Big Tech and Software Deals Send Nasdaq to Another Record
The Nasdaq Composite Index made another record high Monday because tech buyers are still taking offers in the companies with the strongest AI story, the best earnings outlook or a takeover bid behind them. Treasury yields rose hard. The Nasdaq did not care.
The Dow and S&P 500 joined the move late in the session, but technology is still driving. The megacap AI names are pulling money into the growth trade, and software deal flow is giving buyers another reason to stay aggressive.
At 18:10 GMT, the Dow Jones Industrial Average was trading at 51,324.14, up 147.18 or +0.29%. The S&P 500 Index was at 7,775.63, up 52.91 or +0.69%. The Nasdaq Composite was trading at 27,452.152, up 261.288 or +0.96%.
AI Buyers Are Still Ignoring the Bond Market
The 10-year Treasury yield climbed more than 6 basis points to 5.341% and the 30-year was up about 7 basis points to 5.699%. Those aren’t friendly numbers for growth stocks.
Nvidia rose more than 1%, trading near Friday’s record high. Meta gained more than 2%, Microsoft added more than 1% and Tesla picked up about 2%. SpaceX ran nearly 6%.
The trade has become simple. Bond sellers are pushing long-term rates higher and traders keep buying the companies they believe can grow through it. The AI names are acting more like a place to hide from the bond market than a group getting hurt by it.
Chips were slightly lower earlier in the session while software and services stocks moved higher. Traders are getting pickier inside AI. The money is going to the companies expected to sell the software, security and computing capacity behind the buildout.
Microsoft got a buy upgrade from Melius Research on its position in AI security and governance. Cerebras moved up after OpenAI chief Sam Altman called the company a close partner. TSMC traded higher after Elon Musk confirmed discussions about operating Texas factories for the Terafab project. Intel is also involved and went the other way.
Same project, opposite moves. Traders are picking the names they think will get the contracts, and an AI label by itself isn’t enough.
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See all Dow Jones forecastsPTC Put a Bid Under Software
PTC was the best trade in the S&P 500 after Schneider Electric agreed to buy the company for $205 per share in a $22.6 billion all-cash deal. The stock surged more than 30%.
That gave software buyers something more concrete than an opinion about rates or earnings. A strategic buyer was willing to pay cash for a major software asset with long-term yields climbing, and that put a bid under the group.
PTC didn’t start the software move, though. Buyers were already working the group on the AI software trade.
Deals and Upgrades Are Picking the Winners
RXO jumped 21.8% after C.H. Robinson agreed to buy the transportation broker for $5.8 billion, while C.H. Robinson dropped 12.9%. Traders liked the deal for RXO and didn’t like the price C.H. Robinson agreed to pay.
DraftKings rallied more than 7% after a Bank of America upgrade. Harley-Davidson popped about 10% on a Citi upgrade. Wells Fargo and Estee Lauder also firmed after favorable analyst calls.
The Fed Trade Has Calmed, but the Long End Has Not
Friday’s Non-Farm Payrolls report lowered expectations for an October Fed rate hike, and Monday’s ISM services report didn’t stir them back up. Activity kept expanding in September at a slower pace than the month before, with the Purchasing Managers’ Index at 54.9, roughly in line with expectations.
So the October trade stayed calm, but nobody came in to buy bonds.
Heavy government debt issuance and concern over government finances are still hanging over the market. France’s debt burden and political uncertainty are adding to the pressure in global bond markets.
Crude isn’t helping much either. Brent crude was down more than 0.7% at $101.51 a barrel and WTI was lower by about 1% at $88.53. Oil eased, but Brent is still above $100 and the risk to Gulf energy infrastructure hasn’t gone away.
Payrolls gave stock buyers room to work. The long end is still the problem, though. I’m impressed with the Nasdaq record, and with yields this high it has to keep proving itself.
Brazil Was a Separate Risk Trade
Brazilian stocks were sharply higher after Flávio Bolsonaro edged President Luiz Inácio Lula da Silva in the first round of Sunday’s election. Neither candidate won a majority, sending the race to an October 25 runoff.
The iShares MSCI Brazil ETF was up more than 13%, on track for its best session in more than six years. Itau Unibanco and Banco Bradesco took off, and Mercado Libre went along with one of its largest markets.
None of this says traders are suddenly comfortable with higher Treasury yields. It’s a political trade, and buyers moved fast on a clear change in the outlook for regulation, taxes and capital flows.
Daily Nasdaq Composite Index (IXIC) Technical Analysis
The Nasdaq Composite Index is trading higher on Monday after posting another record high at 27,452.152. The main trend is up according to the daily swing chart. A trade through 26,706.14 will change the main trend to down.
The minor trend turned up with Monday’s move through the two-day top at 27,288.79. That breakout confirmed 26,706.14 as the new higher main bottom. The prior main bottom at 25,802.96 was relevant until the new higher bottom was confirmed.
The 50-day moving average is sloping higher. It is providing price support as well as adding credibility to the swing-chart uptrend.
Daily S&P 500 Index (SPX) Technical Analysis
The S&P 500 Index is trading sharply higher late in the session on Monday after crossing to the strong side of a minor retracement area. The main trend is up according to the daily swing chart. A trade through 7,782.19 will reaffirm the uptrend, with the record high at 7,816.70 the next likely target. The main trend will change to down on a move through the swing bottom at 7,616.78.
The near-term support is a retracement zone at 7,719.00 to 7,699.49. This is followed closely by the 50-day moving average at 7,664.91.
What to Watch
The bond market is the catalyst. Long-term yields climbed again Monday with no buyers stepping in, and the Nasdaq made its record anyway on the megacaps, the AI software names and a cash bid for PTC. The rally is narrow and the long end hasn’t stopped rising.
The Nasdaq Composite Index broke through the two-day top Monday and confirmed 26,706.14 as the higher main bottom. The uptrend holds until that goes.
The S&P 500 Index pushed above its retracement zone late in the session and ran right up under 7,782.19, with the record at 7,816.70 not far past it. Buyers keep defending the 50-day moving average and they’re still posting higher highs and higher lows. The bias stays to the upside.
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