Situation Awareness: Cautious, with an improving recovery bias. Thursday’s session snapped a three-day losing streak as the AI and mega-cap complex roared back — the S&P 500 (+1.1%) reclaimed 7,600 and its 50-day moving average (7,614.9), while the Nasdaq Composite (+1.7%) led on a 3.1% surge in the PHLX Semiconductor Index. Futures point mostly higher this morning (S&P +7 @ 7,714, Nasdaq +99 @ 29,842) as crude extends its pullback and yields ease, though the Dow lags (-45 @ 52,175). Trade mode: selective and constructive — respect the rebound but keep leverage measured with a hawkish Fed still in the driver’s seat. Today’s context is a tug-of-war between falling oil/AI momentum on one side and a Fed that just delivered a “hawkish hike” and signaled more to come on the other; two Fed speakers (Bowman, Schmid) and three economic prints round out a light calendar. Regime context — 31.97% of stocks trade above their 40-day SMA (up from 28.38%), and the 4% Bull/Bear gauge shows 363 bulls vs. 91 bears. The 5-day trend was down three then turned up sharply the last session, signaling early recovery as breadth expands.
SIP: DAIC QXL HPK PAAI
- Continuation/2LYNCH is the only firing scan — 12 signals led by AMD (+6.4%), MU (+5.5%), SNDK (+6.2%), FSLY (+4.4%). Delayed 9M and Reversal scans are empty.
- Live sector/theme data unavailable (market closed); prior session leadership: Information Technology (+2.2%), Consumer Discretionary (+1.4%), Utilities (+0.9%). Financials (-0.1%) were the sole decliner.
- Key event: Fed raised the funds rate to 3.75-4.00% with a 12-0 vote and dot plot showing 16 of 18 officials expecting at least one more hike this year — a genuine hawkish hike.
- Market read: yesterday’s tape was a decisive mega-cap-led rebound with advancers beating decliners ~2-to-1, but leadership stayed narrow (semis, AI infrastructure). Broadening is needed to confirm.
- DEP watchlist: no Delayed 9M signals today — stand down on that book.
- SIPS: AMD, MU, SNDK — semiconductor continuation setups with the strongest tape support.
Today’s Market Narrative
The story into Friday’s open is momentum meeting relief. After Wednesday’s post-FOMC selloff, Thursday delivered a broad rebound powered by semiconductors and the Magnificent Seven, and futures are looking to build on it. Equity futures point to a mostly higher open, with the S&P 500 futures at 7,714 (+7) and Nasdaq futures at 29,842 (+99), while the Dow trails at 52,175 (-45). The two forces doing the heavy lifting: another leg lower in crude oil and a Treasury market that has refused to hold above the 5.00% line on the 10-year.
Yesterday’s session tells you where the leadership sits. The information technology sector closed up 2.2% atop the standings as the PHLX Semiconductor Index surged 3.1%. Intel ripped 7.67% to 108.80 on SK hynix talks over potential U.S. chip production, AMD gained 6.36% to 545.09, Arm Holdings jumped 8.57% to 264.90, and NVIDIA added 2.54% to 219.34 after Jensen Huang flagged plans to double chip sales. The AI infrastructure trade was equally hot — Generac exploded 18.33% to 207.20 on an up-to-$8 billion Amazon generator supply deal, Super Micro rose 9.50%, and HPE gained 7.73%. That is the pocket carrying this market.
The caveat is breadth quality. While advancers beat decliners roughly 2-to-1 and the Russell 2000 (+0.6%) and S&P MidCap 400 (+0.6%) both finished green, they lagged the Nasdaq badly, and financials (-0.1%) were the only sector to close lower as banks stayed pressured post-hike. This remains a market where the generals are advancing faster than the troops. Overnight, Asia was firmly higher (Nikkei +1.4%, Kospi +2.7%, Shanghai +0.9%) even as the Bank of Japan hiked, but Europe is soft across the board (DAX -0.9%, FTSE -0.8%, CAC -0.9%) on inflation and fiscal worries — a reminder the global backdrop is uneven.
Crude is the swing factor. WTI is tracking a potential third consecutive decline, quoted down 0.99 at $96.24 in the morning commodity check after settling $102.03 Thursday, even as Iran reportedly struck another tanker in the Strait of Hormuz and Saudi Aramco moved to halt October crude deliveries to European buyers. The market is choosing to price supply relief over geopolitical risk — for now. That relief is what’s letting yields breathe and equities lift.
Macro & Policy
The dominant macro fact is Wednesday’s hawkish hike. The FOMC voted 12-0 to lift the target range to 3.75-4.00%, and the unanimity — implying Chair Warsh and his predecessor Powell both backed it — was read as resolve, not politics. Warsh’s message was blunt: “inflation is too high and has been for too long,” the Committee “will deliver price stability,” and today’s action merely “starts” to show seriousness. The dot plot backs the hawkish read, with 16 of 18 officials expecting at least one more hike this year and no consensus for a cut until 2028. The SEP also nudged up 2026 GDP to 2.3%, PCE inflation to 3.7%, and core PCE to 3.4% while cutting unemployment to 4.1%.
The bond market is caught between that hawkishness and falling oil. Treasuries are set for a lower start today after Thursday’s rally: the 2-year yield is up 3 bps to 4.72%, the 5-year up 3 bps to 4.83%, the 10-year up 2 bps to 4.97%, and the 30-year unchanged at 5.30%. Recall the 10-year settled six basis points lower at 4.95% on Thursday, reversing part of the Warsh-driven spike from 4.95% toward 5.02%. The inability to sustain a 5.00%-plus print has been a key relief valve for equities — if yields press higher again, the rebound loses its tailwind.
