Major indices are at the lows of the session with the sell-off in semiconductor and AI-related names still the central pressure point.  

Communication Services (XLC) and Technology (XLK) are the worst performing sectors. Micron (MU), Advanced Micro Devices (AMD), and Sandisk (SNDK) are reflecting pressure in the semiconductor space, while CoreWeave (CRWV) has remained under pressure following concerns about data center infrastructure spending.  Weakness has also spread to the previously resilient Health Care (XLV) sector with Moderna (MRNA) and Novavax (NVAX) seeing profit-taking following recent rallies. Energy (XLE) is the current leader with WTI crude prices higher.

Fed Chair Warsh’s comments, coupled with the market’s interpretation that he isn’t priming an October hike, sent October rate hike odds sharply lower to 14.9% from 27.7% yesterday.

Economic Data

Industrial production for September rose 0.66% MoM, surpassing estimates of 0.4%. This is the highest level since 2018. August results were revised upward to +0.06%, and the three-month average sits at +0.32%.

Manufacturing showed a modest rebound after prior softness, increasing 0.27% MoM, almost in-line with the 0.3% expected. Utilities were the main driver, soaring 3.50% to an all-time high, with mining and total energy output also at records.

Import prices rose 1.13%, the most since May, beating consensus of 1.0%. Year over year, prices rose 8.10%, the most since July 2022, missing consensus of 8.2%. Import prices from China saw their largest increase since December 2021, rising 0.7%. Export prices rose 2.25%, above expectations of 0.9% and up 11.6% YoY.

Warsh’s comments about AI should temper the panic. Folks looking to make money should be ready to pounce.