U.S. Stock Trends (September 30): Corning Lands Over-$3 Billion AT&T Deal, Optical Communications Buck the Trend

Author: Chaoxiang Research

On Tuesday, U.S. stock losses narrowed as pressure on long-term bonds remained unresolved. The 10-year Treasury yield broke above 5.29% intraday, while the 30-year hit 5.62%. With oil prices falling and Williams signaling no rush to raise rates, indices recovered some ground. Performance within tech stocks was mixed; Apple fell 2.66%, Nvidia closed slightly lower, while chip equipment and optical communications outperformed. Corning secured an over-$3 billion procurement agreement from AT&T, and Meta launched an AI agent for small businesses. Tonight, ADP, PCE, and third-estimate GDP figures will be released simultaneously, subjecting the interest rate market to fresh data tests.

Three Major Indices Close Slightly Lower, Philadelphia Semiconductor Index Rebounds 1.32%

The S&P 500 fell 0.17% to 7,670.84 points, the Nasdaq Composite dropped 0.09% to 26,797.54 points, and the Dow Jones Industrial Average declined 0.26% to 51,349.92 points. The Nasdaq 100 rose 0.21%, while the VIX fell 0.19% to 16.04.

Four of the S&P 500's 11 sectors gained, seven declined. Utilities rose 1.14%, Communication Services gained 0.40%, Industrials advanced 0.19%, and Consumer Discretionary edged up 0.05%; Real Estate fell 0.01%, Information Technology dropped 0.28%, Healthcare slid 0.32%, Financials declined 0.37%, Consumer Staples fell 0.54%, Materials slipped 0.55%, and Energy dropped 0.89%.

The Philadelphia Semiconductor Index rose 1.32%. Among the Magnificent Seven, Meta gained 3.24% and Amazon rose 0.21%; Microsoft fell 0.05%, Alphabet Class A dropped 0.53%, Nvidia declined 0.72%, Tesla fell 1.29%, and Apple dipped 2.66%.

The Nasdaq Golden Dragon China Index fell 1.55%.

In late New York trading, the 2-year Treasury yield retreated to around 4.89%, the 10-year to approximately 5.26%, and the 30-year to roughly 5.59%. The 10-year touched 5.293% intraday, while the 30-year briefly climbed to 5.6206% before pulling back.

The WTI crude oil November contract fell 3.48% to settle at $89.38/barrel; the Brent crude November contract declined 2.56% to settle at $102.59/barrel. Spot gold rose about 1.46% in late New York session trading to $4,174.26/ounce. Bitcoin hovered around $83,600, and Ethereum was approximately $2,678.

Rate Hike Bets Cool Off, Long-End Costs Remain Elevated

Williams left the market a bit of breathing room.

On the day, New York Fed President Williams stated that the Fed has time to assess forthcoming data before deciding when to resume rate hikes. Following his remarks, market bets for a hike of at least 25 basis points in October receded from near 70% intraday to roughly 50%.

Oil prices also aided the rally. Saudi Arabia's east-west pipeline resumed deliveries, Red Sea ports restarted loading, and signs of recovering Middle Eastern crude exports eased supply concerns.

Short-end rates came down, but long-end rates did not follow suit. While markets dialed back rate hike bets for the next meeting, corporate long-term financing costs remain high.

The index rebound lacked momentum. Without a drop in long-bond yields, companies needing continuous funding cannot lower their debt issuance costs, making it hard for valuations to improve. Whether tonight's PCE data can pull rates further lower will be more critical than any single official's speech.

Consumers Turn More Cautious, Job Openings Fall Below Expectations

The U.S. Consumer Confidence Index dropped to 81.9 in September from 88.6 previously, with both the current conditions and expectations indexes sliding.

Labor market sentiment also worsened. The share of respondents feeling jobs were plentiful fell from 24.5% to 23.6%, while those finding work difficult rose from 20.3% to 21.9%. High prices, fuel expenses, and borrowing rates continue to suppress household spending willingness.

August JOLTS job openings decreased by 256,000 to 7.079 million, missing the market forecast of 7.225 million.

These figures could reduce the need for further rate hikes or signal slowing consumer demand. Beyond monitoring interest rates, attention should turn to whether retailers, automakers, and other consumer-facing companies will adjust sales forecasts. Weaker data may support valuations, but earnings will not improve for the same reason.

Corning Signs $3 Billion Long-Term Deal, Optical Communications Rally Together

Optical communications was one of last night's strongest themes.

Lumentum rose 5.66%, Corning gained 4.70%, Marvell Technology jumped 4.51%, and Coherent advanced over 3%. Chip equipment also rallied in tandem, with Applied Materials climbing 5.19%, ARM gaining 3.65%, and ASML rising 3.56%.

Corning signed a multi-year agreement worth over $3 billion with AT&T to supply the fiber and cable needed to expand its network. AT&T noted that increasing internet usage and data demand driven by AI require greater network capacity.

This agreement translates network expansion demand into concrete orders. AI infrastructure construction involves more than just purchasing GPUs; it encompasses data transmission, network connectivity, and fiber deployment, with related investments extending across more segments.

However, AT&T's procurement cannot be directly counted as incremental revenue for the entire optical communications industry. Corning's subsequent delivery progress, along with order books and profit margins for other companies, still require separate observation.

The divergence between a rising semiconductor index and a falling Nvidia also indicates internal splits within semiconductors. Last night, capital flowed more toward equipment and connectivity links, without a scenario where all AI hardware rallied together.

Meta Pushes AI Agent Toward Small Businesses

Meta launched the SMB version of Muse, integrating its AI agent with Instagram Professional accounts, Facebook Pages, and Meta Advertising Accounts, while supporting several third-party enterprise software tools.

Meta already holds a large base of small business clients. If the agent can help merchants create content, handle daily operational tasks, and find customers, it stands a chance to increase these merchants' platform engagement frequency, opening new growth avenues for its advertising business.

The stock price rise depends on the viability of this commercialization pathway. Post-launch, the true focus should be on merchant retention, willingness to pay, and whether the agent actually improves ad placement efficiency. A chasm remains between rolling out new features and establishing steady revenue streams.

Meanwhile, larger expenditure figures have emerged on the AI infrastructure side. According to confidential prospectus materials reviewed by Reuters, Anthropic has committed to at least $518 billion in infrastructure spending over the next decade, with approximately 80% non-cancelable or payable regardless of actual utilization.

Consequently, the supply chain gains long-term demand support, while model companies face heavier expenditure pressures. Revenue must catch up to committed spending; the higher the financing costs, the more closely the market will watch for returns on these investments. Spending commitments cannot be equated directly with suppliers' recognized revenues.

Today's Focus

Tonight at 20:15, start with the September ADP employment data. With job openings falling below expectations yesterday, today's focus is on whether private-sector hiring continues to decelerate, providing further clues for Friday's Nonfarm Payrolls.

At 20:30, August PCE, personal income and spending, and the third estimate for Q2 GDP will be released simultaneously. Key focuses include the core PCE month-over-month change, actual consumption performance, and the reaction of 2-year and 10-year Treasury yields post-release. If inflation remains sticky, the cooled-off rate hike bets from last night could reheat.

Tonight marks the final trading day of the month and quarter. End-of-session volatility from institutional rebalancing may emerge. If after-hours trading volume expands, assessments must be made in conjunction with interest rates and sector performance.