Wall Street Morning Brief: Treasury Buyback Fails to Halt Selloff, Storage, Optical, Meta Hold Up in Three-Day Slide

Oil Tops $100, Treasury Yields Hit Three-Year High, Trump Bets on Midterms

All three major U.S. stock indexes fell for a third straight session, with the Dow Jones Industrial Average down 0.77%, the S&P 500 down 0.48%, and the Nasdaq Composite down 0.64%.

Overnight, the U.S.-Iran conflict escalated significantly. Brent crude settled at $101.21 per barrel and WTI at $96.05 per barrel, both the highest since late May. The core driver is the conflict moving further offshore: Iran announced a new maritime "sanctions zone," U.S. forces struck Iranian oil tankers, Houthi rebels attacked multiple Saudi cities, and shipping risks in the Strait of Hormuz surged. Data from Kpler's Bridgeton Research Group shows trend-following CTAs' long positioning in Brent and WTI jumped to 91% and 90%, respectively, from 45% and 36% at the end of August, signaling that systematic funds are now treating rising oil prices as a trend trade.

Trump is trying to repackage this energy shock into an election narrative. At the Dallas Republican convention, he said the U.S.-Iran conflict would end "immediately" after the November midterms and oil prices would then "fall sharply," but he also admitted that efforts to lower gasoline prices might not bear fruit until after the midterms. To court voters, Trump promised that if Republicans win the midterms and keep both chambers of Congress, he would send every adult American citizen a $5,000 "Trump dividend," funded by tariff revenue. But the market is more focused on another question: the plan could cost over $1 trillion, potentially widening the fiscal deficit and fueling inflation. Polls show his approval rating is low, with war and cost-of-living pressures eroding his base.

The U.S. Treasury raised the cap on long-term Treasury buybacks to $6 billion, still below the $7 billion to $10 billion the market had hoped for. After the buyback announcement, bonds fell instead of rising. In addition, Wednesday's $39 billion 10-year Treasury auction drew a high yield of 4.834%, the highest on record for that maturity, with a bid-to-cover ratio of 2.71, indicating demand has not improved significantly. The 10-year Treasury yield rose about 5 basis points to 4.85%, the highest since November 2023; the 30-year broke above 5.30%. The market interpreted this as insufficient stabilization efforts by the Treasury, and Bessent's attempt to push down long-end costs has hit a wall for now. Also, a 30-year Treasury auction is scheduled for early tomorrow morning, and the market is closely watching demand and the high yield. If the auction is weak, long-end yields could rise further, intensifying pressure on both stocks and bonds; if demand is better than expected, it could temporarily ease term premium pressure.

The dollar index fell for a fourth straight day but only modestly, while the yen strengthened to near its strongest level since February. The stronger yen combined with rising Treasury yields is simultaneously hitting carry trades and equity valuations. Gold reclaimed $4,400 per ounce, up about 1%; copper prices in both London and New York hit record highs, with three-month LME copper touching $14,858.50 per ton and COMEX copper rising to $6.894 per pound. On one hand, the market worries that the Trump administration will impose tariffs on refined copper imports, causing large volumes of copper to be shipped to the U.S. for stockpiling; on the other hand, data centers, power grids, and new energy construction continue to boost copper demand.

Storage and AI Sectors Buck the Trend, Apple Unveils First Foldable Phone

Overnight, most long-duration tech giants were under pressure, but storage, optical communications, AI networking, and personal AI agents bucked the trend.

Bernstein remains positive on the storage sector, noting that global semiconductor sales rose 131.4% year-over-year in July, with memory chip sales up 451.7% year-over-year. The firm maintains Outperform ratings on Micron, SanDisk, Samsung, and SK Hynix, believing earnings estimates still have room for upward revision.

Goldman Sachs also turned bullish on storage, arguing that Micron and SanDisk have broken out of their summer downtrends, while hedge fund positioning remains low, suggesting more money could chase the sector.

But storage is not without risk. Kioxia's CEO cautioned that NAND prices "have already risen too much," indicating the sector has moved fast in the short term and volatility will be high.

In addition, Apple unveiled its first foldable phone, the iPhone Duo, starting at $1,999 (15,999 yuan in China, HK$17,499 in Hong Kong). Pre-orders begin Oct. 16, with sales starting Oct. 23. Also announced were the iPhone 18 Pro series and the A20 Pro chip built on a 2nm process. Apple shares slipped 0.28% on pricing concerns and the absence of AI features in some regions. Bloomberg Intelligence expects first-year iPhone Duo sales of about 14 million units, with potential revenue of $28 billion, but analysts note Apple may be sacrificing margin for volume.

