Lower Yields Give Tech a Second Chance
The Fed raised rates Wednesday, Warsh said inflation is too high and the committee left another hike on the table. Stocks are rallying Thursday anyway. The 10-year dropped more than five basis points to 4.951% and crude fell under $100 for the first time in over a week. That was all it took. The Dow lost 630 points yesterday on the rate decision and financials took the worst of it. Thursday morning the same market decided that the hike was manageable and put the money straight into the names that held up best during Wednesday’s selling.
At 13:30 GMT, the Dow Jones Industrial Average is trading 51,857.71, up 395.81 or 0.77%. The S&P 500 Index is at 7,639.75, up 87.94 or 1.16%. The Nasdaq Composite is trading 26,371.211, up 392.787 or 1.51%.
Daily December E-mini S&P 500 Futures Technical Analysis
December E-mini S&P 500 futures are sharply higher on Thursday after a successful test of the short-term 61.8% level at 7,584.00. Although futures dipped to 7,575.00 late Wednesday, buyers overcame the 50% level at 7,632.00 early Thursday, setting in motion a turn in momentum strong enough to overcome the 50-day moving average at 7,705.65.
A new short-term range has formed between 7,904.00 and 7,575.00. Its retracement zone at 7,739.50 to 7,778.25 has become the next key upside target.
The main trend is down according to the daily swing chart. It will change to up on a trade through 7,833.50. The minor trend is also down. It will change to up on a trade through 7,750.50.
Wednesday’s Split Told You Where Thursday’s Money Was Going
The Dow dropped 1.2% Wednesday. The S&P 500 lost 0.5%. The Nasdaq barely moved. Financial stocks absorbed the rate decision. Technology did not. That ordering matters because Thursday is confirming it. The money is going back into the group that held together while the rate-sensitive names were breaking.
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Nvidia and Amazon each gained 2% before the open. Microsoft rose 1%. Those were the names that did not participate in Wednesday’s decline and now they are leading the recovery. The Dow is bouncing too but it is only up 0.77% against the Nasdaq’s 1.51%. The index that took the hardest hit yesterday is recovering the slowest today.
The Hardware Side of AI Is Where Buyers Are Showing Up
Marvell gained 4.5% before the bell. Lam Research and Corning were up 4%. Arm Holdings added roughly 4% after CEO Rene Haas said demand for its data-center chip remains strong. Seagate and Western Digital each rose about 3.5%. Applied Materials, Qualcomm and Intel were each higher by about 3%.
Semiconductors, equipment, memory and data-center infrastructure all moved together Thursday morning. The AI buildout story took a hit Monday when the industry’s own leaders questioned the pace. Four days later the hardware trade is buying the dip with both hands. The software side is not getting the same treatment. Cybersecurity and enterprise names are still dealing with the question of whether AI helps their revenue or takes it. That split inside the technology trade is as clear Thursday as it was Monday. The rebound did not close it.
Claims Were Too Strong to Help the Dove Case
Initial claims fell to 196,000, down 10,000 from the prior week and well below the 207,000 estimate. Continuing claims dropped 39,000 to 1.73 million. A number under 200,000 the day after the Fed raised rates does not support the argument that tightening is starting to hurt.
Housing told the opposite story. Building permits fell 2.7% in August to an annualized 1.394 million. Starts dropped 2.6% to 1.275 million, both below expectations. The rate-sensitive corner of the economy is showing cracks while the labor market refuses to cooperate with the dove case. UBS Global Wealth Management is positioned for further equity gains while preparing for near-term volatility. The firm’s view depends on measured tightening, stable credit and continued profit growth. That is the bet the market is making Thursday. It works until inflation pushes back.
Stocks in the News
Generac jumped 33% after reaching a deal to supply backup power generators for Amazon’s data centers. Initial deliveries are expected to total $2.4 billion between 2027 and 2028. That is the AI story moving into physical infrastructure. Lennar fell after third-quarter earnings missed at $1.19 per share against a $1.28 estimate with revenue of $8.05 billion below the $8.23 billion forecast. Fluence Energy dropped 22% after cutting its full-year outlook. Nike gained 1.5% after naming Alexandre Arnault to its board.
What to Watch
Thursday’s bounce is trading the relief from lower yields and weaker crude. The Fed did not change its message. Warsh still sounds like there is more work to do. Claims at 196,000 confirmed that the labor market is not going to force the committee into a softer stance anytime soon. The question for the rest of the session is whether the hardware bid can hold into the close or whether it fades once the initial short covering runs out. The Dow recovering less than half of yesterday’s loss while the Nasdaq is up 1.5% tells you the rebound is concentrated. A broad rally would include the financials and industrials that got hit hardest Wednesday. That has not happened yet.
The S&P 500 futures regained the 50-day moving average at 7,705.65 after testing the support zone at 7,632.00 to 7,584.00. The retracement zone at 7,739.50 to 7,778.25 is the next target and where the rally finds out if it has follow-through or just short-covering momentum behind it. A push through 7,750.50 flips the minor trend to up.
The main trend does not change until 7,833.50 and that level would mean buyers are willing to commit past the initial reaction. On the downside, a move back through 7,632.00 tells traders Thursday was a one-day bounce and puts 7,584.00 back on the table.
More Information in our Economic Calendar.
