What Happened Yesterday
Thursday, October 8. Most stocks went up. The index went down anyway. Welcome to a market where a handful of chip stocks hold the remote.
Close | Move | Mood | |
|---|---|---|---|
S&P 500 (SPY) | 773.93 | -0.42% | Carried by the wrong people |
Nasdaq 100 (QQQ) | 747.58 | -1.34% | Read the FT, regretted it |
Dow (DIA) | 511.65 | +0.12% | Smug about owning soda |
Russell 2000 (IWM) | 277.57 | -0.05% | Barely flinched |
VIX | 15.41 | +2.19% | Sat up straighter |
2-Year Treasury | 4.75% | -2 bp | Unbothered |
10-Year Treasury | 5.22% | -6 bp | Exhaled |
30-Year Treasury | 5.60% | -7 bp | Auction day hero |
Gold (GLD) | 378.62 | +0.73% | Back on the shelf |
Oil (USO) | 147.58 | +2.55% | Lit a match |
Bitcoin | $81,676 | -1.92% | Third bad day, who's counting |
The S&P 500 index fell 36.41 points to 7,765.36, its second straight loss. The Nasdaq Composite dropped 345.35 to 27,193.34. The Dow rose 51.77 to 51,231.64. Energy (+2.97%) led. Tech (-1.79%) was the only real casualty. Eight of 11 sectors rose. The equal-weight S&P 500 fund (RSP) gained 0.60% while the regular one lost 0.42%.
OpenAI Showed Its Homework
The Grade Came Back Lower
The Financial Times reported that OpenAI told investors its annualized revenue was about $50 billion as of the end of September, according to Investing.com and Yahoo Finance. Earlier reports had it near $70 billion. "Annualized" means take one month of sales and multiply by 12, which is how startups make a good month look like a good year.
The $20 billion gap was mostly bookkeeping. Per the FT, Anthropic counts sales that run through cloud partners like Amazon and Google. OpenAI doesn't. Same lemonade stand, different way of counting the cups. Nobody waited for the footnote.
The chip index fell 3.4%. Micron dropped 4.79%, Broadcom 4.35%, AMD 3.90%, and Nvidia 2.94%. Oracle, which has bet its data centers on OpenAI paying the rent, fell 5.48%. In the debt market, Bloomberg reported that credit insurance prices imply a better-than-20 % chance Oracle defaults within five years. For Nvidia, the most valuable company on Earth, it's over 7%.
Overnight plot twist: Bloomberg reported OpenAI expects to hit $70 billion or more in annualized revenue by year-end. Nasdaq 100 futures were up about 0.8% early this morning, per Investing.com.
The whole AI trade runs on one assumption: somebody at the end of the pipe pays for all these chips. One accounting footnote made the market check its wallet, and the most expensive stocks dropped the most. When a $20 billion haircut is "just how you count," the counting is the risk.
Oil Caught Fire Again
Then Got a Text From the President
Brent crude jumped 4.1% to $104.28, its best close since September 28, per Seeking Alpha. US crude rose 3.6% to $91.49. Diesel futures surged 5.6%. That's bad news for anyone who buys things that ride on trucks, which is everyone.
Three things lit the match: reports of more Iranian attacks on tankers, a storm heading for Gulf Coast refineries, and Reuters data showing ships crossing the Strait of Hormuz at their lowest since July 23. Then President Trump posted that the US is having "productive discussions" with Iran and won't attack before the midterms. Oil came off the highs. It didn't give back the gains.
To be clear: nothing has been signed. The New York Times reported the US has drawn up plans for three days of strikes. "Productive discussions" is a status update, not a deal. By early Friday, Brent had slipped back to about $103.
Energy stocks (+2.97%) led the day. Every rally in your gas bill is a rally for whoever sold you the gas. Oil is the one stock in the market that pays you for being scared.
The Bond Auction Nobody Dreaded Enough
Remember yesterday's "one thing that could ruin everyone's day"? The $22 billion 30-year bond auction. It came in at 5.618%, and buyers showed up. The 30-year yield dropped from about 5.73% in the morning to 5.60%, per AP, a big move for a market that usually moves in decimals. The 10-year eased to 5.22% after touching 5.35% early.
Relief is relative. Freddie Mac's 30-year mortgage rate climbed to 7.40% from 7.28% last week. A year ago it was 6.30%. On a $400,000 loan, that's about $290 more a month than a year ago.
And the Fed isn't coming to the rescue. Governor Christopher Waller, who votes at every meeting, said in Istanbul: "I anticipate additional hikes to support a timelier return of inflation to our 2 percent goal." He added that the hikes "do not need to come at consecutive meetings." In plain English: not necessarily October. Definitely eventually.
Here's the Thing: the auction passed, and that's the bar now. When the good news is "the government found people willing to lend it $22 billion at 5.6%," you're grading on a very generous curve.
Quick Hits
Soda, Burritos, and a Very Nervous Barista
PepsiCo rose 3.73% to $128.34 after beating estimates, posting $2.34 per share on $25.27 billion in revenue. It also cut its 2026 profit-growth forecast to 2.5%- 3.5% from 5%- 7%, per Zacks. CEO Ramon Laguarta said the company doesn't "feel good about the beverage business," per Bloomberg. The stock rallied anyway. When expectations are this low, "less bad" counts as a beat. Staples rose 2.11% as a group, so Pepsi had help.
Chipotle jumped 6.21% to $32.68 after the FT reported, via Axios, Bloomberg, and CBS, that Starbucks has explored a takeover. Neither company confirmed talks. Starbucks CEO Brian Niccol ran Chipotle from 2018 to 2024, so this would be less a merger than moving back in with your ex. Starbucks closed down 0.40%.
The $1,000 test: $1,000 in the S&P 500 index on January 1 is about $1,134 today. Still up. Just a little less up than Tuesday.
What to Watch Today
Friday, October 9 (all times CT). Futures were higher early, led by tech.
Before the bell: Delta Air Lines. Bloomberg consensus is $1.82 a share on $17.66 billion in revenue. Watch the fuel bill. Jet fuel is diesel's close cousin, and diesel just jumped 5.6% in a day.
9:00 AM: University of Michigan consumer sentiment (preliminary October). Last month: 48.1, economist for "grumpy." Watch the 1-year inflation expectations line, last at 4.6%.
3:00 PM: Boston Fed President Susan Collins speaks. She doesn't vote this year, so treat it as color, not a signal.
Next week: the bond market is closed Monday for Columbus Day (stocks stay open). Big banks report Tuesday (JPMorgan, Goldman, Citi, Wells Fargo). September CPI is scheduled for Wednesday.
Rate odds: Polymarket puts an October 28 hike at about 15.5% and a December hike at about 74.5%. Waller just told you which one to believe.
The one thing that could ruin everyone's day
The inflation-expectations line in the Michigan survey. The Fed hiked in September, and Waller just said more are coming. If regular people now expect prices to run hotter than 4.6% a year from now, the Fed gets its excuse, and October stops looking like a gimme.
Yesterday, a newspaper audited OpenAI. Today, a phone survey audits the American consumer. Neither one is known for good news.
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