By Johann M Cherian and Tharuniyaa Lakshmi
Oct 1 (Reuters) – Wall Street’s main indexes were set to open higher on Thursday, buoyed by gains in chip and consulting stocks, even as inflation and mounting government debt concerns pushed Treasury yields to more than two-decade highs.
Micron Technology’s better-than-expected revenue forecast and $32 billion customer commitments under its supply agreements reinforced faith in the AI trade.
Although AI enthusiasm continues to power Wall Street, soaring Treasury yields are testing investors’ appetite for richly valued stocks as inflation and government borrowing keep interest-rate concerns firmly in focus.
“The bond market is weighing heavily on the majority of stocks. It’s just not weighing so heavily on the stocks with the highest index weights,” said Steve Sosnick, chief market analyst at Interactive Brokers.
Nvidia rose 0.7% in premarket trading, while Lam Research gained 1.3%. Micron shares, however, slipped about 0.9% after nearly quadrupling this year.
Accenture jumped 17.7% after the consulting firm forecast full-year revenue growth above estimates, lifting peers. Cognizant climbed 7.9%, while blue-chip IBM gained 5.6%.
Global bond markets came under renewed pressure, with rising energy costs and heavy investment in AI infrastructure reinforcing expectations that interest rates would remain elevated.
The yield on the benchmark 10-year Treasury note hit 5.3423%, its highest since 2002, a day after Treasuries logged their worst quarter since 1994.
The Cboe VIX index, seen as Wall Street’s fear gauge, climbed to a two-week high and was last at 16.39 points.
At 08:56 a.m. ET, Dow E-minis were up 98 points, or 0.19%, and S&P 500 E-minis were up 18 points, or 0.23%. Nasdaq 100 E-minis were up 117.5 points, or 0.38%.
Alphabet advanced 1.6% after announcing its Gemini 4 flagship AI model.
Wall Street had a rocky September, with the S&P 500 and Dow posting monthly declines during what has historically been a weak month for equities, while enthusiasm around AI helped the Nasdaq notch gains.
Softer-than-expected inflation data on Wednesday tempered expectations for an interest-rate hike later this month, with traders pricing in a 63% chance that the Federal Reserve would hold rates steady, according to CME Group’s FedWatch Tool.
Still, with inflation above the central bank’s 2% target, a December rate hike remained on the table.
On the data front, weekly jobless claims showed new applications for US unemployment benefits fell last week and layoffs decreased in September, suggesting that labor market stability persisted even as employers remained cautious about boosting hiring.
However, Minneapolis Federal Reserve President Neel Kashkari said that the job market was not a key driver of inflation and that labor market pain would not be needed for the central bank to achieve its inflation goal.
Comments from policymakers Thomas Barkin, Christopher Waller, Philip Jefferson, Michelle Bowman and Lorie Logan could offer further clues on the policy path.
Among other stocks, Constellation Energy rose 2.5% after the utility signed a 20-year power purchase agreement with Amazon.com.
Rocket Lab gained 4.3% after the space company secured its largest-ever Electron commercial launch agreement, a 20-launch contract with Synspective.
(Reporting by Johann M Cherian and Tharuniyaa Lakshmi in Bengaluru; Editing by Arun Koyyur and Anil D’Silva)
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