Bonds Trounced while Tech Stocks Bounced

Last Week

U.S. consumer sentiment slipped to a four-month low in September, Treasury yields spiked to their highest levels since 2007, the war raged on-but oil prices dropped, Xi Jinping and Trump held a summit, and Meta (a)Mused investors with its new AI tool. Wall Street’s major market averages advanced on the week, but there was widespread weakness outside of the Tech sector.

The slip in consumer sentiment and the slide in consumer confidence both stem from inflation driven by the spike in energy prices, which is a result of the war in the Middle East. Negotiations between Washington and Tehran to restore commercial traffic through the Strait of Hormuz led to an 8% decline in crude prices. Any details or signs of actual progress remained elusive.

Chinese President Xi Jinping wrapped up his U.S. state visit with President Trump with a two-month extension of the countries’ trade truce, but with no other agreements on myriad other significant issues, such as AI controls or Taiwan sovereignty.

AI stocks enjoyed a nice rally following Meta Platform’s Muse personal agent rapid rollout announcements. Meta’s shares gained 12.9%, fueling a 2.1% bounce in the Nasdaq Composite. The S&P 500 added 1.2%, while the Russell 2000 lost 0.8%, and declining issues more than doubled the number of advancing issues. The Dollar reached a recent high, while gold slipped.

On the Chicago Sports Scene, the Cubs and Sox both clinched playoff spots within an hour of each other. The Bears will host the Eagles tonight at Soldier Field without star quarterback Caleb Williams. It is time for the defense to BEAR DOWN!

This Week

Inflation, employment, AI, the war, and the MLB playoffs will dominate the headlines.

Inflation takes the spotlight Wednesday with the release of the core PCE price index, the Fed’s preferred inflation gauge.

It will be all about jobs on Friday, when the BLS will release the September employment report, with the consensus estimate calling for an increase of 100K jobs, down from the 162K jobs added in August. That report was more than double what economists had expected and was the strongest increase since March.

AI will also be prominent Tuesday. OpenAI holds its DevDay, with CEO Sam Altman scheduled to deliver the opening keynote. AI stocks have taken investors on a wild ride over the last few months, most recently rallying on announcements from Meta.

The Cubs and White Sox will both be in the playoffs for only the fourth time in history, with 2020 being the last time. The odds of a rematch of the 1906 World Series are about 100-1. Although those are long odds, we quote Jim Carrey from the 1994 classic film Dumb and Dumber: “So, you’re telling me there’s a chance?”

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