US Stocks Close Higher for Third Day as Rate Cut Bets and AI Drive Markets

Market Performance and Key Drivers

• 📈 US stocks climbed for a third consecutive day, with the S&P 500 rising 0.9% and the Nasdaq 100 finishing 0.6% higher.
• 💡 The market was influenced by renewed interest-rate cut bets for December and advancements in AI technology boosting Big Tech valuations.
• 📊 Small and mid-cap stocks, particularly the Russell 2000, significantly outperformed, closing up over 2%.

Treasury Yields and Economic Outlook

• 📉 The US 10-year Treasury yield fell to around 4%, influenced by speculation about Kevin Hassett potentially becoming the next Fed chair.
• ⚠️ Northern Trust CIO Anwiti Bahuguna expressed concern that lower Fed rates could be problematic if inflation remains above target and the US economy accelerates.

Big Tech and AI Developments

• 🚀 Alphabet shares continued to rally, approaching a $4 trillion valuation, partly due to reports of Meta Platforms considering using Google's AI chips.
• 📉 Conversely, shares of Nvidia, Advanced Micro Devices, and Oracle saw declines.
• 🧩 A notable pair trade in Big Tech involved buying Alphabet and selling Nvidia, causing the Nasdaq 100 to underperform.

Retail Sector Earnings and Performance

• 🛍️ Retailers showed strong performance, with Abercrombie & Fitch gaining 37% after raising its guidance, and Kohl's soaring to its highest level in over a year.
• 📈 Urban Outfitters also saw significant gains, up 9% in regular trading and 16% in after-hours trading, driven by strong comp sales and EPS beats.
• ⚠️ Despite positive revenue forecasts, Zscaler shares fell about 5%, indicating a tough reception from investors.

Software and Data Infrastructure Earnings

• 💻 Autodesk reported a beat-and-raise quarter, exceeding EPS and revenue estimates and providing strong guidance.
• ☁️ Workday shares rose approximately 7% in after-hours trading after boosting its full-year subscription revenue forecast and reporting strong third-quarter results.
• 💾 NetApp saw its shares surge, with the company raising its fiscal year adjusted earnings per share forecast and reporting net revenue above estimates for the second quarter.