US Market Recap: the S&P 500 closes above 7,800 as the AI trade spreads from chips to power and connectivity

I. The three indexes: the S&P 500 tops 7,800, but the Russell 2000 is the lone decliner

II. Sectors: utilities lead at +3.01%, bought by a contract rather than by fear

III. Mega-cap tech: five up, one down, and Nvidia's gain down to 0.14%

IV. Semiconductors and equipment: the SOX gains 1.04%, led by custom silicon and networking

V. Storage: a second HDD selloff on Toshiba's expansion plus a bidding war

VI. Optical networking and AI hardware: Ciena +13.85% in a single session

VII. China ADRs: the Golden Dragon +0.31% as breadth narrows

VIII. Notable movers: OPCH +32.65% on being acquired

IX. Key events of the day

• Google signs a 20-year power agreement with Constellation Energy covering 890 megawatts of new nuclear

  The framework totals 3,590 megawatts: 890 megawatts of new nuclear uprates paid for and locked in by Google for 20 years, with the remaining 2,700 megawatts covered by long-term supply agreements. Constellation will invest more than 4.3 billion dollars to uprate 11 units across Illinois, Pennsylvania and New Jersey, with first power in 2028. Constellation closed +12.25% at 300.40 dollars and Talen Energy +12.43%.
• McKesson and CD&R buy Option Care Health for about 5.8 billion dollars

  The all-cash deal values the home-infusion provider at 32.05 dollars a share, an enterprise value of about 5.8 billion dollars and a 37% premium to the October 5 close; on completion CD&R will hold about 51% and McKesson about 49%. OPCH closed +32.65% at 31.00 dollars on 65 million shares, a 43.45% turnover rate.
• Toshiba's expansion and the TDK bid knock the storage pair down 7% to 9%

  Nikkei reported that Toshiba plans to roughly double data-centre hard-drive capacity by fiscal 2027, lifting its unit share by capacity from about 10% to 30%; Bloomberg reported that Seagate and Toshiba are bidding for TDK's head business. Seagate fell -9.18%, Western Digital -6.93% and TDK rose 5.3% in Tokyo; Goldman Sachs warned of mid-term pricing pressure while Morgan Stanley, Bernstein, Citi and Evercore argued the expansion will not relieve a tight market.
• Marvell's investor day lifts the fiscal 2028 revenue target to about 20 billion dollars

  The company raised its fiscal 2028 revenue target to about 20 billion dollars (against a FactSet consensus of about 18.2 billion) and guided to 70 billion to 90 billion dollars by fiscal 2031 (consensus about 47 billion), saying its total addressable market will reach roughly 400 billion dollars by 2030. The shares closed +5.81% at 287.01 dollars.
• Treasury yields fall for the first time in three sessions, the 10-year down about 4 basis points

  On the official Treasury par curve: 3-month 4.21% (-1bp), 2-year 4.79% (-5bp), 5-year 5.03% (-3bp), 10-year 5.27% (-4bp) and 30-year 5.64% (-2bp), with 11 of 14 tenors lower. The 10-year sits well below the 5.31% of October 5, which was the highest par close since 2007. Market-implied odds of an October hike are about 19.4%, down from 50.9% a week ago.
• The August trade deficit widens 13.7% to 105.6 billion dollars, the widest since March 2025

  The deficit widened 13.7% to 105.6 billion dollars, above the 102 billion dollars expected; imports set a record, up 4.3% on the month and 28.4% on the year, and the Atlanta Fed's GDPNow estimate for third-quarter growth was cut to 3.7%.
• Oil finishes roughly flat, with Hormuz shipping and attacks both in play

  November WTI settled at 89.44 dollars a barrel (+0.01%) and December Brent +0.26% to 100.58 dollars, having fallen about 3.3% to near 98 dollars intraday before recovering. Vitol's chief executive said about 12 million barrels a day have been shipped through the Strait of Hormuz over the past 7 to 10 days, and Saudi Arabia said flows through its east-west pipeline have recovered to 5.8 million barrels a day; the UK Maritime Trade Operations office has reported 9 attacks in the strait this month. Details of the G7 reserve release will be settled at the IEA meeting on October 14 and 15.
• Third-quarter earnings season opens next week, with S&P 500 profit growth seen at 30.6%

  LSEG expects S&P 500 earnings to grow 30.6% year on year in the third quarter, led by energy at +114.7% and information technology at +66.5%; the largest US banks report first next week.

