Wall Street began the fourth quarter on firmer footing on Thursday, as a blowout earnings report from Micron Technology revived appetite for artificial intelligence shares and offset unease over bond yields that sit at their highest in 24 years.
Funds tracking the S&P 500 and the Nasdaq-100 finished up roughly 0.2% and 0.3%, while a fund tracking the Dow Jones Industrial Average was little changed. The session was choppy. Stocks slipped in the morning after fresh manufacturing data fed inflation worries, then recovered as bond yields eased and the AI trade bounced back.
Micron sets the tone
The main catalyst was Micron, which reported fiscal fourth-quarter revenue of $54.23 billion, against $11.32 billion a year earlier and $41.46 billion in the previous quarter. Net income reached $37.7 billion, or $32.87 a share on a GAAP basis, and operating cash flow came to nearly $44 billion. Demand for the memory chips that power AI data centres has transformed the company’s finances in a matter of quarters.
The stock is up around 270% this year, which raised the bar for the report. Micron’s shares dipped about 1% early on Thursday despite results that beat expectations, a reminder that investors had already priced in a great deal of good news. Even so, the broader chip sector moved higher.
Alphabet adds to the AI momentum
Alphabet also drew attention after launching Gemini 4 Argon, its newest and most capable AI model. The shares dipped about 2% on Wednesday, when the model was unveiled, then rose around 2% in early trading on Thursday. The launch is being watched as a test of whether Google can hold its place at the front of the AI race.
Yields, oil and banks stay in focus
Not everything was moving in the same direction. The yield on the 10-year Treasury note hovered near 5.3%, just below the 24-year highs reached overnight, and Brent crude futures were trading around $100 a barrel. Both pressure the outlook for inflation and interest rates.
Bank shares were among the weakest performers in the morning, with Citigroup down 1.9%, PNC down 1.8% and Bank of America down 1.4%. Market strategists also noted a widening gap beneath the surface of the major indexes at the end of September, with leadership narrowing around a handful of technology names.
Nike shares fell sharply in after-hours trading after the sportswear maker forecast lower sales for the year and reported weak demand in Greater China.
Eyes on the jobs report
The next big test comes on Friday, when the Labor Department publishes its September employment report at 8:30 a.m. Eastern time. Economists polled by Dow Jones expect about 84,000 new jobs and an unemployment rate of 4.1%. Other forecasts run slightly higher.
Equity futures pointed to a modestly higher open ahead of the data. S&P 500 futures were up around 0.2% to 0.3%, Dow futures about 0.3% and Nasdaq-100 futures roughly 0.5%.
The Federal Reserve raised interest rates last month for the first time since 2023, and officials have stressed that inflation, rather than the labour market, is their main concern. Analysts say Friday’s report is unlikely to change that on its own. A much stronger figure could still reinforce expectations of further rate increases, which would weigh on shares that are sensitive to borrowing costs.
The S&P 500 is trading roughly 1.6% below the record of about 7,817 set in August. Some strategists argue that historical patterns favour a strong fourth quarter, and Fundstrat’s Tom Lee is among those urging investors to expect a rally. Others point to the combination of high yields and expensive oil as a reason for caution.
Asian markets sit out the day
Elsewhere, markets in India were closed on Friday for the Gandhi Jayanti holiday, and Chinese exchanges were shut for the National Day Golden Week break. On Thursday, India’s Sensex and Nifty fell for a fourth straight session as foreign selling, higher bond yields and rising crude prices weighed on sentiment, and both indexes ended the week lower.
For US investors, the equation for the next few weeks is simple to state and hard to resolve. Strong AI earnings are carrying the market, while rising yields and energy prices threaten to take the shine off valuations. Friday’s payroll figures will offer the first clue about which force wins out.
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