Written by: ChaoXiang Research

The US stock market opened high on Monday and rose strongly, with the Nasdaq reaching a closing high not seen in nearly four months. The S&P 500 increased by 1.49% to 7764.70 points, the Nasdaq rose by 2.26% to 27122.090 points, and the Dow Jones gained 0.71% to 52048.83 points. Meta's Muse topped the US App Store's free chart, and the excitement around AI quickly spread to CPUs and AI hardware, with AMD's market value exceeding $1 trillion for the first time. The decline in oil prices and the 10-year US Treasury yield falling below 5% also provided space for highly valued tech stocks. Tonight, pay attention to US employment data and Federal Reserve officials' speeches.

Nasdaq reaches new high, Philadelphia Semiconductor index surges 4.29%

The S&P 500 rose by 1.49% to 7764.70 points, the Nasdaq grew by 2.26% to 27122.090 points, reaching a historic closing high; the Dow Jones increased by 0.71% to 52048.83 points. The VIX reported at 14.87, slightly up by 0.41%.

The Philadelphia Semiconductor Index surged by 4.29%, marking the best single-day performance since August 4. All seven tech giants saw gains: Meta rose by 11.43%, Tesla by 3.03%, Nvidia by 2.30%, Amazon by 1.87%, Microsoft by 1.59%, Google by 1.55%, and Apple by 0.85%. The Nasdaq Golden Dragon China Index increased by 0.71%.

The bond market showed divergence. The 2-year US Treasury yield edged up to 4.751%, while the 10-year yield fell by about 4.5 basis points to 4.951%. The short end is still pricing in subsequent rate hikes, while pressure on the long end has eased with the drop in oil prices.

WTI crude oil fell by 4.86% to $95.43 per barrel, and Brent crude oil dropped by 3.62% to around $100. Spot gold fell by 0.6% to $4349.94 per ounce. Bitcoin broke through $86,000, hitting an eight-month high, while Ethereum rose above $2,700.

Muse surges, CPU sector becomes the strongest trade last night

The most vigorous market action last night came from Meta's new AI agent, Muse.

Data from Sensor Tower shows that Muse surpassed ChatGPT last Friday, becoming the number one free app downloaded on iPhone in the US, and it remains in the top position. It can operate a virtual computer and browser in the cloud, handling multi-step tasks for users such as web searches, spreadsheets, emails, shopping, and travel bookings.

With the sudden emergence of a hit application, funds quickly flowed into server CPUs and inference demand. AMD, Intel, Qualcomm, and Arm all experienced significant gains, with AMD's market value exceeding $1 trillion for the first time.

AMD and Meta have a direct business relationship. Meta is one of AMD’s key customers, and this year the two have signed a long-term agreement to deploy up to 6 gigawatts of AMD Instinct GPUs. As Muse gained popularity, investors developed a more realistic reference for the inference computing power demand brought about by the proliferation of AI agents.

The application ecosystem also began to align. Shopify announced the integration of Muse's smart checkout feature, while Amazon banned Muse from accessing its website citing privacy and security risks. As AI agents truly reach ordinary users, data permissions and business boundaries between platforms will be the focus of the next round of competition.

AI hardware heats up, funds return to the entire industry chain

After Muse ignited the imagination of the application end, funds quickly spread from Meta to chips, storage, and optical communication.

Micron rose by 2.77%, Marvell by 5.38%, Applied Materials by 4.42%, Corning by 5.89%, and Lumentum by 2.53%. Corning and Lumentum recently showcased high-density optical interconnect solutions aimed at horizontal scalability for AI in collaboration with Qualcomm, with data center interconnection continuing to receive industry catalysts.

Nvidia announced that it would increase its investment in SB Energy by an additional $1.5 billion before the IPO in the US, bringing the total equity investment commitment to $3 billion. SB Energy is building data centers and supporting power facilities in the US, including a project in Ohio that will serve OpenAI. Nvidia's investment aims to secure power supply, as the competition for AI computing power extends from chips to power infrastructure; locking in low-cost electricity secures the advance for data center expansion.

The market just experienced a rapid drop due to an AI safety controversy over the past week, and last night’s rebound transformed from mere bottom fishing into new industry-driven catalysts. The emergence of hit applications led to a comprehensive strength in CPUs, GPUs, storage, optical communication, and power infrastructure, re-establishing the main line of AI.

Oil prices fall below $96, 10-year US Treasury yield back below 5%

The significant rise in tech stocks comes against an important backdrop: oil prices and long-term interest rates, which have been pressuring the market for the past few weeks, are both retreating.

US crude fell to around $95, and Brent crude decreased to around $100. Trump expressed willingness to meet with Iranian President Raisi during the UN General Assembly, leading the market to bet on potential diplomatic engagements that could bring de-escalation.

Improvements on the supply side have also been observed. Kpler data shows that Saudi oil exports have recovered to an average of over 4 million barrels per day in September, up from 2.4 million barrels in August. The market is also waiting for the damaged east-west oil pipeline in Saudi Arabia to resume more transport.

As oil prices declined, inflationary pressures on the long end were somewhat alleviated, and the 10-year US Treasury yield subsequently fell below 5%. The 2-year yield did not drop in tandem, as the Federal Reserve just increased rates last week, and the CME FedWatch continues to price in a 50% chance of another rate hike in October.

Progress in US-China AI dialogue, tech policy to be observed at the summit on Thursday

Progress has been made in the US-China consultations in New York over the weekend, directly related to tech stocks.

US Treasury Secretary Yellen stated that both sides agreed to establish a formal AI safety dialogue and discuss establishing a communication mechanism for significant AI events. The next round of high-level AI safety talks is planned to take place in Shenzhen in about two months.

In terms of trade, both sides have not yet decided whether to extend the tariff truce set to expire in November, and there were no breakthroughs in the high-end AI chip export restrictions during this round of talks.

Trump and Xi Jinping are scheduled to meet on Thursday. AI regulation, chip policies, critical minerals, and trade truce arrangements will directly impact the trading expectations of semiconductor, AI infrastructure, and large tech companies. If the summit achieves more substantive progress beyond the AI safety dialogue, the semiconductor equipment and AI infrastructure sectors might welcome new catalysts.

Today’s Focus

US employment data and speeches from Federal Reserve officials. ADP will release the latest weekly private employment data, and New York Fed President Williams, Fed Governor Jefferson, and Richmond Fed President Barkin will all give speeches. The Federal Reserve has just restarted rate hikes, and the market will closely monitor their comments on inflation and next steps.

Funding diffusion in the AI sector. The Nasdaq has already set a new historic closing high, with the Philadelphia Semiconductor Index surging over 4% in a single day. Tonight, it is worth observing whether funds can continue to diffuse from a few hit stocks to chips, storage, and optical communication, or if there will first be divergence after a rapid increase.