November 2nd Market Overview

Happy Monday

Pretty tough to see the market flop over from a big green gap up to now almost -1% down as of now. The economy itself had a good day though, with factories growing for a 10th straight month. Investors are glad to own paint, planes and hardware stores right now. They just want proof before paying up for AI again, and that has been a cyclical theme this year outside of war headlines.

Let's dig in...

Today's Big Picture

1. Tech Gave Back Its Morning Bounce

Chip and hardware stocks erased the morning's gains and pulled the Nasdaq into the red. Intel $INTC fell again after losing nearly half its value in October. Deutsche Bank turned bullish, saying tech has trailed the market this badly five times in 2 1/2 years. It bounced every time, but with Apple $AAPL reporting tonight, buyers seemed happy to wait a day.

2. Cheaper Oil Gave the Old Economy a Lift

Brent crude fell about $9 to near $104 on signs the U.S. and Iran may try diplomacy first. Axios reported Trump wants talks to play out, and Iran said its supreme leader cleared the government to negotiate. Cheaper oil helped industrial and materials stocks, and Sherwin-Williams $SHW and Home Depot $HD led the Dow higher. Goldman Sachs still expects pricey oil, and raised its December Brent forecast to $105 from $90.

3. Oracle Had to Pay Up to Borrow

Oracle $ORCL is raising $20 billion for its AI buildout, half in new stock and half in bonds. Bond buyers demanded 2.75 percentage points over Treasuries on its new five-year notes. That's more than the safest junk-rated companies pay on average, even though Oracle still holds an investment-grade rating. Shares fell hard, though Oracle says it plans no more bond sales for new projects for a few years.

Market Overview

Index Performance

Stock Spotlight

Marvell Technology $MRVL ( ▼ 12.93% )  
agreed to buy Lumentum $LITE, which makes optical parts for data centers, in an all-stock deal. Lumentum holders get 4.5 Marvell shares each, so when Marvell sold off, Lumentum went down with it.

IDEXX Laboratories $IDXX ( ▲ 21.9% )  
which makes lab tests for veterinarians, beat on earnings and revenue and raised its 2026 forecast. Its pet business drove the beat, and revenue came in at $1.21 billion.

Tempus AI $TEM ( ▲ 8.63% )  
a cancer-testing and health-data company, beat on earnings and revenue and raised its 2026 sales forecast. Revenue grew to $411.5 million, and growth in its cancer test volume sped up.

Marriott $MAR ( ▲ 4.3% )  
rose after revenue grew on broad demand in the U.S. and Canada. It also said travel in the Middle East has improved since the second quarter.

Big name updates

Alphabet $GOOGL ( ▼ 0.3% )  
is raising about 6 billion euros in a new bond sale, and the stock still rose. Wells Fargo trimmed its target to $365 from $371, saying Google can't yet offset fewer paid search clicks.

Amazon $AMZN ( ▲ 2.2% )  
rose after PhillipCapital upgraded it to buy with a $330 target. The firm expects Amazon's AI spending, held at $220 billion this year, to pay off over the long run.

SpaceX $SPCX ( ▲ 1.23% )  
is exploring a Boost Mobile deal after the major carriers turned it away, per the Washington Post. Elon Musk also put tighter limits on Grok, saying the chatbot cost too much to run relative to revenue.

CrowdStrike $CRWD ( ▼ 3.44% )  
rose after Deutsche Bank upgraded it to buy, betting AI makes cybersecurity a bigger market.

Other notable company news

Estée Lauder $EL ( ▼ 4.26% )  
raised its sales outlook after quarterly sales of $3.72 billion beat estimates, yet the stock fell.

Fox $FOXA ( ▼ 0.76% )  
got a lift from the World Cup and a record $350 million in midterm political ads.

Rivian $RIVN ( ▲ 8.47% )  
rose after UBS upgraded it to buy ahead of the ramp-up of its R2 midsize SUV.

AB InBev $BUD ( ▲ 4.47% )  
said Anheuser-Busch CEO Brendan Whitworth is leaving at month's end to run gym chain Equinox.

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Sector Watch

Bond market

The 10-year Treasury yield slipped to about 4.9 percent after fewer factories reported paying higher prices in October. The dollar barely moved.

Policy watch

Midterms

Voters head to the polls tomorrow, and Democrats are favored to win the House. Prediction markets give them close to a three-in-four shot at the Senate too, per CNBC.

• Barclays says the 10-year barely moved after each of the last three midterms, which all ended in divided government.

• Standard Chartered says a Republican sweep would surprise markets most, since it could mean bigger deficits and higher yields.

• Goldman Sachs expects the next Congress to pass some AI rules, but no sweeping limits on building data centers.

Fed

Futures traders give a quarter-point rate hike in December about three-to-one odds, per CME Group.

• Apollo's Torsten Sløk says taming inflation may take almost 3 more points of rate hikes by late 2027.

• September construction spending fell the most since April 2020, led by a drop in housing.

Iran

There's no deal yet. Iran's foreign minister called the talks through mediators "very intensive," and Qatar's mediators have draft language but no agreement.

• Secretary of State Marco Rubio said over the weekend that Trump hasn't decided on new strikes.

• The Journal reports America's Gulf allies are preparing for another round of strikes anyway.

• Retail gas fell to $4.12 a gallon.

What to Watch

Apple and Palantir After the Bell

It's John Ternus's first earnings call as CEO of Apple $AAPL, which trades at 36 times next year's profit. Listen for memory costs, which have quintupled since last summer, and how fast Apple can make the folding Duo. Wall Street expects $2 a share on $113.46 billion in revenue, and Palantir $PLTR reports tonight too.

Chip Earnings From AMD and Qualcomm

Advanced Micro Devices $AMD reports tomorrow and Qualcomm $QCOM reports Wednesday. Barclays expects those two, plus Friday's jobs report, to matter more to stocks than the election results. Watch AMD's outlook on AI chip demand, since that's what the whole chip group is trading on.

Thanks for reading - you are now the more informed 🙂

- John

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