Stocks Climb as Inflation Risks Ease and Bond Yields Decline
The S&P 500 Index ($SPX) (SPY) is up by +0.75% today, the Dow Jones Industrial Average ($DOWI) (DIA) is up by +0.53%, and the Nasdaq 100 Index ($IUXX) (QQQ) is up +0.83%. December E-mini S&P futures (ESZ26) are up +0.78%, and December E-mini Nasdaq futures (NQZ26) are up +0.87%.
Stock indexes are moving higher today, with the S&P 500 and Nasdaq 100 posting new all-time highs and the Dow Jones Industrials posting a 1-week high. Sliding crude oil prices have eased inflation expectations and lowered bond yields today, supporting stock gains. Market sentiment has improved as WTI crude oil is down more than -1% to a 1-month low today on signs that more oil supplies are leaving the Middle East. The 10-year T-note yield is down -3 bp to 5.28%.
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Strength in the Magnificent Seven technology stocks is supporting the overall market today. Also, cybersecurity stocks are moving higher, and airlines and cruise line operators are climbing today after the price of WTI crude oil fell to a 1-month low, which lowers fuel costs and boosts the profitability prospects of the companies.
Today’s US economic news was bearish for stocks after the Aug trade deficit increased to a 17-month high of -$105.6 billion, wider than expectations of -$102.1 billion and a negative factor for Q3 GDP.
Nov WTI crude oil prices (CLX26) are down more than -1% today at a 1-month low on signs that more oil supplies are coming out of the Middle East. Kuwait said it is pumping about 75% of the level seen before the Iran war, and Iraq is seeking to hire additional vessels to send its oil cargoes through the Strait of Hormuz. Crude prices also fell today after Yemeni government forces backed by Saudi Arabia said they retook the port city of Mokha and other areas near the Bab el-Mandeb Strait from Houthi militants.
Markets are discounting a 19% chance of a +25 bp Fed rate hike at the next FOMC meeting on October 27-28.
Overseas stock markets are higher today. The Euro Stoxx 50 is up +0.26%. China’s Shanghai Composite did not trade, with markets in China closed for the week-long Golden Week holidays. Japan’s Nikkei-225 Stock Average soared to a 3-month high and closed up +1.05%.
Interest Rates
December 10-year T-notes (ZNZ6) are up +7 ticks today. The 10-year T-note yield is down -2.7 bp to 5.277%. T-notes are climbing, and yields are falling as a -1% decline in WTI crude oil prices today to a 1-month low has lowered inflation expectations. However, supply pressures are limiting the upside in T-notes as the Treasury will auction $119 billion in T-notes and T-bonds this week, beginning with today’s $58 billion auction of 3-year T-notes.
European government bond yields are moving lower today. The 10-year German bund yield is down -0.2 bp to 3.491%. The 10-year UK gilt yield is down -2.2 bp to 5.396%.
Eurozone Aug retail sales rose +0.1% m/m, weaker than expectations of +0.2% m/m.
German Aug factory orders fell -10.6% m/m, weaker than expectations of -1.0% m/m and the biggest decline in 7 months.
French Finance Minister Lescure said circumstances in France are very different from a decade earlier during the debt crisis and the country is far from needing help from the ECB.
Markets are discounting a 14% chance of a +25 bp ECB rate hike at the ECB’s next meeting on October 29.
US Stock Movers
The Magnificent Seven technology stocks are mostly higher today, a positive factor for the overall market. Amazon.com (AMZN), Nvidia (NVDA), and Microsoft (MSFT) are up more than +1%. Also, Tesla (TSLA) is up +0.53%, Alphabet (GOOGL) is up +0.46%, and Apple (AAPL) is up +0.14%. Conversely, Meta Platforms (META) is down -0.06%.
Strength in cybersecurity stocks today is supportive of the broader market. Zscaler (ZS) is up more than +4%, and Palo Alto Networks (PANW) and Crowdstrike Holdings (CRWD) are up more than +3%. Also, Fortinet (FTNT) and Gen Digital (GEN) are up more than +2%, and SentinelOne (S) is up more than +1%.
Airlines and cruise line operators are moving higher today after the price of WTI crude oil fell to a 1-month low, which lowers fuel costs and boosts the profitability prospects of the companies. Norwegian Cruise Line Holdings (NCLH) is up more than +4%, and United Airlines Holdings (UAL), Alaska Air Group (ALK), Carnival (CCL), and Royal Caribbean Cruises (RCL) are up more than +3%. Also, Southwest Airlines (LUV) and JetBlue Airways (JBLU) are up more than +2%, and American Airlines Group (AAL) and Delta Air Lines (DAL) are up mor than +1%.
Option Care Health (OPCH) is up more than +32% after McKesson and Clayton Dubilier & Rice agreed to acquire the company for $5.8 billion, including debt.
Apogee Enterprises (APOG) is up more than +13% after boosting its 2027 adjusted EPS estimate to $3.00 to $3.40 from a prior view of $2.70 to $3.25, well above the consensus of $2.92.
Constellation Energy (CEG) is up more than +12% to lead gainers in the S&P 500 and Nasdaq 100 after announcing a long-term deal with Google to bring 890 MW of new nuclear capacity over 20 years onto the PJM grid in Illinois, Pennsylvania, and New Jersey.
Lam Weston Holdings (LW) is up more than +10% after boosting its 2027 adjusted EPS forecast to $3.05 to $3.35 from a previous estimate of $2.95 to $3.25, stronger than the consensus of $3.02.
Marvell Technology (MRVL) is up more than +6% after saying at an investor day conference that it sees $20 billion in total revenue for fiscal 2028.
Advanced Micro Devices (AMD) is up more than +3% after CEO Lisa Su predicted “very high” chip demand continuing for the next few years.
Vaxcyte (PCVX) is down more than -10% after announcing that it will offer $500 million worth of shares and pre-funded warrants.
Gentex (GNTX) is down nearly -1% after Goldman Sachs downgraded the stock to sell from neutral with a price target of $20.
Earnings Reports (10/6/2026)
Apogee Enterprises Inc (APOG), Boost Run Inc (BRUN), Constellation Brands Inc (STZ), Lamb Weston Holdings Inc (LW), Neogen Corp (NEOG), Penguin Solutions Inc (PENG), RPM International Inc (RPM), Worthington Steel Inc (WS).
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