Morning Market Setup: Tech Leads, Utilities Surge, Powell Ahead

Introduction#

U.S. equities head into Tuesday’s open with momentum concentrated in technology and an unusual surge in utilities setting the tone. According to Monexa AI, the S&P 500 (^SPX) closed at 6,693.75 on Monday, up +29.39 or +0.44%, while the Nasdaq Composite (^IXIC) finished at 22,788.98, up +157.50 or +0.70%. The Dow Jones Industrial Average (^DJI) ended at 46,381.54, up +66.27 or +0.14%. Volatility was mixed: the CBOE Volatility Index (^VIX) slipped to 16.04 (-0.06, -0.37%), but small-cap risk pricing via the Russell 2000 Volatility Index (^RVX) ticked higher to 22.60 (+0.89, +4.10%). These reference points frame a market that’s cautiously risk-on at the index level yet discriminating beneath the surface.

Overnight, global markets were mixed as investors weighed the Federal Reserve’s rate-cut path and fresh headlines tied to artificial intelligence build-outs. As reported by Reuters, international equities were uneven, gold pushed to record highs, and the dollar was steady. Sweden’s Riksbank cut its policy rate to 1.75% and suggested further easing is unlikely, a notable signal from a European central bank already down the cutting path, per Reuters. Oil traders, meanwhile, are monitoring Q4 oversupply risks and geopolitical hotspots around Israel-Iran tensions and Ukraine’s strikes on Russian energy infrastructure, according to RBC’s Helima Croft as cited by Monexa AI and Bloomberg.

A powerful catalyst continues to be the AI infrastructure story. Multiple overnight reports highlighted Nvidia’s $100 billion partnership with OpenAI, a development that sparked a rally in Asia’s chip complex (TSMC, SK Hynix) and is drawing regulatory scrutiny and feasibility questions from parts of Wall Street and prominent short sellers, as aggregated by Monexa AI from Reuters and Bloomberg. The deal sits squarely at the intersection of capex, antitrust, and market concentration—issues that could color sentiment at today’s U.S. open.

Market Overview#

Yesterday’s Close Recap#

The tape favored large-cap growth and AI-adjacent leaders while defensives bifurcated. According to Monexa AI, semiconductors and semi-cap equipment paced gains, with outsized moves in several hardware and software bellwethers. Utilities rallied sharply as investors bought power-generation and transition names tied to data center demand. Communication Services and Consumer Defensive lagged.

Leadership was concentrated. Monexa AI’s heatmap shows standout gains in semis and equipment—Teradyne TER +12.79%, Applied Materials AMAT +5.48%—alongside mega-cap contributions from Apple AAPL +4.31%, Nvidia NVDA +3.97%, and Oracle ORCL +6.31%. Utilities surged, led by Constellation Energy CEG +4.90%, NRG Energy NRG +4.02%, and Vistra VST +3.14%. Laggards included Kenvue KVUE -7.47%, Church & Dwight CHD -4.06%, Keurig Dr Pepper KDP -4.28%, and Communication Services heavyweights Alphabet GOOG -0.92% and Meta Platforms META -1.63%.

The high-level read-through is a familiar one: AI and data-center capex beneficiaries continue to pull indices higher, but breadth remains mixed. The ^VIX at 16.04—roughly in line with its 50-day average per Monexa AI—signals contained headline risk, yet the jump in ^RVX to 22.60 shows small caps retain elevated volatility.

Overnight Developments#

Global risk cues are balanced by monetary policy and AI build-out headlines. As covered by Reuters, global markets were mixed overnight; gold’s record-setting impulse and a steady dollar reflect a defensiveness beneath equity indices. Sweden’s Riksbank cut to 1.75% and hinted this could be the last easing for now, an important reference for European rates. The OECD lifted its U.S. and global growth outlooks for 2025 but maintained a cautious tone longer term, citing tariffs as a looming drag by 2026, according to Monexa AI’s summary of OECD commentary and Reuters reporting.

In the U.S., investors await Federal Reserve Chair Jerome Powell’s first public remarks since the Fed’s recent rate cut, a potential near-term sentiment driver, per Reuters. Bruce Richards of Marathon Asset Management told Bloomberg the Fed’s cutting cycle may be only halfway complete, implying roughly 125 basis points of room to a neutral rate near 3%, with jobs data weakening—context that will shape rate-sensitive exposures this morning.

