October 29th Market Overview

Happy Thursday

Alphabet is on track to lose about $500 billion in market value today, the second-biggest one-day drop ever for a US company. That pulled the S&P 500 toward its first loss in four days, while healthcare stocks hit a record. Big tech now trails the rest of the market this year, and today didn't help.

Yesterday I told you takeout and groceries are where I've felt the pinch. Today Sprouts and Hershey said their customers are feeling it too.

Let's dig in...

Today's Big Picture

1. Wall Street Stayed Calmer Than Alphabet's Stock

Alphabet fell about 13 percent, on track for its worst day since going public in 2004. Analysts didn't panic with it. UBS cut its target to $332 from $380, still well above today's price near $283, and Barclays called it a "code yellow" but said the shares are still attractive at about 14 times expected 2028 profit. A cloud business that more than doubled to nearly $31 billion couldn't stop the slide.

2. The Other 493 Stocks Are Beating The Magnificent Seven

A fund of the 493 big US companies outside the Magnificent Seven is up more than 15 percent this year. A fund of just the seven is up less than 6 percent, and the S&P 500 sits in between at 13 percent. Today fit the pattern, with software stocks down about 4 percent, ServiceNow down about a quarter, and smaller companies up for a third straight day.

3. Shoppers Got More Careful Heading Into October

Sprouts Farmers Market fell about a fifth after cutting prices to win back shoppers, and it now sees fourth quarter profit at less than half what analysts expected. Hershey said convenience store candy and gum sales fell nearly 5 percent across the industry in September, and the caution is carrying into October. Today's GDP report showed consumer spending at its fastest pace since late 2024, but it only covered July through September.

Market Overview

Index Performance

Stock spotlight

Carvana $CVNA ( ▲ 15.72% )  
rose after its first quarter above $8 billion in revenue, up 42 percent from a year ago. It sold 217,385 vehicles, up 39 percent, though profit grew more slowly than sales as advertising, diesel and interest costs rose. The company says it still has only about 2 percent of the used car market.

Crocs $CROX ( ▲ 24.74% )  
rose to its highest price in more than two years after HeyDude, the loafer brand it bought for $2.5 billion in 2022, grew sales for the first time in six quarters. HeyDude revenue rose about 6 percent to $170 million, and Crocs gave a brighter outlook for 2026 sales.

Intercontinental Exchange $ICE ( ▲ 4.71% )  
owner of the New York Stock Exchange, is on pace for its best day since March 2020 after announcing plans to bring perpetual futures to the US. These are bets made with borrowed money on crypto, stocks, commodities and currencies, and they never expire. Traders have flocked to them on the crypto exchange Hyperliquid this year. ICE is partnering with and investing in Trade[XYZ], the creator of some of Hyperliquid's most popular contracts, pending regulators' approval. Also today, prediction market Kalshi raised $1 billion at a $40 billion valuation.

Big name updates

Microsoft $MSFT ( ▼ 0.16% )  
offered voluntary buyouts to about 60,000 employees, adding to a voluntary retirement program it started in April. Last quarter it spent $39.4 billion on data centers and equipment.

Palantir $PLTR ( ▼ 0.43% )  
got an overweight rating, JPMorgan's version of a buy, with a $262 target for December 2027. Analyst Brian Essex says companies have moved from figuring out how to use AI to demanding a return on it, and Palantir is already delivering one. Revenue grew 93 percent last quarter, and Palantir kept 62 cents of every sales dollar as adjusted operating profit.

PayPal $PYPL ( ▲ 0.57% )  
was cut to underweight, Barclays' version of a sell, with its target lowered to $53 from $56. Barclays says the earnings beat hid weakness in PayPal's own checkout button, which grew just 1 percent excluding currency swings and was flat without Venmo. The fourth quarter outlook there is now 1 to 2 percent growth.

Other notable company news

Textron $TXT ( ▲ 12.14% )  
rose after earning $1.76 a share against the $1.43 analysts expected, and it raised its full year outlook.

Boot Barn $BOOT ( ▲ 15.0% )  
rose after beating on profit and margins, earning $1.73 a share against $1.64 expected.

Carrier $CARR ( ▼ 1.84% )  
signed a cooling deal worth more than $3 billion with one of the big cloud companies, and its data center orders quadrupled last quarter.

Blue Owl $OWL ( ▲ 6.26% )  
rose after raising $10.2 billion last quarter, $8.3 billion of it from big institutions, while money from individual investors held roughly flat at $1.9 billion.

West Fraser $WFG ( ▼ 0.71% )  
will idle an Arkansas sawmill and an Alabama wood panel plant by year end, blaming weak home building and remodeling.

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Sector Watch

Bond market

The 10-year Treasury yield fell to about 4.98, from 5.04 yesterday afternoon. Lately yields have moved with tech stocks, and on rough tech days investors buy Treasurys as the safer place to wait.

Mortgage rates fell for a second straight week, to an average 7.24 percent on a 30-year fixed, per Freddie Mac. That's still more than a point higher than a year ago.

Policy watch

Fed

The job market keeps giving the Fed room to hike. The four-week average of new jobless claims is the lowest since the late 1960s, per The Wall Street Journal.

• Before the Dec. 8-9 meeting, the Fed gets two more months of jobs data and one more inflation report.

Midterms

Three industries could face action in Washington next year whoever wins Tuesday. Candidates from both parties have called for action on drugmakers, housing and AI data centers, Yahoo Finance reports. With the Senate's 60-vote threshold, any new law would need support from both parties.

What to Watch

The AI company quietly automating every Walmart distribution center. 
23 billion in orders on the book.

It's just one of seven names in this free MarketBeat report.

Amazon's Cloud Growth Tonight

Wall Street expects Amazon Web Services sales to grow 37.8 percent from a year ago, up from last quarter's 36.8 percent, per FactSet. Microsoft's Azure grew 48 percent and Google's cloud more than doubled. If AWS comes in under 36.8 percent, Amazon's cloud is slowing while its two biggest rivals grow faster. Shares fell more than 2 percent today ahead of the report.

Thanks for reading - you are now the more informed 🙂

- John

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