Softer-than-expected U.S. inflation failed to produce a sustained stock-market rally on Wednesday. After the initial buying, the S&P 500 turned negative while the Nasdaq posted a modest gain. The rise in the 10-year U.S. Treasury yield is also making it harder for good news to translate into lasting price gains.

However, a company's growth and a broad market rally depend on different conditions. Today's manufacturing data and tomorrow's jobs report will help clarify whether lower inflation is arriving alongside a significant economic slowdown.

Key takeaways

  • The favorable inflation surprise eased concerns that the Fed would raise rates again. For that relief to provide broader support to stocks, borrowing costs also need to fall. Looking only at the initial reaction to the data leaves an incomplete picture.
  • Micron's ($MU) sales outlook is strong, but it is too early to say that a new rally has begun across chip stocks. Separating the company's growth from the sector's overall price action helps avoid reading too much into a good earnings report.
  • The gold ETF GLD ($GLD) fell 0.54% to $380.84, while the silver ETF SLV ($SLV) lost 1.75% to $54.51. Expensive oil was not enough to lift the metals. Their previous closes of $382.89 and $55.48 are initial reference points for a recovery. Energy-driven inflation risk and daily moves in precious metals do not have to follow the same direction.

What changed since yesterday?

  • Yesterday, we were waiting for PCE data and Micron's earnings to test whether the recovery in chips could continue. Inflation came in below expectations and Micron reported strong results, yet a sustained broad-market rally did not follow. The focus now shifts from the news itself to why buying has not broadened despite these favorable developments, and how Treasury yields respond.

What happened?

  • The August personal consumption expenditures price index (PCE), released by the U.S. Bureau of Economic Analysis on September 30, rose 0.3% month over month and 3.4% year over year. The core measure, excluding food and energy, rose 0.2% monthly and 3% annually. Buying after the softer-than-expected release did not hold through the close: the S&P 500 fell 0.25%, the Nasdaq Composite gained 0.24%, and the Dow Jones lost 0.86%. QQQ ($QQQ), which tracks the Nasdaq 100, rose 0.25% to $739.77 but finished near the bottom of its daily trading range.
  • Micron reported revenue of $54.23 billion in the final quarter of its fiscal year, up from $41.46 billion in the preceding quarter. The company expects revenue of $61.5 billion, plus or minus $1.5 billion, in the first quarter of its new fiscal year. Those sales have not yet been realized. The memory producer's strong outlook supports the view that AI investment is generating revenue for suppliers. It does not, by itself, prove that the customers making those investments will earn profits on the same scale.
  • U.S. President Donald Trump said on September 30 that he was still considering a ban on diesel exports. The statement does not mean a ban has taken effect. Such a step could reduce fuel supply outside the United States, so assessing oil solely through news about talks with Iran is not enough.
  • The BIST 100 closed Wednesday down 2.79% at 11,947. Modest gains in U.S. technology stocks did not carry over to Turkey. High energy costs are a separate source of pressure on Turkey's inflation and external balance, but attributing the day's BIST decline to that factor alone would be unwarranted.
  • The December Brent contract rose 1.9% to $98.03 on Wednesday. Persistently expensive energy could limit the relief from the softer inflation reading. New supply restrictions could also make it harder for fuel costs to fall.

Market levels

  • The S&P 500's close of 7,651.54 is just above the 7,640 support level tracked by market analyst Tunç Şatıroğlu (@tuncsatiroglu). Resistance is at 7,770. Holding support by a narrow margin does not establish a strong direction within this range; a break below 7,640 would increase downside risk.
  • The semiconductor ETF SMH ($SMH) rose to $609, but even its daily high fell short of resistance at $614. Şatıroğlu tracks support at $590, with $614 as the upside confirmation threshold. Without holding above $614, it is too early to talk about fresh momentum across the sector.
  • The cybersecurity ETF CIBR ($CIBR) traded above $104 during the session but closed at $103.09. Şatıroğlu tracks support at $99 and resistance at $104. This clearly illustrates the difference between an intraday breakout and a gain sustained through the close.
  • Bitcoin was around $84,034 at 7:48 a.m. Turkey time this morning. It moved above the $85,100-$85,200 area the previous day but failed to close there. Holding that area is the upside confirmation condition, while $82,700 is support. A brief move above a threshold is not the same as a sustained advance.

Red flags

  • Treasury yields remaining high after the inflation release could limit the prices investors pay today for growth stocks' future earnings. That is why a weak broad-market close, even alongside good company news, should not be overlooked.
  • Even if Micron meets its sales outlook, profitability may not grow at the same pace. Its adjusted gross margin outlook, the share of sales left after production costs, is 86.25%, compared with 87% in the last quarter. A lower margin alongside higher expected sales explains why I track growth and profitability separately. Production costs and selling prices also determine the outcome; revenue growth alone is not enough to estimate future profit.

Calendar

  • October 1, 3:30 p.m. Turkey time: U.S. weekly initial jobless claims. The release will offer a near-term indication of how quickly the labor market is slowing.
  • October 1, 5:00 p.m. Turkey time: U.S. ISM manufacturing index. Production, orders, and price pressures need to be assessed together.
  • October 2, 3:30 p.m. Turkey time: U.S. employment report. This will be the second major test of interest-rate expectations after the inflation release.

My analysis

Today's distinction is between how quickly companies grow and how much investors pay for that growth. Micron's results support the strength of the memory business. High borrowing costs, however, can reduce what investors are willing to pay for future earnings. There is no automatic link between a strong company and a rising share price.

First, I will look at whether the new data point to a sharp deterioration in growth, then at the response in Treasury yields. Lower rates are not necessarily good news for stocks if they reflect a significant weakening in the economy. If growth holds up, cost pressures ease, and buying spreads beyond chips, my assessment of the broader market will become more positive. For now, I care more about these conditions coming together than about a single inflation release or earnings report.

Sources

This is not investment advice; it is a research and monitoring note.