October 30th Market Overview

Happy Thursday

All of a sudden the market wants to get skeptical about AI? Something spooky must be in the air 🎃

Tech got hammered despite beating earnings. Meta and Microsoft both raised AI spending plans and investors weren't buying it. I think the market is starting to question who actually profits from this arms race.

Trump and Xi sat down for the first time in six years. Tariffs came down to 47% from 57%. Markets were hoping for more.

Lets dig in…

Today's Big Picture

AI Spending Spooks Tech Investors 

Meta and Microsoft both beat earnings but fell anyway. Meta raised capital spending to $70-72 billion and took a $16 billion charge. Microsoft took a $3.1 billion hit from OpenAI. Investors are questioning who profits from this AI buildout.

Trump-Xi Trade Truce Delivers Modest Gains 

U.S. cut China tariffs to 47% from 57% after their first meeting in six years. China will delay rare earth export curbs for one year and buy 12 million tons of U.S. soybeans this season. April's rare earth restrictions stay in place. Markets expected more.

Eli Lilly Extends Weight-Loss Drug Dominance

Eli Lilly beat estimates and raised its outlook. Zepbound and Mounjaro sales hit $25 billion year-to-date. Zepbound tripled from last year, Mounjaro doubled. Rival Novo Nordisk is in a bidding war with Pfizer for obesity drug developer Metsera worth up to $9 billion. The weight lost drug industry is well and thriving.

Market Overview

Index Performance

Stock Spotlight

Chipotle $CMG ( ▼ 17.48% ) 
had its worst day since 2012. The company cut its sales forecast for the third straight quarter as younger diners visit less. Full-year sales expected to decline.

Alphabet $GOOGL ( ▲ 3.22% ) 
was the bright spot in big tech. Google Cloud and YouTube advertising drove strong results. Sometimes it's not what you spend on AI, it's how you explain it.

Nvidia $NVDA ( ▼ 2.06% ) 
became the first company to hit $5 trillion market value. The Magnificent Seven now make up 38% of the entire S&P 500, a record.

Cleveland-Cliffs $CLF ( ▼ 12.07% ) 
plans to issue 75 million shares to pay down debt. Shareholders didn't like it. The company announced a deal with South Korean steel giant POSCO but gave no details.

Big Name Updates

Apple $AAPL ( ▲ 0.64% ) 
and Amazon $AMZN ( ▼ 2.34% ) report earnings after the close. Apple crossed $4 trillion market value Wednesday. All eyes on their AI spending plans.

Berkshire Hathaway $BRK.B ( ▲ 0.93% ) 
sold $50 million of DaVita $DVA shares, a kidney dialysis provider. Still Berkshire's 10th biggest holding.

Boeing $BA ( ▼ 6.28% ) 
downgraded to hold by Deutsche Bank after taking a $4.9 billion charge on 777X delays. The bank cut its cash flow forecasts.

Comcast $CMCSA ( ▼ 4.27% ) 
lost 104,000 broadband subscribers, the tenth straight quarter of losses. Mobile carriers keep stealing customers with home internet offers.

Other Notable Company News

Eli Lilly $LLY ( ▲ 3.52% ) 
beat third-quarter estimates and raised its full-year revenue outlook to $63-63.5 billion from $60-62 billion.

Cigna $CI ( ▼ 17.31% ) 
fell. Management warned its pharmacy business will face margin pressure in coming years.

CVS $CVS ( ▼ 4.94% ) 
dropped after warning about its Medicaid business due to industry headwinds. The company also expects slower growth in its PBM unit.

Hershey $HSY fell after disappointing Halloween candy sales. With Halloween on Friday, a third of sales typically happen during the week.

Shell $SHEL ( ▼ 1.11% ) 
beat earnings but CEO Wael Sawan is preparing for oil oversupply in 2026. The company cancelled a Rotterdam biofuels plant after taking a $600 million loss.

Sector Watch

Bond Market

Treasury yields climbed. The 10-year hit 4.1% after dipping below 4% earlier this week. Powell's rate cut comments drove the move. The dollar hit its highest level since August.

Policy Watch

The Fed

Powell said yesterday a December rate cut is "not a foregone conclusion." Traders reacted fast. December cut odds fell from 90% Tuesday to 69% now. The Fed wants more data over the next six weeks - holiday shopping and jobs numbers.

Fiscal & Trade

The Trump-Xi meeting resulted in several agreements:

• U.S. will cut fentanyl-related tariffs on Chinese goods to 10% (overall tariffs now 47% down from 57%)

• China will delay new rare earth export restrictions for one year

• China agreed to purchase 12 million tons of U.S. soybeans this season and 25 million tons annually for the next three years

• Both countries will pause port fees for one year

• U.S. will hold off on expanding its entity list blacklist for one year

What's not resolved: TikTok divestiture and Nvidia chip exports.

Government Shutdown

The Fed will cut bank supervision staff by 30% by next year's end - down to 350 people from 500. Vice Chair Michelle Bowman made the announcement. The Trump administration wants less regulation on banks.

Congress

The Senate voted 51-47 to end Trump's tariff emergency. Four GOP senators joined Democrats. The resolutions move to the House where GOP leaders blocked votes on tariffs until March.

International

The Bank of Japan held rates steady. The yen weakened. The European Central Bank held rates. Japan's Nikkei 225 closed at a record high, its biggest monthly gain in nearly five years.

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What To Watch

Apple and Amazon Earnings B
oth report after the close today. I want to hear their AI spending plans and see if investors punish them like they did Meta and Microsoft.

December Fed Meeting
Powell made this meeting matter. What seemed certain is now uncertain. The next six weeks of data decide it.

Memory Chip Boom 
DRAM revenue should hit $231 billion next year per TrendForce. That's four times 2023 levels. Samsung's chip division posted record revenue. SK Hynix posted record earnings.

U.S.-China Follow-Through
A truce is one thing, action is another. I'm watching to see if both countries follow through. The big issues around tech and national security aren't resolved.

Thanks for reading 🙂

- John