Stock Market Open: Major Indexes Rise as AI Stocks Gain Despite 10-Year Treasury Yield Hitting New High

Deep News
10/01

Major U.S. stock indexes opened higher on Thursday as the new trading month of October began, with investors continuing to buy AI-related stocks, even as a sharp surge in Treasury yields weighed on most market sectors. The Dow Jones Industrial Average rose 0.27%, the S&P 500 gained 0.27%, and the Nasdaq Composite advanced 0.44%.

Accenture jumped 19.41%, Cognizant climbed 10.58%, Synopsys rose 8.62%, Gartner gained 6.81%, Fair Isaac Corp added 5.84%, and IBM rose 4.90%. Micron Technology delivered better-than-expected earnings. The report's boost to other chipmakers and AI-related companies was even greater than its effect on Micron itself, and the stock has now gained 270% year to date. In early trading, Nvidia, AMD, and Broadcom all moved higher. Alphabet released its latest Gemini large language model, further lifting bullish sentiment, with the stock up nearly 2% in early trading.

Technology stocks led the market in September, but most individual stocks within the benchmark index declined. That pattern continued in early trading on Wednesday: the vast majority of stocks outside the technology sector weakened or traded flat. Micron currently enjoys profit margins as high as 87%, but the company plans to raise employee compensation, which will cause actual margins to fall below Wall Street expectations.

Despite the two risk factors investors worry about most — oil prices and interest rates — still being present, U.S. stocks opened October higher. The 10-year Treasury yield climbed to 5.342% intraday, surpassing the 5.328% reached in June 2007 and marking the highest level since April 3, 2002, when the 10-year yield hit 5.379%. At 9:10 a.m. Eastern Time on Thursday, the 30-year Treasury yield stood at 5.663%. West Texas Intermediate crude rose 1.6%, breaking above $91 per barrel. Traders are closely watching Trump's next move in the Iran conflict, assessing whether he will wait until after the midterm elections before taking further military action.

Historically, September is typically a weak month for stocks, with the S&P 500 falling 0.5% in September as investors had to contend with both rising oil prices and surging Treasury yields. The Dow Jones Industrial Average dropped 4.3%, while the Nasdaq outperformed on the strength of technology stocks, gaining 1.9% for the month. Wednesday also marked the final day of the third quarter. The S&P 500 and Nasdaq each rose about 2% for the quarter, while the Dow fell 2.7%. Tracey McMillan, head of global asset allocation strategy at the Wells Fargo Investment Institute, said: "Even though these factors continue to act as market headwinds, corporate earnings have continued to show resilience. The key question is whether that earnings strength can persist in an environment of persistently high borrowing costs."

Data released on Wednesday showed that U.S. inflation rose less than expected in August, while price pressures from the prior month were revised downward. The data reduced market expectations for an October rate hike. Markets now price in a 36% probability of a hike in October, down from 45% before the data was released. However, traders still see an 89% chance of a rate hike in December. Ilya Spivak, global macro head at Tastylive, said: "The data coming next will be very important, and the market will watch these figures and adjust its rate hike expectations accordingly." He added: "We are now in an environment where the market is facing many conflicting forces at the same time." The U.S. September nonfarm payrolls report is scheduled for release on Friday.

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