October 8th Market Overview

Happy Thursday

Tech had a rough day after a report put OpenAI’s revenue well short of the number making the rounds. Oil didn’t help, climbing on another tanker attack in the Gulf.

I’m not weighing to much into it personally. The S&P 500 and Nasdaq closed at records just two days ago.

Let’s dig in...

Today's Big Picture

1. A Smaller OpenAI Number Hits AI Stocks

OpenAI’s annualized revenue hit about $50 billion at the end of September, per the Financial Times. The $68 billion figure reported last month included partners’ gross revenue, so the two numbers measure different things. AI stocks sold off anyway, with CoreWeave $CRWV among the hardest hit. I think that says more about how high the bar is for AI than about OpenAI.

2. Oil Climbs After a Tanker Is Hit Near Qatar

Brent closed around $104, its highest finish since Sept. 28. A tanker was struck off the coast of Qatar, well away from the usual trouble spot in the Strait of Hormuz. Oil came off its highs after President Trump posted that the US won’t attack Iran before the Nov. 3 midterms. With strikes off the table until then, tanker attacks are the risk I’d watch.

3. Starbucks Looked at Buying Chipotle

The Financial Times reported Starbucks $SBUX explored a deal for Chipotle $CMG, and Chipotle rose on the news. At about $39 billion, it would be the biggest restaurant takeover ever. Starbucks CEO Brian Niccol ran Chipotle before this job. Starbucks said only that it’s focused on its own turnaround, which isn’t a denial.

Market Overview

Index Performance

Stock Spotlight

Pacira BioSciences $PCRX ( ▲ 44.41% )  
, a pain-drug maker, agreed to a $1.65 billion buyout from Viatris $VTRS.

Palantir $PLTR ( ▲ 2.4% )  
finished green on a rough day for AI stocks. Goldman Sachs upgraded it to Buy with a $230 target, and it closed about $8 below its record high.

Wolfspeed $WOLF ( ▼ 1.13% )  
landed a conditional $1.5 billion, 30-year loan from the Defense Department to make chips in the US. The Pentagon gets warrants for a piece of the company in return.

Applied Digital $APLD ( ▼ 0.97% )  
posted $341.9 million in quarterly revenue, nearly triple what Wall Street expected. Demand from the biggest AI cloud companies drove it, though its loss widened.

Big Name Updates

PepsiCo $PEP ( ▲ 2.99% )  
beat estimates but cut its full-year profit outlook, and shares rose anyway. CEO Ramon Laguarta admitted PepsiCo is losing in soda and will pour savings into Pepsi, Mountain Dew and Poppi.

Broadcom $AVGO ( ▼ 4.29% )  
fell with the chip group, and it has more riding on OpenAI than most. It’s lining up more than $50 billion in financing for the custom chips it’s building with the company.

Amazon $AMZN ( ▼ 1.95% )  
confirmed it cut fewer than 1,000 jobs, mostly in its retail business.

Other Notable Company News

Riot Platforms $RIOT ( ▼ 9.17% )  
led bitcoin miners lower as investors questioned their costly pivots into AI data centers.

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

Coinbase $COIN ( ▼ 3.61% )  
slid as bitcoin fell to a three-week low near $81,000. CoinGlass says $974 million in crypto bets got liquidated over 24 hours.

D.R. Horton $DHI ( ▲ 1.93% )  
and other homebuilders kept sliding as 30-year mortgage rates hit their highest since November 2023.

Nebius $NBIS ( ▼ 7.79% )  
got a Buy rating and $304 price target from Rosenblatt, which expects 2026 revenue to grow 6.5 times.

Levi Strauss $LEVI ( ▼ 2.51% )  
raised its full-year earnings outlook to $1.54 to $1.56 a share. Revenue growth guidance slipped to the bottom of its range.

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Sector Watch

Bond Market

Yields backed off this week’s 24-year highs after a $22 billion 30-year auction drew decent demand. The 10-year finished around 5.23.

Policy Watch

Fed

Fed Governor Christopher Waller said more rate hikes are coming, but they don’t need to happen at back-to-back meetings. That points to a pass in October. It also fits Wednesday’s minutes: most officials want another hike this year, just not in a hurry.

• Waller blamed Middle East energy prices and AI build-out spending for keeping inflation too high.

• Jobless claims fell for a fifth straight week, which keeps the Fed focused on inflation.

Trade & Labor

• The government suspended Microsoft $MSFT and Adobe $ADBE from the green card labor program in a foreign worker crackdown.

• The New York Fed said price increases on many everyday items came entirely from tariffs.

International

France is the weak spot in the global bond selloff, with borrowing costs climbing on worries about years of overspending. Bank of France chief Emmanuel Moulin said European inflation is all energy. He added that the oil shock is now turning into a financial shock.

What to Watch

Delta Earnings

Delta Air Lines $DAL reports Friday. Fuel is one of an airline’s biggest costs, so listen for how Delta plans around oil at these levels.

Michigan Consumer Survey

The University of Michigan’s first October read on consumer mood lands Friday. Watch the inflation expectations number. The Fed is trying to stop energy costs from spreading into everything else.

Thanks for reading - you are now the more informed 🙂

- John

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