November 3rd Market Overview: Nasdaq Rallies Ahead of AMD Earnings

Happy Tuesday

Chip names bounced back while Americans went to the polls, the Nasdaq broke a three-day losing streak. It was a narrow rally, though since more S&P 500 stocks fell than rose (breadth is so important to watch). Market is waiting on two answers tonight, one from AMD and one from the voters.

An odd thing happened to me today at classic deli sandwich spot, has an AI ever taken your drive-thru order? Seriously, how’d it go?

Let's dig in...

Today's Big Picture

1. Chips Bounced Back, Apple Didn’t

Chip stocks ended Monday down more than a fifth from their October high, which Wall Street typically calls a bear market. Today they bounced back, led by the companies that make memory chips. Those same chips go into every iPhone, and they’ve gotten so expensive that Apple $AAPL warned they’ll cut into its profits, so its stock fell. With Apple down and chip stocks up, Nvidia $NVDA passed Apple again as the world’s most valuable company.

2. Wall Street Isn’t Ready for a Democratic Sweep

People betting real money on the election think Democrats are all but sure to win the House and have about a 3-in-4 shot at the Senate. Even so, investors told CNBC the stock market hasn’t really prepared for Democrats taking both. JPMorgan thinks that could knock stocks down tomorrow, especially AI companies, while Republicans keeping the Senate could give stocks a short-term lift. Whatever happens tonight, the S&P 500 has risen in the last three months of 21 of the past 23 midterm years, according to Deutsche Bank.

3. Even Meta Is Paying More to Borrow

Meta Platforms $META borrowed $15 billion in a bond sale today, and lenders made it pay up. On its 10-year bonds, Meta will pay about 1.6 percentage points more than the U.S. government does, while strong companies usually pay about 0.9 points more. The tech giants building AI data centers are borrowing huge sums, and JPMorgan says their borrowing costs just hit a high for the year. I’d keep an eye on that, because when borrowing costs more, AI gets more expensive to build, and one good day for chips doesn’t change it.

Market Overview

Index Performance

Stock spotlight

CoreWeave $CRWV ( ▲ 7.2% )  
, which rents out AI chips, has over three-quarters of its tradable shares sold short, per S3 Partners. It reports next Tuesday, after losing about two-fifths of its value in a month.

Shopify $SHOP ( ▼ 8.55% )  
missed revenue estimates for the first time since 2022, with $3.74 billion against $3.75 billion expected. The total value of orders on its platform, $119.15 billion, also came in light.

Graphic Packaging $GPK ( ▲ 20.58% )  
, which makes paper cups and cereal boxes, beat sales and profit estimates after a rough year. It was the stock’s best day since its climb back from the 2008 crash.

Bloom Energy $BE ( ▲ 8.71% )  
, a fuel cell maker, rose after Barclays upgraded it to overweight, citing stronger demand than expected. Barclays still cut its price target to $289 from $319.

CarMax $KMX ( ▼ 4.98% )  
fell as new CEO Keith Barr plans to lend more to buyers with credit just below prime. CarMax says that will dent profits at first, since it has to set aside more for bad loans.

Big name updates

Pfizer $PFE ( ▼ 2.38% )  
beat estimates, earning 87 cents a share against 73 cents expected, but the stock slipped. CEO Albert Bourla is pausing big deals to focus on cancer and obesity drugs from Seagen and Metsera.

Palantir $PLTR ( ▼ 1.46% )  
won back most of a steep early drop after its first $2 billion quarter. Jefferies says investors now want to know whether growth can keep speeding up from a much bigger base.

Yum Brands $YUM ( ▲ 0.04% )  
beat estimates and said Taco Bell is recovering from an outbreak tied to a supplier’s lettuce. Taco Bell’s AI drive-thru ordering is in 900 stores and bringing bigger checks, with over 1,500 planned by year-end.

Other notable company news

JetBlue $JBLU ( ▲ 0.16% )  
raised its first-bag fee to $50 from $39, its second hike this year, citing fuel costs.

Coinbase $COIN ( ▲ 5.52% )  
bounced after three straight losing days, including a Morgan Stanley downgrade yesterday.

Lumentum $LITE ( ▼ 0.83% )  
slipped even after Raymond James upgraded it to strong buy with a $1,328 target.

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Sector Watch

Bond market

Treasury yields edged up as voting began, and September job openings beat forecasts at 7.5 million. I think that keeps a December rate hike on the table, which puts extra weight on Friday’s jobs report.

Policy watch

Midterms

The AI worry tonight is mostly about data centers, and those get approved or blocked in the states. That’s why investors are watching governor races in Texas, Ohio and Georgia, plus dozens of local data center votes.

• Washington could help tech, since Rob Rains of Washington Analysis expects Democrats to get tougher on Chinese rivals.

• Drugmakers have about $42 billion in Medicaid sales at risk once work requirements start in January. Democrats want the rule reversed, but one health consultant sees low odds within two years.

Oil and Iran

Oil swung on headlines all day. Brent fell to about $101.50 this morning on hopes of a U.S.-Iran deal, then drifted back near $104. Trump’s plan to end about $4 billion a year in military aid to Israel also weighed on prices early. ING says clear progress in the talks would push oil lower, a welcome break at the pump.

• Gas averages $4.12 a gallon and diesel $6.28, the highest on any Election Day, per GasBuddy.

What to Watch

AMD and Super Micro Tonight

Advanced Micro Devices $AMD reports after the bell, and its outlook may matter as much as last quarter’s numbers. Intel showed last week how much an outlook can move a chip stock. Super Micro $SMCI reports too, after losing about a quarter of its value in a month.

Election Results Tonight

Polls start closing at 6 PM ET, and the bigger wave of results starts at 8 PM. Democrats’ House campaign chair is watching Kentucky’s 6th District, which Trump won by 15 points, as an early read. Some Senate races may not be called tonight.

Thanks for reading - you are now the more informed 🙂

- John

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