October 26th Market Overview

Happy Monday

You can't buy a share of Anthropic yet, and it still ran the show today. Its IPO filing showed people are paying real money for AI, and beaten-up chip stocks finally caught a serious break.

After two straight losing weeks, it’s been much needed. Brazil had the opposite kind of day with several Brazilian companies getting slaughtered in the public markets.

Quick question: would you buy Anthropic on its first day of trading? (Just shoot me a reply)

Let’s dig in...

Today's Big Picture

1. Anthropic Opens Its Books and Chip Stocks Bounce 
   Anthropic's first-half revenue came in at $16.3 billion, up from $1.2 billion a year earlier. The $80.7 billion net loss looks scary, but about $72 billion of it is an accounting charge. It has also signed up for more than $475 billion in computing deals over the next seven to 10 years. That's a lot of future chip demand, and chip stocks, down about a quarter from their peak, finally bounced.
   

2. Brazil's Surprise Election Result Hits Its Markets
   Luiz Inácio Lula da Silva won a fourth term Sunday, even though polls and betting markets favored Flávio Bolsonaro. Investors had piled into Brazil after Bolsonaro's first-round lead on October 4, betting on business-friendly policies. The iShares fund tracking Brazilian stocks had its worst day since March 2020. Brazil's exchange briefly halted trading, and the currency had its worst day against the dollar since at least 1994.
   

3. Oil Backs Off, but Gas Is Still Over $4 
   U.S. crude slipped to about $102 a barrel after Saudi Arabia's defense minister met with Iranian officials in Tehran. Brent, the global benchmark, hit its highest since April on Friday after Iran-backed Houthis attacked Saudi Arabia. Gas still averages $4.28 a gallon, $1.23 more than a year ago, per AAA. Goldman Sachs says high energy prices and sour moods are most of the reason everyday investors are trading less.

Market Overview

Index Performance (Today is tech)

Stock Spotlight

Micron $MU ( ▲ 3.76% )  
rose after Bank of America met with management and now sees tighter memory supply through 2028. Tighter supply usually means better prices, which cuts against the oversupply fears that hit the stock last week.

CoreWeave $CRWV ( ▲ 1.76% )  
bounced off its lowest level in more than a year. It borrows to buy Nvidia chips and rent them out. Over the weekend, Elon Musk said lenders have mostly stopped funding that model.

XP $XP ( ▼ 47.52% )  
a Brazilian financial services company, lost about half its value at the open after Lula's win.

Surgery Partners $SGRY ( ▲ 47.56% )  
rose after the Financial Times reported Bon Secours Mercy Health is close to buying a majority stake. The deal would value the company at about $6 billion, including debt.

Big Name Updates

Tesla $TSLA ( ▲ 5.97% )  
rose after Barclays analyst Dan Levy said a merger with SpaceX would likely pay Tesla shareholders a premium. He upgraded the stock and raised his price target to $450 from $370.

Meta $META ( ▼ 2.22% )  
slipped after laying out plans to raise up to $95 billion for AI, starting with $35 billion in stock. Nvidia, AMD and Broadcom may buy up to $5 billion, so Meta's chip suppliers are helping pay for its chips.

Verizon $VZ ( ▼ 3.54% )  
fell even though it earned $1.31 a share, beating the $1.27 expected, and raised its full-year outlook. Revenue of $34.3 billion missed the $34.8 billion Wall Street wanted.

Other Notable Company News

Blue Chips
MarketBeat lists “7 Blue-Chip Stocks to Add To Your Forever Portfolio”

Hewlett Packard Enterprise $HPE ( ▲ 3.48% )  
rose with other data center builders as Anthropic's filing eased fears about AI spending.

Moderna $MRNA ( ▼ 0.68% )  
kept falling after leaked results from a closely watched cancer vaccine study disappointed investors.

CACI $CACI ( ▲ 4.63% )  
rose after Jefferies upgraded it to buy with a $725 target, citing faster growth than its peers.

Apollo $APO ( ▲ 1.37% )  
rose after agreeing, with partners, to invest $5 billion in Mubadala Capital, part of Abu Dhabi's sovereign wealth fund.

Genmab $GMAB ( ▲ 1.85% )  
rose after JPMorgan upgraded it on promising mid-stage data for its colorectal cancer drug.

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Sector Watch

Bond Market

The 10-year Treasury yield barely moved. French bonds rallied after Moody's held off on a downgrade, though it warned one could still come.

Policy Watch

Fed

The Fed decides on rates Wednesday, days before the midterms. After a hotter inflation report, the real question is whether Chair Kevin Warsh hints at another hike.

• Former Fed Vice Chair Alan Blinder expects a "hawkish pause." That means no move now, with a hint that the next meeting could bring a hike.

• Warsh usually avoids previewing the Fed's next move, so any hint will carry extra weight.

International

Bolsonaro hasn't conceded and says he'll try to annul the result. He objects to Supreme Court Justice Cristiano Zanin's decision to keep polls open two extra hours. Jubarte Capital's Benjamin Mandel expects Brazil's rate cuts to stall until Lula shows a believable budget plan.

• The European Central Bank decides Thursday and the Bank of Japan on Friday. The Bank of Canada also meets this week.

• News reports that the U.S. and Israel could strike Iran after the midterms helped push oil higher last week.

What to Watch

Microsoft and Alphabet Report Wednesday

Both report after the close, a few hours after the Fed decides. Watch their AI spending plans and cloud backlogs, which are signed deals not yet counted as sales. Piper Sandler said its checks with Microsoft's partners came back strong.

Amazon Reports Thursday

Last quarter, Amazon raised its 2026 forecast for building and equipment spending to $220 billion. A higher number means more orders for chipmakers, and a lower one says the AI build-out is cooling.

Third-Quarter GDP Lands Thursday

It's the first look at how fast the U.S. economy grew this summer. A hot number makes another rate hike easier for the Fed to justify.

Thanks for reading - you are now the more informed 🙂

- John

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