US Semiconductors Snap Eight-Day Slide on Bargain Hunting; MSCI Korea Index Rises 4.08%
WTI Hits $103.66, US 10-Year Yield Reaches 5.14% as Rate and Energy Pressures Persist Amid Risk-Asset Rebound
Key Market Trends
① Semiconductors Snap Eight-Session Losing Streak on Growing Oversold Perceptions
Bargain hunting flowed into recently battered AI and semiconductor stocks, propelling the Nasdaq and S&P 500 higher.
The rebound was led by gains of 3% to 5% in Western Digital, SanDisk, Marvell, and SK hynix ADRs, among others.
Market sentiment shifted amid realizations that the Philadelphia Semiconductor Index’s eight-day losing streak through last week had excessively priced in short-term technical factors, such as VARA liquidation rumors and heavy put-option trading.
Investor sentiment was also soothed by upcoming earnings reports from Meta and Tesla this week.
CNBC noted that optimistic earnings forecasts from major tech companies could help stabilize the market.
Amazon surged nearly 5% to lead index gains, while Intel, Palantir, Moderna, and ServiceNow also traded strong.
② CoreWeave Relinquishes Intraday Gains as Wall Street Maintains Optimistic Stance
CoreWeave opened sharply higher following favorable brokerage reviews, but pared its gains to close slightly lower.
Goldman Sachs lowered its price target to $106 while upgrading its investment rating to 'Buy,' citing CoreWeave's differentiation from other neo-cloud providers.
Truist also reiterated its 'Buy' rating, asserting that the cancellation of CoreWeave's IPO does not signify structural weaknesses in its business model.
Conversely, Gartner maintained its cautious stance, arguing that revenue growth is lagging behind AI infrastructure investments.
CoreWeave’s order backlog stood at $104 billion as of the end of the second quarter.
Retail investor purchases of CoreWeave surged to record highs during the recent sharp pullback.
③ Crude at $103, US 10-Year Yield at 5.14% Act as Headwinds to Recovery
International oil prices opened lower following news of a potential easing of Russian crude sanctions, but reversed course after reports of Houthi rebel attacks on Saudi facilities.
WTI crude climbed 2.22% to settle at $103.66 per barrel.
UBS noted that ongoing vessel attacks in the strait continue to underpin oil prices.
French fiscal anxieties also rattled the bond market, pushing France's 10-year bond yield up to 4.93%.
As the tech stock rebound prompted some capital outflows from safe-haven sovereign bonds, the U.S. 10-year Treasury yield rose to 5.14%.
Driven by high interest rates, 14.5% of September contracts in the U.S. housing market were reportedly canceled.
Market Perspective
Selling pressure has overwhelmingly outpaced buying in the recent stock market. Given that the index's decline accelerated continuously after the 6th, the sharp drop can be attributed to forced liquidations or preemptive selling to avoid them.
A closer examination of the market reveals even starker divergences. While large-cap stocks experienced maximum drawdowns approaching 20% in October, mid-caps fell by less than a third of that, and small-caps retreated just over 2%. Rather than a systemic market collapse, the sell-off was driven by supply-and-demand dynamics concentrated heavily in top-tier large caps.
With institutional buying returning to large-cap stocks yesterday, the groundwork for a potential turnaround has been laid. Earnings forecasts for bellwether sectors, particularly semiconductors, have yet to show downward revisions. Concerns over rising Chinese memory supplies are widely viewed as difficult to materialize in the short term, with underlying demand remaining robust.
Nonetheless, an immediate transition to a stable upward trajectory following such a steep plunge remains challenging, with energy and interest rate burdens still lingering. For the time being, investors should navigate ongoing volatility by focusing on former market leaders that suffered heavy recent pullbacks alongside fundamentally sound earnings plays.
Today's Checkpoints
Semiconductors: Sustainability of bargain hunting following the eight-session slide.
Large-Caps: Shifts in supply and demand for Samsung Electronics and SK hynix following the 4.08% surge in the MSCI Korea Index.
Oil Prices: Potential escalation of Middle East supply risks following WTI's rise to $103.66.
Interest Rates: Trajectory of the U.S. 10-year yield (5.14%) and French 10-year yield (4.93%).
Earnings: Meta and Tesla earnings this week and shifting outlooks on AI investments.
Key Indicators
Dollar Index: 107.98 (+0.14%)
Crude Oil (WTI): $103.66 (+2.22%)
Volatility Index (VIX): 18.44 (-7.75%)
U.S. 10-Year Treasury Yield: 5.14%
MSCI Korea Index: +4.08%
Night Futures: -0.11%
Source: Market Analyst's Stock Story (t.me/shmstory)
YouTube: Market Analyst TV www.youtube.com/@blueoak1004
This article has been reorganized from a Telegram post by Market Analyst's Stock Story with the author's consent. All content may be subject to errors and does not constitute a recommendation to buy or sell, nor should it be used as a basis for investment decisions. Under no circumstances can the contents of this post be used for legal liability.