X. Cross-asset: oil flat, gold and silver up, the dollar lower, yields down

XI. Takeaways

• Yields fell and the index set a record — but the record was thinner than the day before
  The 10-year fell from 5.31% to 5.27% (-4bp), its first decline in three sessions, and the index duly set a record. But the counter-evidence is just as clear: the Russell 2000 fell 0.59%, the only major index to close lower, while 48 Nasdaq stocks hit 52-week highs and 123 hit new lows. The record was made by a handful of large caps, not by broad improvement — UBS's global head of equities was quoted across several outlets saying breadth is narrowing. The risk is not on the day but in what comes next: with the index at a record and the 10-year still near 5.3%, there is no cushion for a miss.
• The AI trade has spread from compute chips to the power that feeds them and the networks that connect them
  The leaders looked different from usual: Constellation Energy +12.25%, Ciena +13.85%, Nokia +7.55%, Corning +6.02%, Cisco +4.54% and Astera Labs +7.58%, spanning utilities, communications equipment, optical networking and connectivity silicon — different line items of the same capex budget. Nvidia, at the very top of the stack, closed at a third straight record but gained only 0.14%. A narrowing gain at the leader with double-digit moves down the chain usually signals catch-up rotation inside one narrative rather than broad accumulation. The implication for stock selection is direct: what gets priced from here is not who does AI, but who has signed contracts with delivery dates and dollar amounts — Constellation's 20-year agreement and Marvell's 20 billion dollar guidance both qualify.
• Storage completed a three-session round trip, and the scarcity premium is now fully recognised
  On October 2 a report of Toshiba expanding capacity sent Seagate and Western Digital down more than 10% each; on October 5 the sell side called the reaction overdone and both bounced 4% to 6%; on October 6 the report escalated into a real bid for TDK's head business plus a firm fiscal 2027 expansion path, and both fell 9.18% and 6.93% again. There was no new earnings or industry data across those three sessions, prices completed a round trip, and the sell side never converged on the same facts. The HDD duopoly's pricing power remains intact and nearline supply is still tight, but the trade around it has shifted from allocation to speculation: from here, any news on capacity, consolidation or share will be priced in double-digit swings rather than discounted gradually.
• Health care fell 0.16% while its components fell 18% — the sector return leads to the wrong conclusion here
  Health care was the only sector to fall, and only by 0.16%, but underneath was a concentrated liquidation of an entire high-momentum life-science chain: Twist Bioscience -18.55%, 10x Genomics -17.47%, Alamar -15.39%, Tempus AI -13.85% and NeoGenomics -13.72%, with vaccine names Moderna -7.75% and Novavax -9.87% giving back sharp gains. These companies share no news; what they share is having run hardest over the past month or two. The sector index looked calm because heavyweights Eli Lilly +1.26% and Pfizer +0.33% held up, and because Option Care Health surged 32.65% on being acquired. When an index is shielded by a few heavyweights, the sector return stops being a reliable proxy for the industry — you have to look at component dispersion. Health care today and storage a few sessions ago are the same trap.
• Public markets pay for proven revenue; private markets shut the door on unproven stories
  Two sets of numbers on the same day. In public markets, suppliers to AI infrastructure were bid to double-digit gains (Ciena +13.85%, Constellation +12.25%, Nokia +7.55%), all driven by verifiable contracts and guidance. In private markets, IPO activity has all but frozen, investor demand for new issues is weak, concerns about valuations are rising, and delayed listings from Anthropic and OpenAI have added to the gloom — with BCA Research data showing this year's technology listings down an average of about 23% since their first day. Capital is not scarce; the willingness to underwrite unproven growth is. Money is crowding into assets with existing revenue and order books while refusing to pre-pay for new narratives. The implication cuts both ways: the AI trade is still concentrating in companies that can sign contracts, which offers near-term support, but when the market systematically refuses to price new stories, the ceiling on risk appetite is usually not far away.