Nasdaq 100 Slumps, AMD Disappoints and Accounting Issues Grow for SMCI

Also 10-year T-note, gold, crude oil and Japanese yen futures

1. S&P 500 E-mini futures (/ES): -0.09% 
2. 10-year T-note futures (/ZN): +0.17% 
3. Gold futures (/GC): +0.31% 
4. Crude oil futures (/CL): +1.44% 
5. Japanese yen futures (/6J): -0.33% 

This morning’s price action in equity markets is instructive. Alphabet (GOOG), which accounts for nearly 5% of the Nasdaq 100, beat earnings expectations handily last night, but the broad Nasdaq 100 is not trading higher today. Why? Two companies within this bull market’s leadership group—Advanced Micro Devices (AMD) and Super Micro Computer (SMCI)—are having, shall we say, difficult sessions today. If semiconductors are going to struggle to retain bullish traction, then the Nasdaq 100 may likewise struggle to break out. Elsewhere, bonds are trying to reverse higher after the October U.S. ADP employment change and 3Q ’24 U.S. gross domestic produce (GDP) reports. 

Nasdaq futures (/NQZ4) traded slightly lower this morning despite Alphabet rising nearly 7% after reporting earnings that beat estimates yesterday afternoon. SMCI plunged 30% this morning, dragging the entire tech sector down with it. Nasdaq losses extended once news crossed the wires that the company’s auditor resigned after flagging concerns. Microsoft (MSFT) is set to report after the bell today.  

Treasuries rose across the middle- and long-end of the curve after the United States reported a drop in job openings and a very strong seven-year note auction yesterday. ADP came in warmer than anticipated this morning, but the GDP report was solid yet a touch weaker than anticipated. We are about a week away from the U.S. election and the next Federal Reserve rate decision, which is likely injecting some uncertainty into the bond market. That volatility is reflected by the ICE BofA MOVE Index rising to fresh yearly highs this morning. 10-year T-note futures (/ZNZ4) were higher ahead of the New York open.  

Gold futures (/GCZ4) surged to fresh highs today after Reuters reported Chinese policymakers were considering approval of a $1.4 trillion stimulus package to bolster domestic economic conditions. The drop in yields is also helping to clear some upside for the metal ahead of next week’s U.S. elections.  

Crude oil prices (/CLZ4) rose nearly 2% this morning after a Reuters report revealed the oil cartel OPEC+ could decide to push back the rollback of voluntary production cuts because ofsoft global demand. The group, which includes Russia, was set to raise output by 180,000 barrels per day in December. The news comes after the American Petroleum Institute (API) reported a surprise inventory drop yesterday. The Energy Information Administration (EIA) is set to report its own inventory figures today. 

British Pound futures (/6BZ4) fell after the Labour government offered its first budget, which calls for higher taxes and spending. The plan wasn’t kind to the sterling, but it was nothing compared to former Prime Minister Liz Truss’s budget that crashed the bond market because of higher spending plans with little insight into how to pay for it. Finance Minister Rachel Reeves plans to spend about $52 billion in fiscal measures, according to a Reuters report citing government sources familiar with the matter.  

Christopher Vecchio, CFA, tastylive’s head of futures and forex, has been trading for nearly 20 years. He has consulted with multinational firms on FX hedging and lectured at Duke Law School on FX derivatives. Vecchio searches for high-convexity opportunities at the crossroads of macroeconomics and global politics. He hosts Futures Power Hour Monday-Friday and Let Me Explain on Tuesdays, and co-hosts #Overtime, Monday-Thursday. @cvecchiofx
Thomas Westwater, a tastylive financial writer and analyst, has eight years of markets and trading experience. @fxwestwater

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