Markets
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Luke Kawa

Can tech giants keep stock-market volatility suppressed?

Yes, when you’re the leaders of a cohort that’s greater than 40% of the S&P 500, you warrant getting two out of the five top charts to watch. 

One hallmark of 2024 was the extremely low realized correlation among members of the so-called Magnificent 7 stocks. That is to say, on a daily basis, these stocks tended to march to the beat of their own drums, despite all operationally doing a similar thing: spending billions to enhance their AI functionality in their respective key business lines — while Nvidia, again, is just raking in these dollars.

It’s particularly noteworthy that Tesla is the chief driver of lower correlations as of late. The last time it was this much of a unique snowflake versus this group was when the stock traded in a range for three years, compared to going straight up after the election. 

What were the consequences of this for the US stock market as a whole? Well, the implied and realized volatility of the S&P 500 is a function of how much individual stocks move and how much they tend to move in the same direction — that is, their correlation. The one-year rolling average of the one-month co-movement of the S&P 500’s top 50 constituents ended 2024 at a record low (based on data going back to 2011), and this phenomenon among the megacaps is a big reason why.

This dynamic has important implications for how much money some types of investors are willing to put into stocks. We live in a world where many hundreds of billions of assets under management are systematically tied to the volatility of what they own — so called vol-control funds or risk-parity strategies.

Whether due to a slide in the economy or some industry-specific common factor (say, a downward revision of the expected returns on AI investments), anything that raises the co-movement of tech giants is going to lower how much stock-market exposure those funds will have. And, as the clichéd line goes and the chart shows, in a crisis, correlations go to one.

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Tasha Matsumoto
7h
The S&P 500 and Nasdaq 100 notch new closing highs as investors shake off the government shutdown

The S&P 500 closed 0.3% higher, the Nasdaq 100 was up 0.5%, and the Russell 2000 gained 0.2%.

Germany, Bull running on field
markets
Matt Phillips

Intel jumps on report of customer talks with AMD for foundry division

Intel shares popped in afternoon trading Wednesday after Semafor reported that it’s in preliminary talks for AMD to come aboard as a customer for Intel’s troubled contract chip manufacturing division, known as a foundry.

Shares were recently up 5.7%.

Semafor stressed that sources said, “It’s unclear how much of their manufacturing would shift to Intel if the two companies reach a deal, or whether it would come with a direct investment by AMD, similar to the deals cut by other companies. It is possible that no agreement will be reached, the people said.”

The addition of AMD — which competes with Intel in the CPU space — as a customer would be another big win for the US chipmaker following its partnership with Nvidia announced in mid-September.

TSMC, the primary manufacturer of AMD chips, was only briefly rattled by the news, and remains well in the green on the day.

Intel in early talks to add AMD as foundry customer

Intel in early talks to add AMD as foundry customer

Semafor stressed that sources said, “It’s unclear how much of their manufacturing would shift to Intel if the two companies reach a deal, or whether it would come with a direct investment by AMD, similar to the deals cut by other companies. It is possible that no agreement will be reached, the people said.”

The addition of AMD — which competes with Intel in the CPU space — as a customer would be another big win for the US chipmaker following its partnership with Nvidia announced in mid-September.

TSMC, the primary manufacturer of AMD chips, was only briefly rattled by the news, and remains well in the green on the day.

markets
Jon Keegan

ChargePoint jumps as EV sales soar

Riding along with some other EV stocks, shares of ChargePoint jumped 4.1% in recent trading. The last rush to take advantage of Biden-era federal EV incentives has put a bunch of new electric vehicles on the road, sending ChargePoint up along with Tesla, Rivian, and Lucid.

Ford said earlier Wednesday that its EV sales hit a quarterly record, and it and other EV makers have been exploring unorthodox ways to replicate the EV tax credits for consumers through year-end.

Still, ChargePoint is down over 47% for the year and narrowly escaped NYSE delisting with a 20-for-1 reverse stock split back in July. And it’s not hard to see why: the company has never had a profitable quarter.

markets
J. Edward Moreno

Trump admin reportedly backs off on pharma tariffs

The Trump administration will not be imposing tariffs on pharmaceutical companies by the deadline it had initially given them, a White House official told STAT.

Last week, President Trump announced on Truth Social that starting on October 1, there would be a 100% tariff on patented, branded pharmaceuticals “unless a Company IS BUILDING their Pharmaceutical Manufacturing Plant in America.” As of October 1, those tariffs have not gone into effect and it’s unclear when they will, according to STAT.

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Trump administration backs off 100% pharma tariffs threatened to start today

Trump administration backs off 100% pharma tariffs threatened to start today
markets
Matt Phillips

GE Vernova declines after analyst downgrade of top AI energy trade

Power turbine maker GE Vernova is down midday after RBC analysts cut their rating on the stock from “outperform” (essentially a “buy”) to “sector perform” (essentially a “hold”), suggesting that long-term earnings expectations for the company might have gotten too optimistic.

RBC’s Christopher Dendrinos wrote:

“Our longer-term expectations are more conservative than consensus expectations which we think could be over appreciating the cadence of revenue growth in the power segment in 2029-2030. We believe investors are already fully valuing the company on the longer-term 2030 outlook and there could be more limited opportunity for positive rate of change in current expectations.”

Dendrinos argues that the Street’s expectations for when the river of payments will materialize from the service contracts GE sells to maintain the newly installed turbines is too soon. He wrote that it will take a much longer cycle:

“Mgmt sees an opportunity to double the installed base of baseload power over the next 10 years which should support significant rev growth and stronger margins (we estimate gas service margins over 30%).

However, the first major service cycle typically occurs ~3-4 years after installation so the benefit of service price increases and new LTSAs are unlikely to begin to benefit the income statement until later in the decade and will be a gradual increase.”

Earlier in the year, GE Vernova was a top performer as the AI data center trade boomed. It was up roughly 100% for the year in late July, making it the third-best gainer in the S&P 500 for the year.

It has stalled since then, though it remains up more than 80% in 2025.

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