The Economy: Good News?

Today, Wednesday the 30th of September, brought the Fed's favourite inflation measure, and on the surface it was good news.

• Core inflation (PCE): 3.0%, against 3.3% expected
• Headline inflation: 3.4%, against 3.7% expected
• US growth (Q2 GDP): revised up to 2.2%, from 1.5%
• Consumer spending: up 0.9% in a month, slightly ahead of forecasts

Cooler inflation, stronger growth, shoppers still spending. On paper, that's about as good as it gets.

The part that moved markets: rate hikes. Last week, traders thought another rate rise in October was about 70% likely. After today's numbers, that fell to around 35%. A senior Fed official had also said on Tuesday that there's no rush to hike again. The next rise is now expected in December instead.

So the pressure's eased for now. But there's a catch, and it's worth understanding.

They Changed The Ruler

Every September, the US government updates how it calculates its economic data. This year it changed how it measures what people spend on things like software, investment fees and legal services, and applied those changes going back five years.

That update is a big reason the number came in lower. Inflation didn't suddenly slow down. The way it's measured changed.

Plenty of economists said the same thing. The general view was that the trend hasn't changed: inflation is still stuck around 3%, well above the Fed's 2% target. And with oil back above $100, most expect September's figure to be higher, not lower.

The Bit That Worries Me

Look closer at the spending figures. Americans spent a lot in August, but their income didn't grow at all after adjusting for inflation. The savings rate fell to its lowest level in nearly four years.

In plain English: people are spending money they're not earning. They're dipping into savings to keep up. That can last a while, but not forever.

What The Bond Market Thinks

This is the real verdict. Right after the release, bond yields dipped, as you'd expect from good news. Within a few hours, they'd turned back up again. The 30-year yield finished the day near its highest level since 2002.

Why? Because a strong economy gives the Fed room to keep rates high. The bond market looked past the inflation number and focused on growth.

Where Does That Leave Us?

• October rate hike: less likely. A genuine relief.
• Inflation: not really fixed. The number looks better mainly because of the measurement change.
• Bond yields: still near multi-year highs, which is what's been hurting most sectors.

The chain from Sunday's post (oil up, inflation fears up, rate hikes, yields up, stocks down) is still in place. It's been paused, not broken.

The next big test is Friday's jobs report. A weak number could finally cool yields. A strong one keeps the pressure on. That's the one I'll be watching most closely this week.

As Always: The Sectors

Here's the odd thing about today,. Inflation came in cooler than expected, the kind of news that should lift the market. Instead, ten of the eleven US sectors finished the day lower.

That tells you who's really in charge right now: the bond market. Yields rose after the numbers, and most of the stock market followed.

Here's how it looks across the day, the week and the month.

Technology

Tech was the only sector up (+0.35%), and it's the clear leader over the past month (+4.57%). Nothing else comes close.

The catch: over the past week it's basically flat (+0.05%). Strong month, stalling week. AI hardware names we covered on Sunday are holding it up, and Micron's results, which we will come back to, will go a long way toward deciding which way it breaks next.

Healthcare: A Wobble Worth Watching

On Sunday, I said healthcare showed the best relative strength of any sector. Over the week, it still is: down just 0.15%, second only to tech.

But it fell 1.18% today, one of the worst days on the board. One bad day doesn't end a trend. It does mean I'll be checking the charts properly before looking for setups there, rather than assuming the strength is still intact.

Communication Services: The Quiet One

This one's been flying under the radar. It's second best over the month (+2.82%) and near the top on the week and the day. With all eyes on tech, it's easy to miss. It's going on my list to look at more closely.

The Rate-Sensitive Sectors

Real Estate, Financials and Utilities should have liked a softer inflation number. Lower inflation normally means less pressure for rate rises, which helps sectors that depend on borrowing costs.

They didn't get the benefit. Yields went up anyway, and all three fell again. Over the month, they're down between roughly 6% and 7% each.

Basic Materials

In August, this was our strongest sector. Now it's the weakest: worst on the week (-3.44%) and worst on the month (-8.58%). There's no sign of a turnaround yet, so I'm leaving it alone.

Consumer Defensive: Nowhere To Hide

The "safe" sector was the worst performer, down 1.56%. That matters. When defensive stocks get sold too, it isn't money moving somewhere safer. It's money leaving the market altogether.

Energy: Still Doesn't Add Up

Oil is up around 16% over the month. The Energy sector is down 3.34%. Those two things shouldn't normally go in opposite directions, so I still want to check the charts before trusting it.

What It All Means

• The market is narrow. Most of the strength is sitting in one sector, tech.
• Yields are still in charge. Good inflation news didn't stop the selling.
• Keep sizes small. When ten sectors are falling, it's not the time for full-size positions.

Stocks On My Radar

A few companies still catch my eye. But let's be honest about the backdrop.

This is a tough market. We're swing traders at Omera, not day traders. We hold for days to weeks, and right now the ground keeps shifting under us. Sectors rotate every few days, on every data release, every Fed comment, every Truth Social post. It's a stock picker's market, and even stock picking is proving hard.

So these aren't buy signals. They're names showing strength while most of the market isn't, and that's worth watching.

Bloom Energy (BE)

Bloom remains one of the stronger names in the AI infrastructure trade, even after giving back some of Tuesday's gains.

The stock jumped around 12% on Tuesday, up as much as 16% at one point, after news that it's taken on another 158,000 sq ft facility in Fremont, California. That almost doubles its existing factory space there. Analysts read it as a sign Bloom expects demand for its fuel cells to stay strong. Tuesday's move also rebounded from a heavy sell-off on Monday.

The bigger story is power. Building AI data centres is one challenge; getting enough electricity to run them is another. Bloom's fuel cells generate power on site, so a data centre can switch on without waiting years for a grid connection.

Big money is backing this. In June, Brookfield expanded its financing deal with Bloom from $5 billion to $25 billion. Bloom also has a large deal with Oracle, which reaffirmed its commitment this week. One thing to watch: a gas pipeline that the Oracle project relies on has been delayed to early 2027.

Today's pullback needs context. After a jump like Tuesday's, some profit-taking isn't surprising, especially in a stock up over 200% this year.

On the chart, not much has changed. Bloom is still making higher lows, sitting above its key moving averages and trending up. $290–$300 is the resistance zone. If the pullback continues, I'm watching the rising trend line underneath.

The trend is intact, but after a run like this, big swings follow.

Marvell Technology (MRVL): AI Momentum Still Driving The Trend

Marvell remains one of the stronger chip names in the AI build-out, and the chart is starting to look interesting again.

The story is custom AI chips and data centre connections. Marvell designs the chips and networking that move huge amounts of data around AI data centres, which puts it right in the path of spending by giants like Google and other big cloud companies.

The numbers back it up. Last quarter, revenue hit a record $2.74 billion, up 37% on a year ago. Management guided next quarter to $3.15 billion, ahead of analyst expectations, and raised its outlook for this year and next. They also said the custom chip business should accelerate in the second half of this year.

The stock still dipped after those results back in August. That's the same "sell the news" pattern we've seen all year.

The next catalyst is close: Marvell's Investor Day on 6 October. It should give more detail on the size of its AI opportunity and longer-term growth targets.

On the chart, I like what I'm seeing. Marvell has recovered strongly from its summer lows, is above its rising 9, 20 and 50-day moving averages, and keeps making higher lows.

$263–$265 is the level to watch. That's where it's meeting old resistance. A convincing break above it would strengthen the setup. A pullback that holds the 9 and 20-day averages would keep the trend intact.

Marvell is another example of AI strength holding up in a much harder market.

Micron: The Numbers Delivered

On Sunday I said Micron needed a clear beat, not just to hit its own targets. It got one.

• Revenue: $54.2 billion, against about $51 billion expected
• Earnings per share: $33.42, against about $31.61 expected
• Next quarter's guidance: $61.5 billion, against about $57 billion expected

That's a beat on the quarter and a beat on the outlook. And the next quarter is a week shorter than the last one, so that guidance is even stronger than it looks.

The Bit I Found Interesting

It's buried in the balance sheet. Customers have paid Micron around $12.7 billion upfront just to guarantee supply. Many of these deals include minimum prices.

Think about that. Customers aren't just ordering memory chips. They're paying deposits to make sure they don't miss out. That's about as strong a sign of demand as you'll find.

The One Thing To Keep An Eye On

Micron's profit margin is expected to dip slightly next quarter, from 87% to about 86%. Management says it's a one-off from selling older, more expensive stock, and expects margins to rise again after that.

But they also said prices will keep rising, just more slowly. That's not a warning sign yet. It is the first hint that the rate of price rises is cooling. In memory chips, pricing usually moves first, so I'll be watching this closely next quarter.

Good News For Other Chip Names Too

Micron plans to spend around $25 billion on new factories in just the next six months. That money goes straight to the companies that make chip-making equipment, like Applied Materials and Lam Research.

What Am I Doing?

Nothing yet, and that's the plan working as intended.

Last quarter, Micron posted record results, peaked on the day, then fell about 40% over the next month. Great numbers don't protect a stock from "sell the news".

This is my first scenario from Sunday: a strong beat and strong guidance. But the trigger was the stock holding above $1,126 on volume. That's for the market to decide over the next few days, not tonight.

So I'm not chasing it. I'm waiting for the first pullback and a proper base, then I'll look for an entry with a clear stop.

As I write this, the earnings call is happening, and price is bouncing around.

In my next post, I'll cover exactly what Micron said, so check back soon; I can't wait to meet you there.

As always, this is not financial advice; just me having a guess of where stocks could go and trying to solve the impossible puzzle