Overseas policy adds crosscurrents. The Bank of Japan hiked 25 bps to 1.25% as expected, but a two-member dissent and vague Ueda commentary pressured the yen — USD/JPY jumped 1.3% to 157.89, a dynamic worth watching for any yen carry-trade unwind risk. In Europe, Germany’s August PPI ran hot (+4.6% yr/yr vs. +4.1% expected) and U.K. retail sales beat sharply (+0.5% vs. -0.2%), keeping the ECB and BoE cautious. The U.S. also reportedly delayed tariffs on excess manufacturing capacity until after Xi’s visit — a modest geopolitical de-risk.
Economic Calendar Today
- 9:15 AM ET — August Industrial Production: consensus 0.3%, prior 0.2% (bond desk cites prior 1.1%). A hot print reinforces the Fed‘s “resilient demand” narrative and pressures yields higher.
- 9:15 AM ET — August Capacity Utilization: consensus 76.4%, prior 76.3%. Watch for any tightening that feeds the inflation story.
- 10:00 AM ET — August Leading Economic Index: consensus 0.2%, prior 0.2%. Secondary, but a soft read tempers the growth-inflation angst.
- Fed speakers: Governor Michelle Bowman and Kansas City Fed President Jeffrey Schmid this morning — any elaboration on the “more work to do” theme can move the front end.
- Earnings: No major pre/post reports today of consequence; corporate catalysts are guidance-driven (NUE, STLD) rather than earnings-driven.
A light data slate means the tape will trade off oil, yields, and Fed-speak headlines — expect intraday volatility around 9:15 and 10:00 releases but no single blockbuster to anchor direction.
Earnings & Corporate News
Steel is the soft spot. Nucor (NUE 261.50, -1.37%) guided Q3 EPS to $5.55-5.65, below FactSet consensus, citing weaker raw-materials earnings, and is gapping down ~1.8%. Steel Dynamics (STLD, -1.8% pre-market) issued downside Q3 guidance as well, though it noted steel operations profitability well above Q2. The read-through is a cyclical group under margin pressure while tech runs — classic late-cycle rotation dynamics.
In media, Netflix (NFLX 72.97, -3.2%) is lower after Wells Fargo cut it to Underweight, a notable downgrade in an otherwise upgrade-heavy tape. Xenon Pharmaceuticals (XENE) is the day’s blow-up, gapping down 26.6% alongside a Deutsche Bank downgrade to Hold. On the constructive side, the analyst desk skewed positive: JPMorgan upgraded Ball Corp. (BALL), Crown Holdings (CCK), and Tyson Foods (TSN); UBS lifted Waste Connections (WCN); and BTIG upgraded Etsy (ETSY) to Buy, tgt $90.
AI and semis dominate the corporate wire. Coherent (COHR +1.49%) expanded its optical portfolio for AI data centers, SK hynix (SKHY) launched a ventures arm targeting AI compute and optical interconnect, and SoftBank increased its Arm-backed loan. Dividend hikes came from McDonald’s ($1.93 from $1.86), Texas Instruments ($1.52 from $1.42), and Ingredion — steady signals from quality names. On M&A, MISTRAS Group (MG) is being acquired by H.I.G. Capital at $20.35/share cash.
WaveFinder Signal Summary
The scan environment is moderately rich but narrow. Continuation/2LYNCH is the only firing book with 12 signals — solid, not spectacular — while both Delayed 9M and Reversal scans are empty, telling you fresh episodic setups and bottom-fishing plays are absent. The 12 continuation names cluster hard in chips and software: AMD ($545.09, +6.4%, RVOL 1.6), MU ($977.50, +5.5%), SNDK ($1,614.39, +6.2%), and FSLY ($24.57, +4.4%) headline. This is a “ride what’s working” tape, not a “new leadership emerging” tape.
Breadth is the encouraging thread. Stocks above the 40-day SMA rose to 31.97% from 28.38% (+3.6pp), and above the 20-day surged to 41% from 25% (+16pp) — a strong day-over-day expansion off Wednesday’s washout. The 4% gauge flipped decisively bullish at 363 bulls vs. 91 bears (versus 161/235 the prior session). The recovery is real but young; sub-32% above the 40-day means we’re still climbing out of a hole, not running in a broad bull.
Today’s Watchlist
- AMD — 2LYNCH continuation after +6.4% Thursday close of $545.09; leader in the semi book, watch for follow-through above the gap.
- MU — 2LYNCH setup at $977.50 (+5.5%), riding the memory/AI-compute wave with low risk (48%) on the scan.
- SNDK — continuation at $1,614.39 (+6.2%); tight ATR (1.1) storage name benefiting from data-center demand.
- INTC — gapping up 3.0% on SK hynix U.S. production talks after +7.67% Thursday; momentum and news-driven.
- GNRC — gapping up 1.2% following the 18.33% Amazon-deal surge; AI-infrastructure power play, watch for consolidation.
- NUE — short/avoid bias; gapping down 1.8% on soft Q3 guidance, the cyclical-weakness tell versus tech strength.
Action Codes of the Day
- CRT (Controlled Risk Taking) — With only 31.97% of stocks above the 40-day and leadership narrow to semis/AI, take calculated risks within the system; the AMD/MU/SNDK continuation trio offers defined-risk entries in a choppy, Fed-shadowed tape.
- BBT (Big Bang Theory) — Big volume is preceding big moves: AMD fired on RVOL 1.6 (+6.4%) and Intel gapped 3.0% on chip-production news — lean into names showing volume expansion ahead of the breakout.