Morning Market Briefing 10/28
3 Things To Know For Today
1. Major Data Points: A big 8:30 AM ET batch lands today. Advance Q3 GDP is forecast at +3.2% (versus +2.2% prior), the September PCE price index at +0.5% month over month and +3.6% year over year, and Core PCE at +0.3% month over month and +3.1% year over year (versus +3.0% prior). Initial jobless claims are expected near 199,000. The Fed held rates at 3.75%-4.00% Wednesday in a 10-2 vote, with the two dissenters wanting an immediate hike, and Chair Warsh gave little signal on December, saying he does not believe in forward guidance outside a crisis. Futures price roughly an 85% chance of a quarter-point hike on December 9, so a hot PCE print today matters.
2. Other Major Financial News: The Big Tech verdicts split. Microsoft beat on revenue ($92.3 billion, up 19%) and adjusted EPS ($4.89 versus about $4.72 expected) with Azure up 48%, and shares rose after hours. Alphabet slipped on revenue ($127.6 billion), reported negative free cash flow of about $9.1 billion as quarterly capex more than doubled to $51.4 billion, and sold off sharply after hours (reports put the drop near 9% to 10%) despite cloud revenue growing 103%. Amazon and Intel report after today's close, with Eli Lilly, Mastercard, and Caterpillar before the open.
3. Market-Adjacent News (Iran War): Qatari mediators gave Iran a new draft deal to end the war, and Iran is reportedly weighing it with a response expected by the end of the week. At the same time, the Wall Street Journal reports Washington has warned several Gulf states to prepare for a possible renewed U.S. military campaign after the November 3 midterms. Houthi missile and drone attacks on Saudi Arabia continue, and Brent (about $115) and WTI (about $101.50) sit near multi-month highs, so headlines in either direction can move crude and the tape quickly.
Yesterday's Price Action
Wednesday was a quiet, slightly positive Fed day: the S&P 500 rose 0.28% to 7,743.98, the Nasdaq gained 0.27% to 26,549.85, and the Dow added 0.19% to 52,475, with energy leading and real estate and utilities lagging. The 10-year Treasury yield pushed through 5% to about 5.02%, and it is near 5.05% this morning. The real action came after the close: Alphabet's slide and a more demanding AI trade have Nasdaq futures down roughly 1.1% to 1.3% and S&P futures down about 0.3% to 0.4%, while Dow futures are modestly higher. NQ and ES open Thursday gapping lower with the market asking whether AI spending can keep being rewarded when the free cash flow isn't there.
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Quote Of The Day
βHe who lives by the crystal ball will eat shattered glass.β
β Ray Dalio
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