The AI capital cycle remains a centerpiece. Nvidia’s planned investment and supply agreement with OpenAI—reported at up to $100 billion—remains under the microscope, with questions from Wall Street about economics, antitrust, and power needs, per Reuters and Bloomberg. Monexa AI notes that Asia’s session saw chip supply chain beneficiaries bid higher on the headlines.

Macro Analysis#

Economic Indicators to Watch#

Today’s focal point is policy communication. As reported by Reuters, Chair Powell is due to speak for the first time since the Fed lowered rates, and his tone on growth, labor, and inflation should set expectations for the cadence of additional cuts into year-end. The broader macro backdrop combines rate normalization with still-firm activity: Monexa AI’s aggregation of OECD updates indicates U.S. growth projections near 1.8% for 2025 and 1.5% for 2026, with tariffs cited as a stronger headwind next year. Rate-sensitive pockets—utilities and real estate—outperformed into Monday’s close, consistent with easing financial conditions, though consumer staples did not respond in typical “defensive” fashion, which we address below.

For commodities, Helima Croft of RBC flagged potential Q4 oil oversupply—even as geopolitics add risk premia around the Middle East and Russia-Ukraine theaters—per Monexa AI and Bloomberg. That combination argues for tactical caution in energy: refiners and renewables outperformed yesterday, but oilfield services modestly lagged.

Global/Geopolitical Factors#

Trade policy and geopolitics are not fading as inputs to earnings power. Monexa AI highlights OECD commentary that tariffs are likely to bite more meaningfully in 2026, squeezing margins as buffers erode. Meanwhile, geopolitical risks—from Israel-Iran tensions to Ukraine’s strikes on Russian energy infrastructure—can stoke commodity volatility and affect corporate planning cycles. Sweden’s rate cut and “likely last” guidance point to a European policy backdrop that could decouple from the U.S. if inflation and growth trajectories diverge.

Sector Analysis#

Sector Performance Table#

According to Monexa AI, sector performance at Monday’s close was led by Utilities, Energy, Real Estate, and Technology, while Communication Services and Consumer Defensive lagged.

The leadership mix is instructive. Utilities’ +3.07% gain—led by CEG +4.90%, NRG +4.02%, VST +3.14%, and GE Vernova GEV +3.24%—reinforces the thesis that power generation and transition platforms are a second-order beneficiary of AI compute demand and data center build-outs. Technology’s +1.20% advance came with outsized single-stock contributions: TER +12.79%, AMAT +5.48%, ORCL +6.31%, AAPL +4.31%, NVDA +3.97%. The dispersion inside Communication Services (down -1.10%) and Consumer Defensive (down -0.40%) speaks to idiosyncratic and margin-related pressures.

Defensive weakness bears emphasis. Staples heavyweights underperformed: Procter & Gamble PG -1.90%, KDP -4.28%, CHD -4.06%, while Kenvue KVUE sank -7.47% following heightened scrutiny of acetaminophen’s use in pregnancy; Monexa AI’s overnight brief notes a premarket rebound attempt, but the volatility underscores headline sensitivity. Communication Services was mixed, with Alphabet GOOG -0.92% and Meta META -1.63% weighing, while Fox FOXA +2.97% and Warner Bros. Discovery WBD +1.45% outperformed—another reminder of dispersion in media and platforms.

In Energy, refiners and renewables led: Valero VLO +2.35%, Marathon Petroleum MPC +0.97%, First Solar FSLR +3.16%, while oilfield services Schlumberger SLB fell -1.48% and Exxon Mobil XOM dipped -0.71%. Industrials were roughly flat overall but featured rail strength: Union Pacific UNP +2.38%, Norfolk Southern NSC +2.41%, and Wabtec WAB +4.91%. Real Estate leaned into the data-center narrative with Equinix EQIX +0.86% and Digital Realty DLR +1.52%; Iron Mountain IRM jumped +4.58%.

Company-Specific Insights#

Earnings and Key Movers#

The micro tape is active. After Monday’s close, investors positioned for Micron Technology MU earnings after today’s bell. According to Monexa AI’s news rollup and Reuters, the setup hinges on High Bandwidth Memory (HBM) traction, DRAM/NAND pricing, and supply visibility into 2026—key inputs to the AI memory cycle. The stock closed at $164.62 (+1.16%). The options market and recent volatility on sector peers suggest an outsized reaction is possible given AI-cycle expectations.

