Before the trading session on Thursday, after various indices set new historical highs at the beginning of this week, Wall Street may have finally realized that, compared to the benefits brought by artificial intelligence, the soaring bond yields and oil prices deserve more attention. As of press time, futures of the three major indices were declining: Dow Jones index futures fell by 0.82%, Nasdaq Composite index futures fell by 0.63%, and S&P 500 index futures fell by 0.45%.
Trump says he is less inclined to reach an agreement with Iran, and the United States is reportedly preparing for "massive bombing." Oil prices have risen sharply, with Brent crude oil futures and WTI crude oil futures rising by nearly 5%.
U.S. Treasury yields continue to rise, with the yield on 30-year U.S. Treasuries remaining high.
Most star tech stocks fell before the market opened: Intel dropped by more than 2%, Micron Technology fell by nearly 2%, AMD, Tesla fell by more than 1%, NVIDIA and Amazon fell by nearly 1%, Meta and SpaceX fell by more than 0.5%, while Microsoft had a slight decline; Apple saw a slight increase.
Storage concept stocks fell collectively in advance of the market session; Rambus tumbled nearly 3%, Micron Technology and Seagate Technologies fell nearly 2%, while Transcend Technology, SK Hynix, Sandisk, and Western Digital all fell more than 1%.
Optical communication stocks saw a collective decline; Applied Optoelectronics fell by over 4%, Lumentum, Coherent, and Astera Labs each fell by over 3%. Credo, Corning, and Ciena fell by nearly 3%, Micron Technology fell by over 2%, Broadcom fell by over 1%, and Amphenol Microelectronics had a slight decline.
Shale oil prices generally rose, with Apache Oil increasing by over 3%, Western Petroleum, Diamondback Energy, Devon Energy, ConocoPhillips, EOG Energy, and ExxonMobil rising by over 2%, Chevron rising by nearly 2%, and Ovintiv rising by over 1%; EQT Energy remained flat.
Individual Stock News
TSMC's revenue in the third quarter increased by 51%, exceeding expectations, with September revenue up 54.6% year-on-year.
TSMC's shares fell 1.47% on the market. TSMC's revenue in the third quarter was NT$1.49 trillion, approximately $46.7 billion, a year-on-year increase of 51%, exceeding the expected NT$1.46 trillion. As a supplier of chips for NVIDIA and Apple, its performance is seen as a barometer of AI demand trends. AMD CEO Steve Su stated that chip demand will remain high in the coming years; Samsung's operating profit increased nearly ninefold, and Hon Hai's sales exceeded expectations. TSMC has committed to investing $265 billion in Arizona and is considering expanding in Texas; North American customers accounted for over 75% of sales in the first half of the year. Key points of the third-quarter report include plans for 2027 and beyond: an additional $100 billion in investment in Arizona in July, and Taiwanese media reports suggest that wafer prices may rise by 3-6% in 2027. The progress of A14, CoWoS, and CoPoS is also under close attention.
NVIDIA's support for IPO has seen a sudden drop, sounding the alarm for financing AI.
NVIDIA-backed Australian data center company Firmus Grid plans to raise $5.5 billion; however, IPO has not received sufficient support, with a target valuation of $30 billion, which may lead to price cuts or cancellation. The chief investment officer of UniSuper, John Pearce, stated that the valuation is not attractive, and "too many things need to go smoothly for it to be considered reasonable." The Jun Bei Liu of Ten Cap described IPO as "extremely polarized," with most of the data centers not yet built. The Phil Wool of Rayliant called it a "historic failure" and noted that this will not be the last disappointing AI IPO. The Maxence Visseau of Arkevium mentioned that investors still believe in AI, but they will not pay any price for a company that incurs substantial data center expenses, relies on a few major clients, and only starts to profit after many years.
