Micron Delivers Robust Demand Picture: 8 Key Items Shaping the Stock Market Thursday
These are the early headlines and other items poised to influence the market at the start of trading Thursday. As we share this collection of market drivers, U.S. equity futures point to a positive start to a new trading month.
1. Iran is preparing a broader and more forceful response if the United States resumes large-scale military attacks, sources said, while continuing a diplomatic push that Iranian officials privately see as unlikely to succeed. The planning reflects a conviction within Iran’s leadership that any renewed US campaign must be met with a stronger response than before, even as Tehran seeks to avert escalation through talks. (Reuters) President Donald Trump said ramped up military strikes against Iran were “possible” after the November midterm elections, as his administration struggles to find an exit plan for a war now in its eighth month. (Bloomberg)
A report that Chinese refiners have suspended October fuel exports, further squeezing war-constrained energy markets, is sending oil prices higher this morning. Meanwhile, the above items, while not quite completely dashing hopes for peace talks between the U.S. and Iran, are suggesting isn’t likely in the very near-term. That and the move by China suggest oil prices are poised to remain at elevated levels.
We will continue to track traffic through the Strait of Hormuz and adjust our thinking as needed. We will also be interested in the technical look at at West Texas Intermediate Crude (WTIC) oil Bob Lang will share later today. Stay tuned for that!
2. Global bonds were engulfed in another sell-off on Thursday, squeezing already pressured government finances, as borrowing costs from the US to France, and Japan hit levels not seen in decades, spilling into broader markets including stocks… The 10-year US Treasury yield, a yardstick for global borrowing costs and asset prices, rose to 5.34%, its highest since 2002, having posted its biggest quarterly rise this century in the three months to September. (Reuters) Bond markets have for months been racked by fears over the spectre of higher inflation triggered by the Iran war energy shock, which has pushed the relationship between oil prices and Treasury yields to its tightest point since 1990. This has been intensified by robust US economic data that has further fed expectations of higher interest rates. (FT)
The step-up in Treasury yields reaffirms our view to remain outside of more interest rate-sensitive areas of the market, like housing. We continue to think higher borrowing costs for housing, auto loans and credit-card borrowings have the potential to crimp consumer spending, but the degree of that will hinge on what we see in job creation and wage data.
3. US companies announced the fewest number of job cuts for any September since 2022, according to data from outplacement firm Challenger, Gray & Christmas Inc. Employers last month announced 43,281 job cuts, a near 20% decrease from a year earlier. So far this year, planned staffing reductions are down almost 40% from the same nine months in 2025. (Bloomberg) Factory activity across Europe and Asia expanded last month as demand, partly boosted by the global AI spending boom, remained strong even as the energy price shock from the Iran war kept inflation elevated, surveys showed on Thursday. (Reuters)
Those items as well as ADP’s stronger-than-expected September Employment Change Report out yesterday speak to the favorable economic landscape and what is powering it. We’ll get another peek into that with today’s September Manufacturing PMI reports from S&P Global and ISM. As we parse those figures, we’ll keep in mind the September climb in oil and related prices, and what the findings say about inflation pressures. We’ll also be examining new order data and how that sets up the start of the final quarter of the year.
More to come today on this once those reports are published.
4. Micron Technology Inc. gave an upbeat forecast for the current quarter, fueled by the AI building frenzy, though the chipmaker warned that rising compensation would weigh on profit margins. Revenue will be about $61.5 billion in the fiscal first quarter, which runs through November, the company said in a statement Wednesday. Analysts estimated $56.8 billion on average… For now, Micron and its rivals continue to be overwhelmed by memory-chip orders. Though the Boise, Idaho-based company is expanding its manufacturing capacity, prices are expected to remain high for the foreseeable future. (Bloomberg)
To us, the comment to focus on from Micron ($MU) management during last night’s earnings conference call relates to demand and the Portfolio’s AI and data center-related positions:
“In terms of 2027 and 2028 in our commentary, we are seeing stronger demand drivers than we’ve seen before. We commented about the server units continuing to grow into ’27. And of course, I think everybody is talking about how agentic AI is really growing fast, and that’s creating a CPU-driven demand stream as well. And so as we’ve gone through working on our fiscal year ’27 and we commented that we have more than 75% of our shipments committed for the year that shows a strengthening demand and allows us to shift our conversations on allocation with our customers out to 2028.“
5. McCormick topped Wall Street estimates for third-quarter profit and sales on Thursday, as stronger pricing for seasonings and sauces helped cushion the impact of rising raw materials and freight costs… Packaged goods makers such as McCormick, Conagra Brands, and General Mills have leaned on price hikes to shield margins as they counter challenges from uncertainty over US tariffs and surging input costs tied to the Middle East conflict… Persistent pressure on household spending has dampened consumers’ appetite for dining out, improving demand for flavor-boosting condiments like McCormick’s Cholula and Frank’s RedHot sauces — affordable pantry staples that can turn home-cooked meals into something special. (Reuters)
By the numbers, for McCormick’s ($MKC) August quarter, prices were up 2.2% from a year ago, while organic volumes dipped 0.3%, which were a wee bit better compared to the 0.5% fall in the previous quarter. However, this tells us a few things. First, consumers are purchasing less, paying more. Second, they are looking for ways to mitigate inflation pressures, and that speaks to the investment rationale behind our positions in TJX ($TJX) and Costco ($COST). Especially Costco given that its Fresh Foods category drives ~15% of revenue and Food and Sundries another 40%.
6. Expectations are low for sportswear giant Nike ahead of its fiscal first-quarter earnings report, slated for after the bell Thursday. Consensus calls for Nike to earn 44 cents a share, a nickel less than it did in the year-ago period, on a 3.4% decline in revenue to $11.3 billion… Sales of sneakers and other athletic gear have been difficult lately, but Nike in particular has suffered: New product launches haven’t garnered much excitement and it lacks the star power like that of Michael Jordan in its heyday. Fashion has been shifting back toward dressier styles, and competition has grown. Just over a quarter of the 44 analysts tracked by FactSet are bullish on the shares. (Barron’s)
Nike ($NKE), in our view, has been challenged by internal issues as well as external competitive ones from the likes of Adidas ($ADDY), On Holding ($ON), Lululemon ($LULU), Vuori, and a host of others that are leveraging direct to consumer and social media. On top of those pressures, one of the risk items flagged in Nike’s filings with the SEC is oil:
“The cost of oil is a significant component in manufacturing and transportation costs, so increases in the price of petroleum products can adversely affect our profit margins.“
This will have us very interested in Nike’s margin performance and as we get ready for the brunt of the Q3 2026 earnings season, the discussion around how higher energy prices are impacting its outlook.
7. Economic data today per TipRanks: Challenger Job Cuts (September), Initial & Continuing Jobless Claims (Weekly), S&P Global Final Manufacturing PMI (September), ISM Manufacturing PMI (September), Construction Spending (August), EIA Natural Gas Stocks (Weekly), 30-Year Mortgage Rate (Weekly).
8. Companies reporting today per TipRanks: AM – Accenture ($ACN), Acuity ($AYI), McCormick & Co. ($MKC). PM – Nike ($NKE).
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At the time of publication, TheStreet Pro Portfolio was long COST, MU, and TJX.