Before the open, AutoZone AZO reported fiscal Q4 results: total company same-store sales +5.1%, domestic comps +4.8%, EPS $48.71, and annual sales $18.9 billion, per the company’s release via GlobeNewswire. Shares finished Monday at $4,121.00 (-0.47%). The print offers a real-time read on U.S. consumer auto maintenance, pricing power, and wage cost dynamics—useful for broader consumer views into Q4.

AI infrastructure beneficiaries continued to draw upgrades and attention. Erste Group upgraded ASML ASML to Buy, with shares up +2.75% to $957.80 on Monday, per Monexa AI. Rosenblatt boosted its target for Lumentum LITE to $225 while keeping a Buy rating, citing demand for 200G EML lasers and coherent modules for 1.6T/800G data center deployments; the stock ended at $164.71 (-2.38%), illustrating how expectations can overshoot near-term flows in optics. Oracle ORCL +6.31% rode continued enthusiasm for cloud workloads and potential platform tie-ins; Monexa AI’s overnight curation also flagged media coverage of Oracle’s potential role in a TikTok resolution.

The power-demand theme remains investable, with utilities and merchant generators at the nexus of AI data center expansion. Constellation CEG, NRG NRG, and Vistra VST were among Monday’s high-beta winners as the market leans into power-shortage debates. Apple AAPL rallied +4.31% and announced the reopening of Apple Ginza in Tokyo on September 26, a reminder of store productivity and brand presence even if not a material near-term P&L driver.

Consumer and leisure were mixed. Piper Sandler downgraded Crocs CROX to Neutral, citing weak U.S. demand and lower performance marketing; shares fell -3.96%. In contrast, Steven Madden SHOO gained on an upgrade to Overweight. Bank of America reiterated a Buy on Carnival CCL ahead of Q3, noting accelerating cruise spend growth; [CCL] closed +0.62% at $30.71.

Biotech volatility persisted. MBX Biosciences MBX doubled (+100.00%) on strong Phase 2 data for canvuparatide in hypoparathyroidism and later announced a proposed follow-on offering—an example of how positive clinical news can quickly be followed by capital raises, per Monexa AI. Momentum pockets in microcaps remain elevated: Boxlight BOXL +205.77% on no material developments, while Chijet Motor CJET fell -34.69% on a shift toward crypto balance-sheet exposure—both high-risk, idiosyncratic moves.

Extended Analysis#

Global Overnight Shifts: How They May Drive Today’s Open#

The overnight mix tilts neutral-to-positive for AI and rate-sensitive longs while keeping a lid on broad-based defensives. The Riksbank’s cut and “likely last” guidance dovetail with a global policy regime that is easing, but not aggressively. For U.S. markets, Powell’s communication later today could reinforce a measured path. Monexa AI’s sector performance shows investors already leaning into the rate narrative through Utilities (+3.07%) and Real Estate (+1.21%), though Real Estate’s leadership is selective, concentrated in data centers such as Equinix EQIX and Digital Realty DLR. Energy dispersion—refiners and solar up, services down—suggests positioning is less about crude direction and more about margin structures and policy tailwinds.

The big macro overlay remains tariffs and growth normalization. Monexa AI’s synthesis of OECD updates indicates U.S. GDP decelerating to 1.8% (2025) and 1.5% (2026), with tariffs weighing more in 2026. That matters for investment horizons beyond this quarter: companies relying on imported inputs (manufacturing, retail hardgoods) face rising cost pass-through risk if tariff relief does not materialize. The effect won’t dictate today’s open, but it should inform portfolio construction for 2025–26.

The AI capital cycle continues to drive leadership—and concentration risk. Monexa AI flags that technology remains the market’s dominant weight, with semiconductors, equipment, and select software/hardware at the core of outperformance. Monday’s outsized moves in [TER] and [AMAT] and sustained strength in [NVDA], [AAPL], and [ORCL] reinforce this. At the same time, Monexa AI’s research highlights weak market breadth and heavy reliance on a small cluster of mega-cap names in major indices. If the narrative moderates—via antitrust scrutiny, capex digestion, or supply constraints such as power availability—the feedback loop into indices can be disproportionate.

