Stocks Finish Higher as Bond Yields Slip and Chip Makers Climb

Economic Indicators - The Dallas Fed manufacturing activity survey for September unexpectedly fell by -6.9 to -8.7, weaker than expectations of an increase to -1.0 [1] - US pending home sales for August rose by +4.0% month-over-month, significantly stronger than expectations of +0.4% and marking the largest increase in five months [2] - The S&P companies are expected to post +6.9% earnings growth in Q3, up from +6.7% as of the end of May, with over 22% of companies providing guidance expected to beat analysts' expectations [8] Stock Market Performance - Stock indexes experienced a rally, with the S&P 500, Dow Jones Industrial Average, and Nasdaq 100 reaching record highs last week, driven by strong earnings growth and Fed easing measures [4] - On Monday, the S&P 500 Index closed up +0.26%, the Dow Jones closed up +0.15%, and the Nasdaq 100 closed up +0.44% [6] - Chipmakers led technology stocks higher, with GlobalFoundries and Micron Technology closing up more than +3% [14] Interest Rates and Bond Market - The 10-year T-note yield fell by -3 bp to 4.14%, influenced by expectations of weak labor market news prompting the Fed to continue cutting interest rates [5][11] - The 10-year breakeven inflation rate fell to a 1.5-week low of 2.357%, supporting Fed policy and T-note prices [11] Corporate Developments - Merus NV closed up more than +35% after Genmab announced a deal to acquire the company for $8 billion or $97 per share [16] - Electronic Arts closed up more than +4% after a consortium acquired the company for $55 billion or $210 per share [18] - Western Digital closed up more than +9% after an upgrade from Rosenblatt Securities, raising its target on the stock to $125 from $90 [16] Sector Performance - Energy producers retreated after WTI crude oil prices fell by more than -3%, with companies like Diamondback Energy and Devon Energy closing down more than -3% [15] - Rising corporate earnings expectations provide a bullish backdrop for stocks, with significant positive guidance from S&P 500 companies [8]