Micron puts charge in the market

There is a charge in the equity futures market this morning that has been generated by Micron’s (MU) better than expected earnings results and guidance, and China touting the possibility of additional policy stimulus.

One can debate which is having the bigger impact, yet it’s clear both have resonated for global markets. China’s Shanghai Composite jumped 3.6% and the STOXX Europe 600 is up 1.2%.

Currently, the S&P 500 futures are up 47 points and are trading 0.8% above fair value, the Nasdaq 100 futures are up 324 points and are trading 1.6% above fair value, and the Dow Jones Industrial Average futures are up 192 points and are trading 0.5% above fair value.

Micron is the standout stock. It is up 17.8% in pre-market action, leading the charge of other semiconductor stocks and AI plays, including NVIDIA (NVDA), which is up another 2.4%. Micron said its 93% year-over-year revenue growth in fiscal Q4 was driven by “robust AI demand.”

The latter are some of the stock market’s favorite buzz words along with “soft landing.” Those are in play today, too, after this morning’s economic data.

• Initial jobless claims for the week ending September 21 decreased by 4,000 to 218,000 (Briefing.com consensus 224,000). Continuing jobless claims for the week ending September 14 increased by 13,000 to 1.834 million.
  • The key takeaway from the report is the continuing low level of initial jobless claims — a leading indicator — that isn’t leading the market to think a recession is imminent.
• The third estimate for Q2 GDP remained at 3.0% (Briefing.com consensus 3.0%). Similarly, the third estimate for the Q2 GDP Deflator remained at 2.5% (Briefing.com consensus 2.5%).
  • The key takeaway from this backward-looking report (we’re just days away from the end of the third quarter) is that personal spending (+2.8%) was nowhere near a recession glide path, having exceeded the prior eight quarter average of 2.2%.
• Durable goods orders were flat month-over-month in August (Briefing.com consensus -2.9%) following an unrevised 9.9% increase in July. Excluding transportation, durable goods orders were up 0.5% month-over-month (Briefing.com consensus 0.1%) following an upwardly revised 0.1% decline (from -0.2%) in July.
  • The key takeaway from the report is that new orders for nondefense capital goods excluding aircraft — a proxy for business spending — increased 0.2% month-over-month, bouncing back from a 0.2% decline in July.

Treasury yields jumped in the wake of these fine releases. The 2-yr note yield, at 3.53% in front of the reports, is at 3.59%, up four basis points from yesterday’s settlement. The 10-yr note yield, at 3.75% in front of the reports, is at 3.79%, up one basis point from yesterday’s settlement.

Treasuries will have a lot to digest today. These economic releases are just the start of it. There is a gaggle of Fed speakers, many of whom are FOMC voters, including Fed Chair Powell at 9:20 a.m. ET, and there is a $44 billion 7-yr note auction with results at 1:00 p.m. ET.

The stock market will also have its ears attuned to the remarks from these various Fed officials, but it will have its eyes trained on the performance of the information technology sector and how it drives the broader market.

With the move in Micron this morning, and its early impact on the broader market, a fear-of-missing out trade will be in the early mix.

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Originally Posted September 26, 2024 – Micron puts charge in the market