Corning Secures a $3.0B+ Deal with AT&T, Strengthening the Fiber Optic Sector

Article by: Tide Research

U.S. equities pared losses on Tuesday as pressure on long-term bonds remains unresolved. The 10-year U.S. Treasury yield rose above 5.29% during trading, while the 30-year yield touched 5.62%. A decline in oil prices, combined with Williams’ statement that there is no urgency to raise rates, helped the indices recover some ground. Tech stocks showed mixed performance: Apple fell 2.66%, NVIDIA edged lower, while chip equipment and optical communications stocks strengthened. Corning secured a $3 billion+ procurement deal with AT&T, and Meta launched an AI agent targeting small businesses. Tonight, ADP, PCE, and revised GDP data will be released together, putting interest rate markets to the test once again with new data.

The S&P 500 fell 0.17% to 7,670.84, the Nasdaq Composite dropped 0.09% to 26,797.54, and the Dow Jones Industrial Average declined 0.26% to 51,349.92. The Nasdaq 100 rose 0.21%, and the VIX decreased 0.19% to 16.04.

S&P 11 sectors: 4 up, 7 down. Utilities rose 1.14%, Communication Services rose 0.40%, Industrials rose 0.19%, and Consumer Discretionary rose 0.05%. Real Estate fell 0.01%, Information Technology fell 0.28%, Health Care fell 0.32%, Financials fell 0.37%, Consumer Staples fell 0.54%, Materials fell 0.55%, and Energy fell 0.89%.

The Philadelphia Semiconductor Index rose 1.32%. Among the Magnificent Seven, Meta increased 3.24%, and Amazon rose 0.21%; Microsoft fell 0.05%, Alphabet A declined 0.53%, NVIDIA dropped 0.72%, Tesla slid 1.29%, and Apple decreased 2.66%.

The Nasdaq Golden China Index fell 1.55%.

At the close of trading in New York, the 2-year U.S. Treasury yield declined to approximately 4.89%, the 10-year yield to about 5.26%, and the 30-year yield to around 5.59%. The 10-year yield touched a intraday high of 5.293%, while the 30-year yield rose briefly to 5.6206% before retreating.

WTI crude oil November contract fell 3.48%, settling at $89.38 per barrel; Brent November contract declined 2.56%, settling at $102.59 per barrel. Spot gold rose approximately 1.46% to $4,174.26 per ounce in New York late trading. Bitcoin is around $83,600, and Ethereum is around $2,678.

Williams has given the market a bit of breathing room.

On that day, New York Fed President Williams said the Fed has time to assess upcoming data before deciding when to resume rate hikes. After his remarks, market expectations for at least a 25-basis-point rate hike in October fell from nearly 70% during the session to about half.

Oil prices are also helping. The restoration of oil flow through Saudi Arabia’s east-west pipeline and the resumption of loading at Red Sea ports have eased supply concerns with signs of recovering crude exports from the Middle East.

Short-term rates have declined, but long-term rates haven't followed suit. The market has lowered its expectations for a rate hike at the next meeting, yet corporate long-term financing costs remain elevated.

The index's rebound has limited strength; with long-term bond yields remaining high, companies requiring continuous financing cannot lower their bond issuance costs, and valuations struggle to improve. Whether tonight’s PCE data can further push interest rates lower is more critical than a single official’s statement.

In the U.S., the September Consumer Confidence Index fell to 81.9 from 88.6, with both the current conditions and expectations indices declining.

Employment sentiment is also worsening. The share of respondents who feel there are enough jobs decreased from 24.5% to 23.6%, while the share who find jobs hard to come by increased from 20.3% to 21.9%. High prices, fuel costs, and borrowing rates continue to suppress household spending intentions.

In August, JOLTS job openings decreased by 256,000 to 7.079 million, below the market expectation of 7.225 million.

This data may reduce the need for further rate hikes and could signal a slowdown in consumer demand. In addition to monitoring interest rates, watch for adjustments in sales forecasts by retailers, automakers, and other consumer-focused companies. Weaker data may support valuations, but it won't improve earnings.

Optical communication was one of the strongest sectors last night.

Lumentum rose 5.66%, Corning rose 4.70%, Marvell Technology rose 4.51%, and Coherent increased over 3%. Semiconductor equipment stocks also strengthened, with Applied Materials rising 5.19%, ARM up 3.65%, and ASML up 3.56%.

Corning has signed a multi-year agreement worth over $3 billion with AT&T to supply the fiber and cable needed to expand its network. AT&T stated that increased internet usage and growing data demands driven by AI require greater network capacity.

This agreement translates the network scaling requirements into concrete orders. AI infrastructure development involves more than just purchasing GPUs—it also encompasses data transmission, network connectivity, and fiber optic deployment, with related investments expanding into more areas.

However, AT&T's procurement cannot be directly counted as new revenue for the entire optical communications industry. The subsequent delivery progress of Corning, as well as orders and profit margins from other companies, must be monitored separately.

The rise in semiconductor stocks and the decline in NVIDIA also indicate a divergence within the semiconductor sector. Last night, capital flowed more toward equipment and connectivity segments, rather than a broad rally across all AI hardware.

Meta has launched Muse for Small Business, integrating AI agents with Instagram professional accounts, Facebook Pages, and Meta ad accounts, and supporting multiple third-party business software platforms.

Meta already has a large number of small business customers. Agents who can help merchants create content, manage daily operations, and find customers have the opportunity to increase these businesses' frequency of platform usage and unlock new growth potential for advertising services.

The stock price rise depends on whether this commercialization path can succeed. After product launch, what truly needs to be tracked is merchant retention, willingness to pay, and whether agents can improve advertising efficiency. There is still a gap between launching new features and generating stable revenue.

On the AI infrastructure side, significantly higher spending figures have emerged. According to confidential offering documents reviewed by Reuters, Anthropic has committed to at least $518 billion in infrastructure spending over the next decade, with approximately 80% non-cancelable and payable regardless of actual usage.

The supply chain thus gains long-term demand support, while the financial pressure on model companies intensifies. Revenue must catch up with committed expenditures; the higher the financing costs, the more the market will focus on when these investments will yield returns. Spending commitments cannot be directly equated to confirmed income for suppliers.

At 20:15 tonight, watch the September ADP employment data. Yesterday’s job openings came in below expectations; today, focus on whether private-sector hiring continues to slow, offering further clues ahead of Friday’s non-farm payrolls.

At 20:30, the August PCE, personal income and outlays, and the third estimate of Q2 GDP will be released simultaneously. Focus on core PCE month-over-month, actual consumer spending, and the market’s reaction in the 2-year and 10-year U.S. Treasury yields. If inflation remains sticky, the cooling expectations for rate hikes last night could reheat.

Tonight is also the last trading day of the month and quarter. Market volatility may arise from institutional portfolio rebalancing during the closing session; if trading volume increases significantly, it should be assessed in conjunction with interest rates and sector performance.