What Happened Yesterday
Wednesday, October 7. The record lasted exactly one day. Bonds yelled, stocks flinched, then everybody calmed down just enough to close slightly red.
Close | Move | Mood | |
|---|---|---|---|
S&P 500 (SPY) | 777.22 | -0.24% | Record hangover |
Nasdaq 100 (QQQ) | 757.73 | -0.25% | Mild headache |
Dow (DIA) | 511.02 | -0.69% | Dropped a bulldozer on its foot |
Russell 2000 (IWM) | 277.70 | -1.29% | Hiding under the desk |
VIX | 15.08 | +0.47% | Opened one eye |
2-Year Treasury | 4.77% | -2 bp | Unbothered |
10-Year Treasury | 5.28% | +1 bp | Flexed, then sat down |
30-Year Treasury | 5.67% | +3 bp | Still flexing |
Gold (GLD) | 375.88 | -1.67% | Lost its shine |
Oil (USO) | 143.91 | -0.69% | Faded the morning pop |
Bitcoin | $83,276 | -2.67% | Got liquidated, emotionally |
The S&P 500 index slipped 17.16 points to 7,801.77, one day after its first close above 7,800. The Nasdaq Composite lost 61.10 to 27,538.69. The Dow fell 341.41 to 51,179.87. Health care (+1.03%) was the only sector in the green. Industrials (-2.18%) were the worst.
The Bond Market Put On Its 2002 Playlist
Long-term Treasury yields climbed to their highest levels since 2002 during the day, per CNBC. The 30-year touched about 5.70% before backing off, per AP. The last time bonds paid this much, people were burning mix CDs and Enron was front-page news.
Then the $39 billion 10-year auction came in at 5.30%, and buyers actually showed up. TheStreet called it strong. Yields eased, stocks cut their losses, and the 10-year finished at 5.28%, up just 1 basis point. A basis point is one-hundredth of a percent. One of them is nothing. Pile up enough of them and it is your mortgage.
Speaking of which: the average 30-year mortgage rate in the Mortgage Bankers Association's weekly survey hit 7.49%. Mortgage applications fell 4.2%. House hunters are now window-shopping from far away.
At 1 PM CT, the Fed released the minutes from its September meeting, when it raised rates to 3.75%-4.00%. The headline line: officials figured "another increase in the target range for the federal funds rate would likely be appropriate by year end." They also called inflation risk "skewed to the upside," which is Fed for "we checked under the bed and the monster is still there." And regular people agree. The New York Fed's survey showed Americans expect 3.9% inflation a year from now, up from 3.6% and above the 3.7% forecast.
The bond market spent the morning screaming and the afternoon napping. The scream was the real message. When the government's 30-year IOU pays more than it has since flip phones, everything priced off it (mortgages, car loans, the stock market's patience) gets more expensive.
Caterpillar Got Towed
Caterpillar fell 5.75% to $813.83. At that share price, it drags the price-weighted Dow like an anchor. Deere dropped 3.80% to $656.87. The whole industrials sector slid 2.18%, the worst of the 11.
Two things hit at once. First, the Federal Trade Commission and the Department of Agriculture opened a joint inquiry into the farm-equipment industry, according to Investing.com and Yahoo Finance. That's an inquiry, not a lawsuit. It's the regulator knocking on the door and asking if it can come in and look around. Nobody enjoys that visit.
Second, those bond yields. People buy heavy equipment with borrowed money. A bulldozer financed at 5% is a business plan. Financed at 7%, it's a very expensive lawn ornament.
The small caps felt it worst. The Russell 2000 fell 1.29%, its second straight down day. Small companies borrow at bank rates, not bond-market rates, and they just watched rates go up again.
The AI trade can shrug off high rates because it runs on cash piles the size of small countries. The rest of the economy runs on credit cards and equipment loans. Yesterday reminded us which half is paying the rate hike.
Memory Is the New Oil
While the bulldozers got towed, Micron rose 4.06% to $1,088 a share. D.A. Davidson told clients it expects the stock to triple, per CNBC, on the theory that AI models run better, faster and longer with more memory. Demand, the firm said, will "outstrip supply in 2027 and 2028."
Two overnight wrinkles. Micron's Taiwan workers voted to authorize a strike over bonuses, per MT Newswires. Hard to blame them. The stock is up so much the bonus math got awkward. And Samsung's third-quarter preliminary results were expected to show a record, with analysts at Hana Securities penciling in about 108 trillion won of operating profit for one quarter.
Memory chips used to be tech's boom-and-bust commodity, like soybeans in a clean room. Now every AI data center wants them by the truckload. When factory-floor workers want a bigger cut, you know the margins are real.
Quick Hits: We Owe You a Beer
Constellation Brands closed UP 2.35% at $118.39. Yesterday we told you it fell about 2.7% after hours. Then it was down 5% before the bell, per CNBC. Then it rallied all day. The beer stock had a better Wednesday than we forecast.
Levi Strauss fell 4.97% in the regular session, then beat after the close: 48 cents a share vs. 36 expected, with revenue at $1.61 billion, about in line. It raised its full-year profit outlook to $1.54-$1.56 a share, per Investing.com. Part of the boost came from $79 million in tariff refunds. Turns out the best-performing driver of 2026 is the government handing money back.
The $1,000 test: $1,000 in the S&P 500 index on January 1 is about $1,140 now. Still a good year, just a slightly worse Wednesday.
What to Watch Today
Thursday, October 8 (all times CT). Stock futures were soft early.
3:30 AM: Fed Governor Christopher Waller gave an "Economic Outlook" speech in Istanbul. He votes at every meeting, so what he said matters.
Before the bell: PepsiCo, expected around $2.29 a share. The turnaround plan meets the snack aisle.
7:30 AM: weekly jobless claims (Labor Department). Forecast: 200,000, from 197,000. Still low. The job market is holding the door open for the Fed.
11:00 AM: Freddie Mac's weekly mortgage rate. Last week's 30-year was 7.28%. Bring tissues.
Noon: 30-year Treasury bond auction. The third and final act of the week's debt sale.
Friday: Delta before the bell, expected around $1.93 a share.
Rate odds: Polymarket puts an October 28 hike at about 14.5% and a December hike at about 75.5%. In plain English: not this month, probably by Christmas. Merry tightening.
The one thing that could ruin everyone's day
The noon 30-year auction. The 3-year got through. The 10-year went better. But the 30-year touched 2002 levels yesterday, and long bonds’ biggest worries: deficits, oil, and a Fed that just said it isn't done. A sloppy auction put 5.70% back on the screen, and this time it may not back off.
The record lasted one day. The 2002 yields are still here. Pick which one you'd rather have as a roommate.
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