 while to dollar also bounces, DXY is now $98.50. The VIX closed at 16.74 but was as high as 17.75 this morning.

Notable Gainers: INTC +8.8%, MRVL +5.1%, IBM +5%, AAPL +1.5%

Notable Losers: ORCL -5.8%, KMX -19%, MSTR -6.3%, LULU +4.5%, TSLA +4.2%, AMGN -2.8%, NKE -2.6%, CRM -2.2%

After hours: COST is basically unchanged after its earnings.

• MRKT Call: Liz joins Dan to talk market breadth, yields, parallels to past tech bubbles / rate cycles, historical tech vs. non-tech mix of bull markets, and potential ripple effects of circular funding in AI.

MRKT MATRIX: TODAY’S TOP STORIES

• S&P 500 declines for a third day as once-hot AI play Oracle falls, yields increase (CNBC)

• Jobless claims tumble to 218,000, well below estimate despite fears of labor market weakness (CNBC)

• Citadel Founder & CEO Ken Griffin Speaks with CNBC’s Sara Eisen on “Money Movers” Today (CNBC)

• Echoes of the Past (SoFi)

• Starbucks to Cut Hundreds More Corporate Jobs, Close Stores (WSJ)

• Amazon Reaches $2.5 Billion Settlement Over Allegations It Misled Prime Users (WSJ)

WHAT’S NEXT?

Today’s action felt slightly more concerning than the past few days mainly because the volatility bands continue to expand. Big picture though, we’re just barely off the highs, and no signs of panic, although some of the rally’s recent key drivers—cumulative Fed rate cut odds and falling Treasury yields—have been shifting over the past week. Ironically, stronger-than-expected economic data has added to that pressure, potentially reducing the case for anything beyond the Fed resetting to a more neutral stance.

This week is also testing some of the market’s biggest themes. Oracle (ORCL) faces the risk of giving back its recent gap higher, and a reversal there could dent confidence in the next leg of the AI trade—reminding investors that parabolic moves aren’t guaranteed. Small caps (IWM) have “struggled” to push through all-time highs, albeit they haven’t exactly sold off hard from there. While a small cap breakout could ignite broader participation and potentially some euphoria, failure underscores how reliant we still are on the Mag 7 and AI-linked mega-cap names, leaving the market as highly concentrated as ever.

One other thing to highlight: we noted around last Friday’s expiration that volatility could pick up this week, especially into the heavier economic data at week’s end now that much of that dampening effect from the options market had expired. Today’s intraday swings were choppier than what we’ve grown used to over the past few weeks. Keep an eye on that intraday volatility, particularly after tomorrow’s PCE reaction, as some counterintuitive crosscurrents seem to be creating a bit of confusion for short-duration traders, which could expand the volatility ranges day to day.

For tomorrow, PCE is a potential market mover but traders still aren’t worried, with just a 0.5% SPX expected move:

• Friday, Sept 25th

  • 8:30am - PCE (2.7%, 0.2%)

  • 10am - UoM Consumer Sentiment (55.4)

• SPX expected move: 0.5%

• TLT expected move: 0.5%

TODAY’S EPISODE

Watch MRKT Call’s latest episode: S&P 500: Now vs The Dot Com Bubble

Liz joins Dan to dig into market breadth—RSP, small caps, and the Dow—and whether anything confirms a lasting breakout. They also discuss the recent bounce in yields, parallels to past tech bubbles and rate cycles, the tech vs. non-tech mix, and the ripple effects of circular funding driving the AI rally.

• Analysis - SPX, RSP, US10YY, US2YY, TLT, BTC, MSTR, COST, MSFT, NVDA

• SoFi Weekly Report - Echoes of past bubbles. Comparing the AI trade to the market cycles in the late 90’s.

• Earnings Preview - COST

Learn more about our sponsor, SoFi.

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