📊 Market Overview
Over the past five weeks, the S&P 500 has barely advanced while the median stock has lost about 4.5%, and the S&P 500’s forward P/E ratio (a way to measure how expensive stocks are relative to expected profits) has compressed from roughly 23x to 19x. The biggest pressure is coming from the bond market, where the 10-year Treasury yield sits around 5.25% and the 30-year yield keeps climbing — driven not just by inflation fears but by rising real yields and a flood of U.S. government debt. Today all eyes turn to the PCE inflation report (the Fed’s preferred inflation gauge) and this evening’s earnings from Micron Technology (MU), both of which could set the tone for October.
📊 Market Snapshot
Today’s PCE inflation reading and Micron’s earnings report will tell us whether the market can start recovering or whether high interest rates will keep squeezing stocks.
📈 The Big Picture
Two forces are pulling the market in opposite directions right now. On one side, AI demand remains strong — OpenAI is approaching $70 billion in annual revenue, Hewlett Packard Enterprise (HPE) just placed a $1.2 billion order for AMD’s AI systems, and Jabil (JBL) beat earnings expectations by nearly 9%. On the other side, bond yields (the return investors demand to lend money to the government) keep climbing, which makes borrowing more expensive for companies and makes stocks look less attractive by comparison.
The key question for your portfolio today is whether the PCE report — J.P. Morgan economists forecast a core monthly increase of about 0.25% and an annual rate near 3.28% — comes in cool enough to calm bond markets. If inflation is softening, growth stocks and smaller companies could catch a bid. If it stays hot, even strong AI earnings may not be enough to push indexes higher because investors will demand cheaper stock prices to compensate for expensive borrowing costs.
📖 Term of the Day
Forward P/E Ratio — the price of a stock (or index) divided by the earnings analysts expect it to produce over the next year; it tells you how many dollars investors are willing to pay for each dollar of future profit. Why you care today: The S&P 500’s forward P/E has dropped from about 23x to 19x over the past year, meaning stocks have already gotten cheaper relative to earnings — but rising bond yields could push that number even lower.
💼 Watchlist: 3 Stocks to Know Today
Micron Technology (MU) — “The Big Test”
Micron reports earnings this evening and expectations are sky-high thanks to booming demand for HBM (High Bandwidth Memory), the advanced memory chips inside AI servers. Investors will be watching whether profit margins are improving and how much capital spending the company needs in 2027 — answers that will ripple across the entire chip sector.
Jabil (JBL) — “The Quiet Winner”
Jabil just posted adjusted earnings of $4.40 per share versus the $4.05 expected, and revenue of $10.6 billion beat forecasts by over 10%. Even better, the company guided fiscal 2027 revenue to $44.5 billion and earnings to $17.55 per share — both above Wall Street estimates — signaling real, cash-generating demand in AI infrastructure.
Cal-Maine Foods (CALM) — “The Caution Sign”
Cal-Maine reported revenue of $539.6 million, missing the $562 million forecast, and posted a loss of $1.26 per share against an expected loss of $0.77. It’s a reminder that outside of AI, many companies are struggling with weak consumer demand and margin pressure — not every sector is riding the same wave.
💬 Esther’s Take
