Big indexes rose as AI stocks bounced

Easy version of the November 4 morning note. It covers the prior U.S. session. This is not investment advice.

In one line, recently crushed semiconductor and AI stocks bounced, so two big indexes rose. The Dow fell, and results split stock by stock.

An index is a score made by putting many stock prices into one basket. DK's close was S&P 500 up ▲ 0.36%, Nasdaq up ▲ 0.83%, Russell 2000 up ▲ 0.08%, and the Dow down 0.38%. Apple pulled the Dow down. An equal-weight S&P 500, which does not give extra weight to giant companies, fell, so the rise was concentrated in technology.

The figures disagree with each other. The opening and the stock section say semiconductors and AI bounced. The sector section says information technology fell ▼ 3.0% and semiconductors fell 2.8%. I did not pick a winner. Other sector numbers in that list were discretionary goods up 2.4%, financials 1.8%, materials 1.7%, staples 1.6%, industrials 1.4%, real estate 1.2%, utilities 0.6%, energy down 3.9%, drugs 1.7%, and health care 0.1%.

In the stock section, Micron rose ▲ 2.57%, SanDisk 4.77%, Seagate 2.08%, and Western Digital 2.58%. Apple warned about higher memory prices and supply limits, and said manufacturing purchase commitments rose to about $90 billion. AMD rose 3.70%, Nvidia 2.28%, and Broadcom 3.05%. Intel, down about 37% over the prior three sessions, rose 0.93%. After hours, trading after the regular close, AMD rose 9.03% on revenue of $13.4 billion, up ▲ 45%, and fourth-quarter revenue guidance of $17 billion. Applied Materials rose ▲ 1.99%, Lam Research 1.40%, and KLA 2.00%.

Oracle rose ▲ 5.90% after a prior crash, as financing terms became clearer. ServiceNow rose 2.96%, Cloudflare 3.09%, and CrowdStrike 1.16%. Microsoft rose 2.71%, Amazon 2.10%, Meta 2.34%, and Alphabet 0.34%. Apple fell 1.94% and Tesla 1.36%. Apple's drop was tied to a weak margin outlook as memory costs rose. Margin is the share of revenue left after costs. Meta moved to issue $15 billion of corporate bonds, debt notes issued by a company.

Power equipment was strong. Eaton rose ▲ 6.96% after a good report, a 46% rise in power backlog, and a higher yearly outlook. Backlog means orders received but not yet finished. Data center orders more than doubled over 12 months. Vertiv rose ▲ 5.24% and GE Vernova 6.49%.

Staples were weak. Walmart fell ▼ 2.22%, Costco 2.04%, and PepsiCo 2.26%. Drugs fell: Johnson & Johnson 1.64%, AbbVie 1.00%, and Merck 2.50%. Oil's drop sent Exxon Mobil down 1.20% and Chevron down 1.08%.

Super Micro Computer rose ▲ 3.32% in the regular session and 8.04% after hours. Revenue of $19.9 billion, up 298%, was a record. Adjusted earnings per share of $1.81 beat the $1.62 forecast. Yearly revenue guidance of $72 billion to $82 billion beat the $69.17 billion forecast. Shopify fell ▼ 8.71%. Onsemi rose 3.58%, Fabrinet 15.48%, and Lattice Semiconductor 10.92%.

Oil fell on reports of U.S.-Iran talks. WTI fell ▼ 0.38% to $96.09, and Brent fell 1.12% to $103.60. A deal was not officially confirmed, and a hard-line Iranian official said seven conditions had to be met before Hormuz would reopen.

Treasury yields rose after a stronger jobs-openings report. The 2-year was 4.629%, the 10-year 4.966%, and the 30-year 5.335%. The dollar rose 0.12% and gold futures fell 0.74%. Rate futures priced a 21.1% chance of a December hold and a 78.9% chance of a hike. September job openings were 7.523 million, above the 7.10 million forecast and the prior 7.19 million, the highest since May. Factory orders rose 1.3% excluding transportation and 2.0% excluding defense. Core capital-goods orders rose 0.6% and shipments 1.2%.

Three lines to keep. Two big indexes rose on a technology bounce, but the Dow fell because of Apple. Power equipment was strong on orders, while staples and drugs were weak. More job openings pushed Treasury yields up.

The sector list and the stock bounce conflict, so I left both. I did not check which semiconductor number is right.