Market Shrugs Off Rates Again as CoreWeave Eases the Capital Crunch

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CoreWeave’s funding plan and Anthropic’s IPO terms are helping AI bounce, while stocks ignore a bond market anticipating a series of rate hikes.

CoreWeave’s funding plan and Anthropic’s IPO terms are helping AI bounce, while stocks ignore a bond market anticipating a series of rate hikes.

The market stumbled on interest-rate concerns Tuesday but is shrugging them off again Wednesday morning. Chip stocks are up about 4.8%, and Nvidia (NVDA) is leading with a gain of about 5%.

Odds of a quarter-point Fed hike on Dec. 9 are at 87%, with a small chance of a half-point increase. The odds of another hike on Jan. 27 have jumped to 67% from 21% a week ago. The market is no longer pricing a single hike. It is pricing a series of them.

As I wrote Tuesday, the market has handled rate pressure fairly well because of optimism about economic growth and lower oil. The worries that hit stocks Tuesday already seem forgotten.

The 10-year Treasury yield jumped to 4.99% Tuesday and briefly topped 5%, and an auction of 10-year notes drew the weakest demand since early June. Dallas Fed President Lorie Logan added to the pressure by calling for at least two more rate hikes.

The bond market is closed today for Veterans Day, so stocks get a day off from watching yields, and that may be helping the mood. The bond market reopens Thursday with an auction of 30-year bonds, and the producer price index comes out on Friday.

Each additional hike adds to a slow squeeze on valuations. That is what happened in 1994, when stocks went nowhere even though earnings grew strongly.

Following its earnings report CoreWeave (CRWV) is lifting the data-center group. The company rents out AI computing power and has been the poster child for worries about the AI capital crunch. It reported a strong quarter Tuesday night. Revenue rose 168% to $3.7 billion and beat estimates, and the backlog of contracted business jumped to $132.5 billion from about $104 billion in June. It also raised its guidance for the year.

CoreWeave said it won’t tap the unsecured debt market at current yields and doesn’t need to.

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