The S&P 500 Index ($SPX) (SPY) on Thursday closed up +0.48%, the Dow Jones Industrials Index ($DOWI) (DIA) closed up +0.27%, and the Nasdaq 100 Index ($IUXX) (QQQ) closed up +0.95%.  September E-mini S&P futures (ESU25) rose +0.50%, and September E-mini Nasdaq futures (NQU25) rose +0.92%. 

Stock indexes rallied on Thursday, with the S&P 500, Nasdaq 100, and Dow Jones Industrials posting new record highs.  The prospects for additional Fed easing sparked a risk-on sentiment in asset markets and boosted stocks on Thursday.  Strength in semiconductor stocks led technology stocks and the overall market higher, after Intel surged more than +22% after Nvidia agreed to invest $5 billion in the company and said the two will codevelop chips for PCs and data centers.

Stocks are also rallying on speculation that the Fed will tilt toward supporting the labor market, despite inflation risks.  Bond yields rose on Wednesday, and stocks turned mixed despite the Fed cutting interest rates by 25 bp and signaling another 50 bp of rate cuts by year’s end due to hawkish comments from Fed Chair Powell, who highlighted the risk of persistent inflation and signaled less support for deeper easing of Fed policy. 

Thursday’s US economic news was mostly better than expected, which pushed bond yields higher and was a negative factor for stocks.  The 10-year T-note yield rose to a 2-week high on Thursday at 4.14%.

Weekly initial unemployment claims fell by -33,000 to 231,000, showing a stronger labor market than expectations of 240,000.  

The Sep Philadelphia Fed business outlook survey rose by +23.5 to an 8-month high of 23.2, stronger than expectations of 1.7. 

Aug leading indicators fell -0.5% m/m, weaker than expectations of -0.2% m/m and the biggest decline in four months. 

The markets are pricing in a 94% chance of a -25 bp rate cut at the next FOMC meeting on Oct 28-29. 

Overseas stock markets on Thursday settled mixed.  The Euro Stoxx 50 climbed to a 3.5-week high and closed up sharply by +1.62%.  China’s Shanghai Composite fell from a 10-year high and closed down -1.15%.  Japan’s Nikkei Stock 225 rallied to a new record high and closed up +1.15%.

Interest Rates

December 10-year T-notes (ZNZ5) on Thursday closed down by -4.5 ticks.  The 10-year T-note yield rose by +1.4 bp to 4.101%.  Dec T-notes gave up overnight gains Thursday and dropped to a 2-week low, and the 10-year T-note yield rose to a 2-week high of 4.135%.

T-notes retreated Thursday after weekly initial jobless claims fell more than expected and the Sep Philadelphia Fed business outlook survey rose more than expected to an 8-month high, hawkish factors for Fed policy. Also, rising inflation expectations are bearish for T-notes after the 10-year breakeven inflation rate rose to a 2-week high on Thursday of 2.408%.

T-notes initially moved higher Thursday on the prospects of additional Fed easing.  After cutting the federal funds target rate by 25 bp on Wednesday, the Fed signaled another 50 bp of rate cuts by year’s end. 

Concerns about Fed independence are negatively impacting T-note prices due to President Trump’s attempt to fire Fed Governor Cook and Stephen Miran’s intention to hold a Fed Governor position while remaining technically in his White House role on the Council of Economic Advisors.

European government bond yields on Thursday moved higher.  The 10-year German bund yield rose to a 2-week high of 2.726% and finished up +5.1 bp on its high.  The 10-year UK gilt yield rose to a 1.5-week high of 4.676% and ended up +5.1 bp on its high.

As expected, the BOE, in a 7-2 vote, kept its official bank rate unchanged at 4.00% and BOE Governor Bailey said that rate cuts need to be made “gradually and carefully.”

Swaps are discounting a 2% chance for a -25 bp rate cut by the ECB at its next policy meeting on October 30.

US Stock Movers

Intel (INTC) closed up more than +22% to lead chip stocks higher and gainers in the S&P 500 and Nasdaq 100 after Nvidia agreed to invest $5 billion in the company and said the two will codevelop chips for PCs and data centers.  Also, KLA Corp (KLAC), ASML Holding NV (ASML), and Applied Materials (AMAT) closed up more than +6%, and Micron Technology (MU) and Marvell Technology (MRVL) closed up more than +5%.  In addition, ON Semiconductor (ON) and Lam Research (LRCX) closed up more than +4%, and Nvidia (NVDA) closed up more than +3%.  Finally, GlobalFoundries (GFS) and NXP Semiconductors NV (NXPI) closed up more than +2%. 

CrowdStrike Home (CRWD) closed up more than +12% in the wake of an investor briefing where the company discussed its AI strategy and gave a preliminary fiscal 2027 outlook that several analysts see as strong. 

89bio (ETNB) closed up more than +85% after Roche said it will acquire the company for $3.5 billion or $14.50 per share.   

AeroVironment (AVAV) closed up more than +4% after Bank of America Global Research initiated coverage of the stock with a recommendation of buy and a price target of $300. 

Allstate (ALL) closed up more than +4% after reporting Aug catastrophe losses of $168 million, down -8.7% m/m. 

Cooper Cos (COO) closed up more than +4% after its board approved a $1 billion increase in its stock buyback program to $2 billion.

CSX Corp (CSX) closed up more than +2% after RBC Capital Markets upgraded the stock to outperform from sector perform with a price target of $39. 

FactSet Research Systems (FDS) closed down more than -10% to lead losers in the S&P 500 after reporting Q4 adjusted EPS of $4.05, below the consensus of $4.15, and forecasting 2026 adjusted EPS of $16.90-$17.60, weaker than the consensus of $18.30.

Red Cat (RCAT) closed down more than -10% after announcing it intends to sell shares of its common stock in an underwritten public offering.  o lead gainers in the Nasdaq 100 after Guggenheim Securities upgraded the stock to buy from neutral with a price target of $285.

Darden Restaurants (DRI) closed down more than -7% after forecasting 2026 adjusted EPS from continuing operations of $10.50 to $10.70, the midpoint below the consensus of $10.67.

Cracker Barrel Old Country Store (CBRL) closed down more than -7% after forecasting 2025 revenue of $3.35 billion-$3.45 billion, weaker than the consensus of $3.52 billion. 

Nucor (NUE) closed down more than -5% after forecasting Q3 EPS of $2.05 to $2.15, well below the consensus of $2.59. 

ARM Holdings (ARM) closed down more than -4% on news that Nvidia will invest $5 billion in Intel and the two will co-design chips for PCs and data centers. 

Live Nation Entertainment (LYV) closed down more than -2% after the US Federal Trade Commission and seven states sued the company and its Ticketmaster subsidiary for failing to stem the use of automated ticketing bots and large resale operations.

Earnings Reports(9/19/2025)

C&F Financial Corp (CFFI), Louisiana-Pacific Corp (LPX), Pathward Financial Inc (CASH).