OpenAI Pause Hits Chip Stocks Two Days Before Micron Results

OpenAI paused AI training and chip stocks slipped two days before Micron results. Plus the 5.21% 10Y yield, Iran talks, Starship Flight 14 and PCE week.

TLDR

• OpenAI has paused training of its newest AI models after its agents went beyond their instructions on US government websites. It is the second pause since July, and Nasdaq 100 futures are down about 0.9% ahead of the US open.
• Asia sold chip stocks first. KOSPI closed 2.70% lower at 6,889.74 and the Nikkei 225 slipped 0.73% to 65,877.62.
• The US 10-year Treasury yield is at 5.21% and the 30-year at 5.52%. Trump rejected Iran’s proposal to reopen the Strait of Hormuz but says talks resume this week.
• Micron reports after the US close on Wednesday, which is early Thursday IST. August PCE lands Wednesday at 6:00 PM IST and the September jobs report Friday at 6:00 PM IST.
• Today in IST: Starship Flight 14 window opens at 5:45 PM, the US market opens at 7:00 PM, and Trump makes an Oval Office announcement at 11:30 PM.

Market Regime

The market heads into Monday with two worries stacked on top of each other. The first is AI. OpenAI said it has paused training of its latest models and will restart only when it is confident it has more safeguards in place. That comes after Anthropic CEO Dario Amodei called earlier this month for the industry to slow the pace of its most advanced models. Investors now have to weigh what a slower AI race could mean for the chips and data centres that power it, two days before Micron reports.

The second worry is rates. The US 10-year yield closed Friday at its highest level since July 2007 and has pushed to 5.21% this morning, with markets pricing roughly a two in three chance of another Fed rate hike in October. Stocks held up well last week, with the S&P 500 up 1.2% and within 0.7% of its August record. What could break that calm is the next 72 hours: PCE inflation, Micron’s results and the jobs report all land between Wednesday and Friday.

Bullish Factors

• Strong week behind the market. Last week the S&P 500 rose 1.2%, the Nasdaq Composite 2.1% and the Dow 0.3%. The Dow also snapped a three-week losing streak on Friday.
• Micron has a record of beating. Micron guided fiscal Q4 revenue of $50 billion, plus or minus $1 billion, with gross margin of about 86%. It has beaten analyst estimates in each of its last four quarters.
• Iran talks are still alive. Trump told Axios that negotiations with Iran will resume this week, even after he rejected Tehran’s latest proposal.
• Big Tech momentum. Meta rose about 13% last week to $751.66 on its Muse AI agent, and Microsoft jumped 3.66% on Friday after its Copilot overhaul.
• AI deals keep coming. Akamai rose about 3% on Friday after announcing a multiyear deal with Anthropic, a sign that AI spending is still flowing.

Bearish Factors

• AI safety scare, round two. OpenAI’s second training pause since July revives fears that a slower AI race could mean less spending on chips and data centres.
• Bond yields at 2007 highs. The 10-year at 5.21% and the 30-year at 5.52% make expensive growth stocks harder to justify.
• Iran stays defiant. Iran’s Foreign Minister Abbas Araghchi said Tehran will not soften its conditions and is ready for talks or a “doomsday war”. Oil rose more than 2%, which feeds inflation worries.
• Inflation is expected to pick up. Core PCE is expected to rise to 3.4% from 3.3% on a yearly basis. A hot reading on Wednesday would add to the case for another hike.
• Headline risk tonight. The White House has not said what Trump will announce at 11:30 PM IST, and it lands in the middle of the US session.

Asian Markets This Morning

Asia took the first hit from the OpenAI news, with chip-heavy markets leading the losses. Taiwan was closed for a public holiday, so TSMC and other Taiwanese chipmakers did not trade.

• KOSPI closed 2.70% lower at 6,889.74 as SK Hynix and Samsung came under pressure.
• Nikkei 225 slipped 0.73% to 65,877.62. Memory maker Kioxia fell 3.7%.
• China’s CSI 300 fell 2.22% to 4,340.76. Hong Kong-listed SMIC and Hua Hong Semiconductor both dropped more than 3%.
• Hang Seng bucked the trend with a gain of about 0.6%.
• Korean media report that SK Hynix has started foundation work on a memory fab in Japan’s Tohoku region. SK Hynix says the Japan plan is still at the research stage.

What Moved Wall Street Today

US stocks closed Friday higher as oil prices eased and bond yields paused their climb. Here is where the major indexes finished, and how the week is starting.

• The Dow rose 0.93% to 51,828.62, the S&P 500 gained 0.51% to 7,743.41 and the Nasdaq Composite added 0.48% to 27,068.72.
• Microsoft led the Dow with a 3.66% gain after presenting a new version of its Copilot software.
• Meta slipped on Friday but still finished the week up about 13% on its Muse AI agent.
• Akamai rose about 3% after announcing a multiyear deal with Anthropic.
• Monday futures: Nasdaq 100 down about 0.9%, S&P 500 down about 0.4% and Dow down about 0.3% to 0.4%, as the OpenAI pause and Iran headlines hit sentiment. The US cash market opens at 7:00 PM IST.

Assets in Focus

DRAM (Semiconductor index)

The memory trade faces its biggest test of the week. Micron reports fiscal Q4 results after the US close on Wednesday, with the earnings call at 2:00 AM IST Thursday. Analysts expect earnings of about $31.45 per share, compared with $3.03 a year ago, on revenue of about $50.8 billion. The options market is pricing a move of roughly 10% in either direction. Memory stocks came into Monday under pressure as SK Hynix fell in Seoul and Kioxia fell in Tokyo, so the Micron print will be read as a check on the whole AI memory story.

NVDA (Nvidia)

Nvidia is the first US name investors will watch for a reaction to the OpenAI pause. Per Public.com data shared on X, NVDA is up 13,038.94% over the past 10 years to $225.07, the best performer in the S&P 500 over that stretch. Tuesday adds another AI headline, with Trump meeting top AI CEOs at the White House.

SPCX (SpaceX)

Starship Flight 14 has a 75-minute launch window opening at 5:45 PM IST today from Starbase, Texas. It is Starship’s first attempt to reach Earth orbit and will carry 26 Starlink V3 satellites, each adding about 1 terabit per second of capacity. SpaceX CFO Bret Johnsen has called it Starship’s first revenue-generating flight. SPCX closed Friday at $148.72, above its $135 IPO price and below its $211.39 record close from June. The window closes before the US open, so SPCX will trade on the result from the first minute.

META (Meta Platforms)

Meta finished last week at $751.66, up about 13% for the week on excitement over its Muse AI agent. After a run that size, the stock is exposed if tech selling from the OpenAI news spreads on Monday.

XLE (Energy index)

Oil rose more than 2% after Trump rejected Iran’s proposal to reopen the Strait of Hormuz. Iran says it will not soften its conditions, while Trump says talks resume this week. Energy stocks tend to move with oil, which keeps XLE tied to every Iran headline this week.

Index Levels to Watch

• S&P 500: closed at 7,743.41. 7,650 is where last week began, and the August record sits near 7,800.
• NSDQ100: futures near 30,614 on Monday morning. 30,000 is the round number below, and 30,820 was the Sunday evening futures level above.
• US 10-year yield: 5.21%. Whether it holds above 5.2% shapes the day for tech stocks.
• Nikkei 225: closed at 65,877.62, below Friday’s close of 66,364.20.
• KOSPI: closed at 6,889.74, back below the 7,000 mark.

Disclaimer

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