US optical disc prices fall by about 2% ahead of the holiday; labor unions in Taoyuan, Taiwan, obtain authorization to strike
Micron Technology shares fell 2% before the market opened. On October 7, the union of Micron's Taoyuan factory in Taiwan stated that over 88% of its members voted in favor of a strike, demanding that the company establish a systematic employee profit-sharing mechanism. The specific timing of the action is still under discussion. The union of the Taichung factory will resume negotiations with management on October 22. Together, the two unions represent more than 80% of the employees at Micron's factories in Taiwan. Taiwan is an important production base for the company's DRAM and HBM products. Micron responded that its compensation package includes basic salary, performance bonuses, stock options, and benefits, and that the company needs to balance talent, research and development, and capacity investment.
SpaceX Plans to Raise $40 Billion to Purchase NVIDIA Chips; Costs of Bonds and Credit Protection Rise
According to the Financial Times, SpaceX is seeking to raise $40 billion to purchase NVIDIA chips, with financing including a $10 billion bank loan and $30 billion in investment-grade bonds. Apollo is expected to take the lead in this effort, and Pimco is also in talks. A follow-up report on October 8th indicated that the company's five-year credit default swap spread rose to a new high of 194 basis points on October 7th, and the spread for bonds maturing in 2056 widened to 2.36 percentage points relative to U.S. Treasuries, up from 1.75 percentage points in June.
Google's AI pharmaceutical company is in talks for new financing, with a valuation of at least $40 billion
According to a report by Bloomberg on October 8th, Isomorphic Labs, a subsidiary of Alphabet, is in talks for a new round of financing with a target valuation of at least $40 billion and potentially up to $50 billion. The negotiations are still in the early stages. The company completed a $2.1 billion Series B financing just five months ago, with Alphabet providing a significant portion of that funding. Isomorphic Labs relies on the technology of AlphaFold developed by DeepMind for its drug research and development efforts and has already established partnerships with Eli Lilly and Novartis. The focus of their research includes cancer and immune diseases.
PepsiCo reported net revenue of $25.27 billion in the third quarter, downgraded profit forecasts as North American recovery slower than expected
PepsiCo shares rose by over 2% ahead of its report, with third-quarter net revenue reaching $25.27 billion, compared to market estimates of $24.95 billion; third-quarter operating profit was $4.26 billion, against market forecasts of $4.19 billion. PepsiCo has lowered its profit outlook for the current fiscal year, expecting core fixed-exchange EPS growth of 1%-2%, down from previous expectations of 4%-6%, due to a slower recovery in North America and rising costs squeezing profit margins. Q3 Organic revenue in North America's food and beverage segment slightly declined, but strong international sales helped EPS exceed expectations. The company cut prices on some snacks in February, but plans to raise prices in the coming months, indicating that price cuts did not sufficiently boost sales. CEO Ramon Laguarta described North American business as "representing a significant opportunity for improvement," and stated that it will cut costs, continue to launch high-protein, high-fiber products, and "revitalize carbonated soft drinks." CFO Steve Schmitt noted that price cuts have eroded profit margins.
Applied Digital once rose nearly 5% during the session, with quarterly revenue growing by 322%; adjusted results exceeded expectations.
Applied Digital once rose nearly 5% during trading. On October 7th, US time, the company announced its financial results for the first quarter of fiscal year 2027 after market close: revenue amounted to $341.9 million, a year-on-year increase of 322%; net loss attributable to common shareholders was $221 million, or $0.76 per share. Adjusted revenue was $300.4 million, higher than the market's expectation of $132.2 million; adjusted loss per share was $0.01, which is better than the expected loss of $0.30, and the adjusted EBITDA was $64.4 million.
Wolfspeed rises nearly 18%, securing a conditional loan commitment of up to $1.5 billion from the US Department of Defense
Wolfspeed is up nearly 18% so far. On October 7th, US time, the company announced that it has received a conditional loan commitment of up to $1.5 billion from the Office of Strategic Capital (OSC) of the US Department of Defense, with a term of 30 years. The funds will be used to expand the production of silicon carbide materials and power devices in the United States, as well as to upgrade gallium nitride and radiation-resistant technologies. The proposed terms require the company to issue warrants to the Department of Defense, which could involve up to 7.5% of the fully diluted share capital.