Specific Moves and Stock Reactions:

• Meta Platforms rose 6.55%: Meta officially launched its personal AI agent, Muse, featuring a cloud-based virtual machine, 24/7 operation, nighttime reflection, and proactive planning. It can send emails, sell items, and book trips on behalf of users. The market sees Muse as an early form of a "real-life Jarvis." Meta also plans to offer 100 million free AI tokens per week and eventually monetize through transaction fees on commerce.
• Apple fell 0.28%: Apple unveiled its first foldable iPhone Duo, starting at 15,999 yuan in China. The new product has strong specs, but the market worries about high pricing, profit margin pressure, and the temporary absence of AI features in China and the EU.
• Google fell 2.09%: Alphabet plans to invest at least €13 billion in Finland over the next two years for data center construction and expansion. The project strengthens long-term compute capacity but adds near-term free cash flow worries. In addition, Google's Crux AI data center project, backed by Blackstone, has been delayed, exposing the real bottlenecks of AI expansion: power, policy, infrastructure, and delivery probability are not just PowerPoint presentations. Crux AI says its goal of 500 megawatts of compute capacity by 2027 is still on track, but executives estimate the probability of on-time delivery for each project is only about 50%.
• SK Hynix rose 7.05% to a record high, extending its winning streak to five days: AI servers continue to drive tight HBM demand, and institutions like Goldman Sachs and Bernstein are turning more positive on the memory cycle. JPMorgan has an Overweight rating on SK Hynix with a $245 price target. S&P Global Market Intelligence expects SK Hynix may announce a 20 trillion to 40 trillion KRW share buyback in the fourth quarter. Micron Technology rose 2.75%, SanDisk rose 1.51%, Western Digital rose 1.04%, and Seagate Technology fell 2.04%.
• MaxLinear rose 7.53%, leading the optical communications sector: AI data center buildouts are expanding from GPU purchases to network interconnects, optical modules, switch chips, and high-speed connectivity. Marvell Technology rose 4.26%, Corning rose 1.51%, Lumentum rose 1.07%, and AAOI fell 3.25%. Arista reaffirmed its 2026 revenue target of $12.6 billion and said GPU back-end network demand is strong, further supporting sector sentiment.
• Oil above $100 pushed energy stocks higher against the trend, with XLE up 0.83%, ExxonMobil up 2.22%, and Chevron up 1.91%. In contrast, airlines, transportation, and high-energy-consuming manufacturing face cost pressures.
• AMD rose 3.04%: The market continues to look for AI chip alternatives to Nvidia with more upside potential. Among related chip stocks, Intel rose 1.69%, Qualcomm rose 1.33%, and Nvidia fell 0.91%.
• SpaceX fell 3.86%: About 7% of insider shares eligible for early lock-up release became available for sale, involving roughly 319 million shares, with potential selling pressure of up to about $47.2 billion.

What to Watch Next:

Thursday, Sept. 10

• 20:15 ECB rate decision; 20:45 Lagarde press conference: The market is divided on whether the ECB will hike, with focus on energy inflation, wage pressures, and December policy guidance. If the tone is hawkish, the euro and European bond yields will rise; if dovish, the market will lower expectations for further hikes.
• 20:30 U.S. August PPI year-over-year and month-over-month: The market expects PPI to rise 0.4% month-over-month and about 5.2%-5.3% year-over-year, with energy and transportation costs as key variables. If PPI runs hot, the market will price in rate hike risk ahead of CPI; if moderate, pressure on stocks and bonds will ease.
• OPEC releases its monthly oil market report: The report will update global crude supply and demand, inventories, and OPEC+ production compliance. If demand is solid and supply constrained, oil prices may remain supported and rekindle inflation expectations; if demand is revised down, the upside slope for oil prices may be limited.

Friday, Sept. 11

• Oracle and Adobe report earnings after the U.S. close: For Oracle, focus on cloud infrastructure orders, AI data center contract conversion rates, and capital expenditures; for Adobe, focus on whether generative AI features like Firefly can translate into subscription growth and higher average revenue per user. The two companies will test AI infrastructure and AI application monetization, respectively.
• 01:00 $22 billion 30-year U.S. Treasury auction: This is the final leg of the three-day Treasury supply wave and the biggest test of long-term investor confidence.
• CME 100-ounce silver futures expand to 24-hour trading: Extended silver trading hours will boost liquidity in Asia and over weekends. Price discovery in precious metals will become more continuous, and silver volatility and cross-market arbitrage opportunities may increase.
• Sept. 11-13: 2026 China Computing Power Conference opens in Langfang: The conference focuses on computing infrastructure and AI infrastructure. Servers, data centers, liquid cooling, optical modules, switches, power supplies, domestic chips, and computing power leasing may get event-driven catalysts.