The Dow and S&P 500 closed higher on Thursday, but chip stocks continued to fall. Declining Treasury yields attracted buyers to some sectors, while parts of technology missed out. Today I am looking at where the recovery is strengthening and which stocks are still lagging.

Faster U.S. producer inflation raises questions about how long the relief from lower yields can last. Even a company reporting strong demand may not see its stock rise immediately: investors weigh today's valuation and financing burden alongside future growth.

Key takeaways

  • The gains were not driven solely by a handful of large technology companies. Strength in IWM, which tracks smaller U.S. companies, and consumer discretionary fund XLY suggests buying spread to other parts of the market. That does not establish that the chip selloff has ended.
  • Nasdaq 100 tracker QQQ ($QQQ) and semiconductor ETF SMH ($SMH) did not share the same recovery. IGV, a fund tracking software companies, rose instead. Treating technology as a single block can hide these differences within the sector.
  • Market commentator Tunç Şatıroğlu (@tuncsatiroglu) sees falling Treasury yields as positive, but also says stocks could remain under pressure. The timing of the bounce he expects remains uncertain.

What happened?

  • The U.S. Bureau of Labor Statistics reported that September's U.S. Producer Price Index (PPI), which tracks producers' selling prices, rose 1.3% month over month and 6.3% year over year. Higher prices charged by producers can leave customers buying fewer goods with the same income. How much of the increase reaches consumer prices is a separate question.
  • AP reported closing gains of 1.1% for the Dow and 0.3% for the S&P 500. Among funds, IWM gained 1.37% and XLY added 1.71%. CNBC reported that falling Treasury yields supported previously weak areas such as consumer businesses and housing. A sustained decline in borrowing costs matters for these companies.
  • TSMC's strong results and revenue outlook for the next quarter are important counterevidence to reading the chip decline as a direct collapse in demand. In the same session, SMH fell 1.04% and Nvidia lost 1.84%, while IGV rose 1.81%. Good company news and the sector's daily return can diverge.
  • On October 15, the U.S. Treasury announced action against banking and intermediary networks it said supplied Iran with foreign currency. Treasury's links between some intermediaries and Iranian oil sales matter for oil-trade payment channels; the announcement alone does not establish a physical supply loss.

What changed since yesterday?

  • Yesterday's note focused on bond buying failing to reach technology. In the new session, software, smaller companies and consumer businesses recovered, while chips lagged. That broadening is encouraging, but technology stocks have yet to turn together. It now matters where buyers show up, as well as whether they show up at all.

Market levels

U.S. indexes and technology

  • S&P 500 tracker SPY ($SPY) closed at $771.79. The session high of $772.87 is the first threshold for further gains; a move below the daily support candidate of $764.43 would weaken the latest recovery. Closing near the upper boundary is an encouraging sign that the recovery carried through to the end of the day.
  • QQQ's $728 close was slightly below the previous day's. The first threshold above is $729.43, with $715.44 a daily support candidate below. Holding above the upper boundary could support a continued recovery. A small gain in the Nasdaq Composite and a decline in the Nasdaq 100 fund are different observations: the two indices should not be read interchangeably.
  • SMH recovered to $558.84 after falling as low as $540.59, but still finished down. The session high, $560.63, is the first recovery threshold; before that area is cleared, it is too early to treat buying from the lows as a lasting reversal. Another search for support at the $540.59 daily low would test buyers again.
  • IGV closed at $109.60. The session high of $109.71 is the first resistance candidate; I will first look for a move above it to assess whether buying can continue. A search for support at the $106.20 low would warn of gains slipping away in this relatively stronger area too.

Bonds and precious metals

  • TLT ($TLT), which tracks U.S. Treasury bonds with more than 20 years to maturity, rose 1.37% to close at $79.97. The latest session low of $79.93 is a daily support candidate, while $80.57 can be watched as resistance above. Despite the gain, the close was near the bottom of that range, so I am not assessing the strength of bond buying from the daily percentage change alone.
  • Gold fund GLD ($GLD) closed at $382.71, just below its daily high of $382.94. Clearing that resistance candidate could help the recovery continue; failure to find support at the $379.72 low would put the latest session's gains at risk. These are prices per fund share.
  • Silver fund SLV ($SLV) gained 3.39% to $51.92, reaching its daily resistance candidate of $51.94. Whether new buying continues there matters. The daily low of $50.97 is a support candidate below; after the silver fund's stronger daily gain, the risk of a pullback also needs to be considered.

Crypto

  • Bitcoin is around $82,058 this morning. The previous completed day's high of $82,561 is the first resistance candidate, while the low of $79,692 is an area to look for support. Clearing and holding the upper boundary would give the latest recovery more room; a return to the lower area would keep selling pressure heading into the weekend in view.
  • Ethereum is around $2,444; the previous day's high of $2,464 is the first resistance candidate. Watch whether it can hold above that boundary and whether support emerges at the $2,322 low below. The current price alone is insufficient to establish that a new uptrend has taken hold.

Red flags

  • If energy and input costs stay high, companies may have to charge more or absorb part of the cost. The first option can hurt demand and the second can hurt profit; falling yields do not eliminate that distinction.
  • A bounce from the intraday low and a positive close send different signals in chips. Sharp moves around options expirations can blur that distinction too. Where prices settle after the initial reaction is a more useful measure.

Calendar

  • October 16, 15:30 TRT: U.S. September import and export prices. After producer inflation, the focus will be on price pressure in international trade.
  • October 16, 16:15 TRT: U.S. industrial production and capacity utilization. This will help assess the direction of output alongside price increases.
  • October 16: Monthly U.S. equity options expiration. Sharp intraday changes in direction should not be confused with a lasting change driven by company news.

My analysis

I see today's gains as meaningful because the market can attract buyers beyond technology. Lower Treasury yields can help companies with large financing needs. Yet the lasting benefit depends on their borrowing conditions and customers' spending power as well as rising fund prices. With inflation accelerating, I do not expect both channels to deliver relief at the same time.

In chips, I assess strong demand separately from expensive expectations. If TSMC's business is performing well while the sector fund falls, investors may be questioning the price they pay for that growth as well as whether demand will last. I would become more constructive if software holds its recovery and chips also retain the ground they regain. Gains rotating between sectors could be healthier than the same companies leading every day, but I would still want to see it over several more sessions.

Sources

This is a research and monitoring note, not investment advice.