Global Macroeconomics
Fed's Powell: Interest rates still need to be raised, but there's no need to do so at every meeting
Federal Reserve Governor Powell said in a speech in Istanbul on October 8 that inflation in the United States is still too high. If economic data continues on its current trajectory, it will be necessary to raise interest rates further in the future. However, these rate hikes do not have to occur at consecutive meetings and should be completed within an acceptable time frame. He pointed out that core inflation has remained between 2.5% and 3% for over a year, and increases in energy costs, AI infrastructure investment, and tariffs have made it more difficult for inflation to decline; there are no signs of widespread layoffs or a clear economic recession in the labor market yet.
Bank of America: U.S. Treasuries regain their allocation competitiveness, S&P returns may be less than 5% over the next decade
The head of strategy at Bank of America, Savita Subramanian, stated that the yield on 10-year U.S. Treasury bonds has exceeded 5%, while the bank's valuation model predicts that the annualized return of the S&P 500 over the next decade may be below this level, making bonds a competitive alternative to stocks. She also believes that demographic trends and the potential deflationary effects of AI could limit long-term interest rates from rising continuously above 6% to 7%. Data from the Dow Jones market shows a significant increase in trading volume of bullish options on long-term U.S. Treasury bonds ETF TLT and utilities ETF. The chief strategist at ETP Securities, Steve Sosnick, said that bullish trades on TLT reflect some funds betting on a decline in long-term interest rates; the demand for utility options involves both interest rate changes and the growth in electricity consumption in AI data centers.
Russia denies the second case of illness, WHO requests more information
The Russian consumer health supervision agency Rospotrebnadzor denied reports on social media that a second person fell ill after coming into contact with an employee of the plague prevention laboratory, stating that no disease was found among those who had contact. The 28-year-old employee worked at the Siberian and Far Eastern Plague Prevention Research Institute in Irkutsk, and the cause of death was described as community-acquired pneumonia. The Russian side stated that no traces of plague were detected in the deceased's samples, and the investigation is still ongoing. WHO reported on Wednesday that Russia confirmed that about 200 people who had contact were initially isolated for testing, and most of them have now been released from isolation. WHO The director of epidemiology and pandemic management Maria Van Kerkhove said that it is not yet clear how the person became infected, as pneumonia can be caused by a variety of pathogens; in the event of an accident, laboratory personnel should wear protective gear and take immediate measures. WHO is requesting more information from the Russian side.
Middle East conflicts escalate again: Saudi airport attacked, oil tanker near Qatar hit by bullets
According to comprehensive reports, airports in Riyadh and Abu Dhabi, Saudi Arabia, were attacked recently, resulting in 3 deaths and 36 injuries. On October 7th, the UK Maritime Trade Operations Office reported that an oil tanker was hit by a projectile in the waters north of Qatar, with injuries to personnel on board. The Atlantic Monthly cited U.S. officials as saying that the White House has asked the Pentagon to develop potential plans for strikes against Iran before the mid-term elections, but no decision has yet been made. At the time of the report, Brent crude oil prices rose above $102 per barrel.
Deutsche Bank expects S&P's third-quarter earnings to grow by 34.1%, with technology and finance contributing the main increase
Deutsche Bank released its financial report season outlook on October 7th, predicting that earnings for the S&P 500 in the third quarter will increase by 34.1% year-on-year, which is higher than the market consensus of 26.7% listed in the report. The bank expects that the earnings of large growth stocks and technology stocks combined will grow by 55.2%, exceeding the consensus of 45.9%; the financial industry is expected to grow by 10.4%, higher than the consensus of 1.3%. The report cites semiconductor demand, GPU rental prices, and cyclical business performance as reasons supporting the earnings forecast.
Pre-market trading volume of U.S. stocks TOP20
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(The following times are Beijing time)
Unemployment claims (in tens of thousands) from the United States for the week ending October 3, at 20:30.
22:00 US August Wholesale Sales Monthly Rate
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