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September was a slopfest and rate hikes may be farther away than we thought.
Meanwhile, the AI earnings boom just got more ridiculous.
So let's dig in to the biggest and baddest stories in the market.
September Was Rough
SPY was down 0.3% in September, while the QQQs were up 3.3%.
Not so bad.
But things were way uglier below the surface.
Just look at all the red in this table showing September ETF performance:
Just 113 of S&P 500/SPY stocks were up for the month, and the average name was down 4.6%.
And by the end of the month, the average stock was 21.1% off its 52-week high.
Essentially, you had to be overweight the right tech names (mostly semiconductors) to have had a decent month.
Micron & the Ridiculous AI Earnings Boom
Memory maker Micron (MU) dropped another amazing earnings report after the close, and AI is the driver.
This chart showing Micron's quarterly earnings per share over the past 10 years illustrates just how transformative AI has been:
Micron earned $33.42 per share last quarter, more than 10X the $2.59 it earned in its last quarterly earnings peak in 2022.
By the way, JR Romero expects Micron to hit $1,434. See why here:
And the AI earnings boom seems to get more ridiculous by the week.
FactSet reports that analysts now expect S&P 500 earnings growth of 29.1% in Q3, which would be the third straight quarter of 25%+ growth.
And AI monsters like Nvidia (NVDA), Dell (DELL), and Super Micro (SMCI) are leading the charge.
Estimates are going up so fast that analysts expect 63.5% earnings growth in the Information Technology sector.
That is wild.
It's not like this is the first year of a bull market where we're working off easy year-over-year comparisons.
We are almost 4 years into the AI cycle and it shows zero sign of slowing!
Starting to feel like a never-ending story.
Sentiment Is Still Not Bullish
The latest AAII Sentiment Survey shows that just 34.6% of investors are bullish.
This is the third straight week of below-average bullishness.
Meanwhile, bearishness remains high at 46.5%.
Plus, CNN's Fear & Greed Index is at just 32/100, indicating moderate fear.
So there remains little enthusiasm for the market as a whole.
No Rate Hikes?
Friday's weaker-than-expected Nonfarm Payrolls report came in the wake of the Fed's Williams saying there is no urgency for rate hikes.
So now the market is pricing in a mere 20.5% chance of a rate hike at the October 28 meeting:
That's down from 64.2% last week.
However, traders are still pricing in an 81.9% chance of at least one rate hike by year-end.
Next Week Is About Rest
This week had some key events like the Micron (MU) earnings report and the Nonfarm Payrolls report.
Next week, we get to take a break. There are no market-moving earnings reports or major economic data.
But remember, we could get news on Iran so keep an eye out.
REMINDER: Join the Open house
Sami Abusaad and James Rich Young's Open House begins Monday.
Want to get to know them? Watch this webinar:
