Markets slip as Fed cheer tapers off

Dow pulled back 111, decliners over advancers 5-2 & NAZ was off 134.  The MLP index was even near 286 & the REIT index slid 1+ to the 436s.  Junk bond funds were mixed & Treasuries saw more selling which raised yields (more below).  Oil crawled higher in the 72s & gold jumped 24 to 2639 for another record.

Dow Jones Industrials

A new agreement between Microsoft (MSFT), a Dow stock, & Constellation Energy to provide power to the tech giant's data centers for artificial intelligence is paving the way for the restart of a nuclear reactor on Pennsylvania's Three Mile Island, the site of a 1979 partial meltdown.  The Baltimore-based Constellation announced that the 20-year deal it has struck with MSFT will create the "Crane Clean Energy Center & restart of Three Mile Island Unit 1, which operated at industry-leading levels of safety & reliability for decades before being shut down for economic reasons exactly 5 years ago today."  "Under the agreement, Microsoft will purchase energy from the renewed plant as part of its goal to help match the power its data centers... use with carbon-free energy," Constellation said.  Three Mile Island, located in Londonderry Township, just south of Pennsylvania's capital of Harrisburg, is the site of a partial meltdown of its Unit 2 reactor in 1979, which prompted mass evacuations.  "This was the most serious accident in U.S. commercial nuclear power plant operating history, although its small radioactive releases had no detectable health effects on plant workers or the public," the US Nuclear Regulatory Commission says.  Constellation is now hoping to get the Crane Clean Energy Center at Unit 1 online by 2028 & secure a license that will allow it to extend plant operations until at least 2054.  "The Unit 1 reactor is located adjacent to TMI Unit 2, which shut down in 1979 and is in the process of being decommissioned by its owner, Energy Solutions. TMI Unit 1 is a fully independent facility, and its long-term operation was not impacted by the Unit 2 accident," the company says.  Constellation cited a study commissioned by the Pennsylvania Building & Construction Trades Council that found that the new Crane Clean Energy Center will create 3400 jobs, add more than 800 megawatts of carbon-free electricity to the grid & bolster Pennsylvania's GDP by $16B.  "This agreement is a major milestone in Microsoft's efforts to help decarbonize the grid in support of our commitment to become carbon negative," Bobby Hollis, MSFT's VP of energy, said.  MSFT stock fell 2.

Microsoft deal would reopen Pennsylvania nuclear plant, site of 1979 partial meltdown, to power AI

Nike (NKE), a Dow stock, announced that its CEO, John Donahoe, is stepping down & company veteran Elliott Hill is coming out of retirement to take the helm of the sneaker giant.  Donahoe, who has been its CEO since Jan 2020, will retire from his position on Oct 13 & Hill is slated to take over on the following day.  Donahoe will stay on as an advisor thru the end of Jan.  “I am excited to welcome Elliott back to Nike. Given our needs for the future, the past performance of the business, and after conducting a thoughtful succession process, the Board concluded it was clear Elliott’s global expertise, leadership style, and deep understanding of our industry and partners, paired with his passion for sport, our brands, products, consumers, athletes, and employees, make him the right person to lead Nike’s next stage of growth,” said Mark Parker, NKE's exec chair.  NKE is in the midst of a broader restructuring after it shifted its strategy to sell directly to consumers.  Critics say in the process of building out sales at its own stores and website, it lost sight of innovation & failed to churn out the types of groundbreaking sneakers the company was known for.  In late Jun when it reported fiscal 4th-qtr results, NKE warned that it expected sales to drop 10% during its current qtr, citing soft demand in China & “uneven” consumer trends across the globe.  The outlook was far worse than the 3.2% decline that had been expected.  Following the rough report, NKE had its worst trading day in history & some analysts speculated that Donahoe would soon be pushed out in favor of a new CEO.  At the time, NKE co-founder Phil Knight said the company was standing by Donahoe's side & the exec had his “unwavering confidence and full support.”  NKE stock rose 5.05.

Nike CEO John Donahoe is out, replaced by company veteran Elliott Hill

Treasury bond yields were lower following the release of lower-than-expected jobless claims in the wake of the Federal Reserve's jumbo rate cut.  The 10-year Treasury yield was marginally lower at 3.738% & the 2-year Treasury note yield was up 1 basis point at 3.614%.  Yields & prices move in opposite directions & 1 basis point is equivalent to 0.01%.  Initial jobless claims, which came in at 219K last for the week, were lower than expected.  The forecast had expected 230K claims for the period.  The Federal Reserve's decision on Wed to slash interest rates by 50 basis points comes amid a week full of central bank rate decisions.  The Bank of England announced yesterday it would hold interest rates steady after cutting rates for the first time in more than 4 years in Aug.  Meanwhile, in Asia, the Bank of Japan kept its benchmark interest rate steady at around 0.25%, the highest rate since 2008 & China surprised markets by leaving its benchmark lending rates unchanged at the monthly fixing.  Market watchers had expected a trim from the People's Bank of China.

Treasury yields move lower as investors digest unemployment data after Fed cut

Stocks started lower after recent gains.  Investors are digesting Fed comments & rate-cut euphoria has faded.  The roaring rally is sputtering amid reminders that risks to growth could still lie ahead.  Traders are still wondering whether the Fed has fallen behind in keeping the economy on track for a soft landing.  Meanwhile demand for gold remains strong.