Major indices are moving lower and near session lows as yields and oil continue to rise.

Energy (XLE) is at the top of the sector leaderboard driven by the recent move in oil. Communication Services (XLC) is also showing strength as Meta Platforms (META) continues to get a boost on its new Muse AI, announcing at its Connect event last night that it will integrate Muse into all its smart glasses and unveiling Muse Charm, a pendant-style device that houses the agent, slated to ship in December. Additionally, they announced Meta VR Glasses, a lightweight, strap-free virtual reality device for gaming, streaming, and live sports, launching in spring 2027 at $1,299.99. Health Care (XLV) is another sector in the green, with Eli Lilly (LLY) strong after the FDA approved its once-weekly insulin Onswik for type 2 diabetes.

On the other hand, Materials (XLB) is the laggard as metal commodities come under pressure from higher rates. Technology (XLK) is also lagging with weakness in both semiconductors and software after Oracle (ORCL) sent a force majeure notice on its Project Jupiter data center in New Mexico, seeking to delay payments if the site misses its 2028 launch. This same story is putting pressure on tangential AI and electrical equipment names in Industrials (XLI), with Bloom Energy (BE) lower as its fuel cells were slated to power the site. Utilities (XLU) are also under pressure from higher yields and the Jupiter news, given the sector's ties to AI power demand.

AI in the News

Alphabet (GOOG/L), OpenAI, and Anthropic are reportedly moving ahead with an independent group to set safety standards and support third-party testing for frontier AI models, targeting a launch in late 2026 or early 2027.

Google is also looking to take AI into orbit, joining SpaceX (SPCX) in pursuing space-based data centers, with an experimental satellite carrying its TPU chips launching October 1st under Project Suncatcher. Two more launches are planned for 2027, and Google estimates orbital data centers could become cost-competitive with those on the ground by the mid-2030s.

Separately, AI startup Odyssey launched Agora-2, a world model that generates a shared environment in real time where up to 20 humans and AI agents can interact, aimed at training and testing agents for robotics, autonomous vehicles, and defense.

Amazon (AMZN) is investing more than $100 million in a new robotics manufacturing plant in Indiana opening by 2028, which along with a planned Austin facility will double its robot-making plants to four.

Economic Data

Initial jobless claims for the week ending Sept. 19 dipped to 197,000, below consensus of 201,000. Continuing claims for the week ending Sept. 12 edged up to 1.719 million, still under the 1.75 million expected.

The Kansas City Fed Manufacturing Index rose to 14 in September from 10 in August. Both durable and nondurable manufacturing increased, driven primarily by plastics and rubber products and furniture-related products. New orders jumped and prices paid accelerated, while the finished products price index reached its highest reading since July 2022. Expectations for future activity eased slightly but remain in expansion, as expected new orders, hiring, and capital spending cooled while expected prices paid rose sharply.

New single-family home sales rose 6.4% M/M in August, ahead of expectations even as mortgage rates increased over the period.

Meanwhile, building permits for August were revised to -2.1% M/M from -2.7% M/M.

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