Pre-market Report for September 7th: Storage Stocks Jump Up to 11.9%, KLA Corporation (KLAC) Rises 7.32% Alongside. Friday's CPI: Can the Core Hold?
Pre-Market Report Summary, September 7: Storage and equipment stocks were standout gainers on September 4, driven by sector-specific fund rotation, while broader indexes fell on rising rate expectations ahead of Friday's key CPI data.
Market Recap: Major U.S. indices mostly declined on September 4 despite strong August job numbers (162K new jobs vs. 55K expected). The robust data pushed 2-year Treasury yields to a one-year high, increasing market expectations for a September rate hike. This raised the discount rate, weighing on long-duration tech stocks. The Russell 2000 rose 0.25%, while the Dow (-0.51%), S&P 500 (-0.38%), and Nasdaq Composite (-0.29%) fell.
Top Performer: KLA Corp (KLAC) surged 7.32% to $185.60, adding $16.5B in market cap. Its five-dimensional score showed a perfect 100 for peer ranking, but only 44 for "trend position," indicating it's rallying from the lower half of its 52-week range ($90.67-$307.37). Volume was in line with its 30-day average, suggesting repositioning, not a volume-driven breakout.
Sector Rotation: Gains were concentrated upstream in the semiconductor supply chain. Storage stocks (e.g., Micron/MU +6.10%, SanDisk +11.9%) led the move, with funds flowing to equipment makers like KLA and Lam Research (LRCX +5.12%). Downstream players (e.g., HPE -4.48%, Synopsys/SNPS -5.40%) declined, highlighting a chain-internal rotation, not broad buying. Nvidia (NVDA +0.84%) saw muted gains due to its already high price level.
Key Insight: KLA's move was not driven by company-specific news but by expectations of future orders from storage expansion. Similarly, Constellation Energy (CEG +4.88%) rose on the theme of "locking in future output" via long-term contracts.
Earnings Spotlight: In retail, Lululemon (LULU) plunged 17.4% despite beating quarterly profit estimates because it slashed full-year EPS guidance. Conversely, Abercrombie & Fitch (ANF) gained 4.3% after raising its annual EPS outlook. This underscores that stock prices react more to future guidance than past quarterly results.
Week Ahead - CPI Focus: All eyes are on the August CPI report due Friday, the last major inflation data before the September 16 Fed meeting. July's readings were: Headline CPI +3.4%, Core CPI +2.5%. The key driver for the headline figure was energy (gasoline +24.6%), while core inflation is largely dictated by housing (+3.2%). The core reading's ability to hold at or below 2.5% will be critical for interest rate expectations and asset pricing.
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