Domestic Sectors to Watch Before the Bell#

Utilities and power generation deserve continued attention, not as classic defensives but as AI infrastructure derivatives. Monday’s strength in [CEG], [NRG], [VST], and [GEV] maps to the data center grid debate and long-dated PPAs. Real Estate’s selective leadership via [EQIX] and [DLR] aligns with the same theme. Technology remains the tactical driver; into [MU] earnings, look for commentary on HBM capacity, pricing, and customer mix as the marginal data point for 2026 memory supply-demand.

Consumer sectors warrant differentiation. Discretionary has pockets of resilience—Tesla TSLA +1.91%, Lululemon LULU +2.23%—but big-box and e-commerce signals were mixed as Amazon AMZN fell -1.66%. Consumer Defensive weakness is notable in a rate-cut tape; margin sensitivity and headline risk (e.g., [KVUE]) argue for selectivity rather than a blanket “lower rates help defensives” stance.

Financials reflect rate and risk-on asymmetry. Monexa AI shows payments and data/ratings names up—Visa V +0.80%, Moody’s MCO +1.57%—while crypto-exposed and regional lenders lagged: Coinbase COIN -3.07%, Fifth Third FITB -2.45%, JPMorgan JPM -0.74%. That split could persist if Powell reinforces gradualism and if crypto volatility remains elevated.

What To Watch Through the Session#

Into the close, [MU] guidance on HBM and DRAM/NAND supply should either validate or challenge the “AI everything” thesis at the memory layer. Watch semicap and optics read-throughs: [AMAT], ASML, and [LITE] can move in sympathy. Powell’s tone will shape the path for duration and rate-sensitive allocation; a neutral-to-dovish signal likely extends relative strength in Utilities and Real Estate, while a hawkish lean could favor Financials via net interest dynamics. Energy remains a dispersion trade; track refiners and solar versus oilfield services if crude is rangebound and macro remains the driver.

Finally, monitor ongoing Kenvue [KVUE] sentiment as acetaminophen headlines evolve; staples’ reaction function will inform whether Monday’s underperformance was idiosyncratic or symptomatic of broader margin stress.

Conclusion#

Morning Recap and Outlook#

The market enters Tuesday with a tech-led bias and a utilities surge that reframes classic “defensive” leadership as a proxy for AI power demand. According to Monexa AI, indices closed higher with the S&P 500 at 6,693.75 (+0.44%), Nasdaq at 22,788.98 (+0.70%), and the Dow at 46,381.54 (+0.14%). Utilities’ +3.07% and Technology’s +1.20% gains contrast with Communication Services -1.10% and Consumer Defensive -0.40%, underscoring a selective tape. Overnight, Reuters reports a mixed global risk tone; Sweden’s rate cut to 1.75% and OECD’s tempered optimism highlight a world easing policy but bracing for tariff frictions in 2026. The Nvidia–OpenAI headlines amplify capex optimism and antitrust scrutiny in equal measure, setting up an open that rewards AI-adjacent exposure and disciplined stock picking elsewhere.

Key catalysts at the open and into the close are Powell’s remarks and Micron earnings. For positioning, the near-term playbook favors maintaining exposure to secular AI beneficiaries—semis, equipment, data-center real estate, and power generation—while hedging concentration risk and staying selective in defensives and rate-sensitive financials. Communication Services and Consumer Defensive require bottom-up scrutiny; idiosyncratic risk is high. Watch volatility: ^VIX 16.04 and ^RVX 22.60 suggest a contained but two-speed risk regime—complacency at the large-cap index level and choppiness in small caps.

Key Takeaways#

• According to Monexa AI, the S&P 500 closed at 6,693.75 (+0.44%), the Nasdaq at 22,788.98 (+0.70%), and the Dow at 46,381.54 (+0.14%); ^VIX 16.04 (-0.37%) and ^RVX 22.60 (+4.10%).
• Sector leadership bifurcated: Utilities +3.07% and Technology +1.20% led; Communication Services -1.10% and Consumer Defensive -0.40% lagged.
• AI and data-center capex continue to drive gains in NVDA, AMAT, TER, ORCL, AAPL; utilities and data-center REITs are secondary beneficiaries.
• Overnight, Reuters reports mixed global markets; Sweden’s Riksbank cut to 1.75% and hinted at a pause. OECD growth was nudged higher for 2025, but tariffs loom as a 2026 headwind.
• Today’s catalysts: Powell’s first post-cut remarks and Micron MU earnings; into the print, watch HBM commentary and pricing.
• Defensive weakness and single-stock volatility (e.g., KVUE, MBX, BOXL argue for selectivity and disciplined risk management.