October 8th Pre-Market Brief

Good Morning

Red start for the second day in a row. Oil is up and bond yields are hovering near 24year highs, so stocks are feeling it.

Pepsi kicked off earnings season with a beat, and layoffs are still low. Two down days after a record doesn't worry me, but I'm keeping a real eye on bonds. This is becoming unsustainable fast.

Let's dig in...

Today's Big Picture

1. Waller Says More Hikes, Just Not in October
Fed Governor Christopher Waller said this morning more rate hikes are coming, just not at back-to-back meetings. Markets read that as no move on Oct. 28 and a hike on Dec. 9. He also said "hikes," plural, while Wednesday's Fed minutes pointed to one more this year. That's good news for October and less good for anyone waiting on lower rates.

2. Oil Is Rising on Threats, With Supply Back to Normal
Brent crude is near $105 on a fresh tanker attack and Trump's turn away from an Iran deal. Gulf exports are back near prewar levels, according to Kpler, so prices are reacting to threats. The White House is also fighting pump prices ahead of next month's midterms, including a diesel tax break. That makes this rise easier to reverse than it looks.

3. The S&P Is Near a Record, but Most Stocks Aren't
Microsoft, Nvidia, Apple and Meta delivered more than three times the S&P 500's gain last quarter, per Citadel Securities. The other 496 stocks lost ground as a group. Small caps have it worst, with the Russell 2000 one bad day from a correction. Rising rates are hitting the typical stock, and the index only looks healthy while those four hold up.

Market Overview

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Stock Spotlight (pre-market)

PepsiCo $PEP ( ▼ 1.58% )  
higher premarket after third quarter sales and profit beat estimates, driven by markets outside the U.S. The soda and snack giant still cut its full-year profit growth forecast as North American beverage sales keep shrinking.

Wolfspeed $WOLF ( ▼ 1.45% )  
sharply higher premarket after landing a conditional $1.5 billion, 30 year loan from the Pentagon. The silicon carbide chipmaker will use it for U.S. production tied to defense systems. The Pentagon also gets rights to buy shares, which would dilute current holders.

Broadcom $AVGO ( ▲ 0.19% )  
lower premarket after the Wall Street Journal reported it is lining up more than $50 billion in financing. The chipmaker needs it for the custom AI chips it is building with OpenAI.

Palantir $PLTR ( ▲ 1.07% )  
one of the few gainers premarket after Goldman Sachs upgraded the data software company to buy with a $230 target. Goldman expects more government contracts as countries build their own AI systems.

Taiwan Semiconductor $TSM ( ▼ 0.53% )  
lower premarket even though third quarter sales beat estimates. September sales at the chipmaker for Nvidia and Apple dipped slightly from August, and full results come next week.

Haemonetics $HAE ( ▲ 13.07% )  
higher premarket after Australian plasma collector CSL set a deadline to roll out Haemonetics' collection system across the U.S. CSL expects to finish by the end of 2027.

What to Watch

30-Year Bond Auction (1:00 PM ET)
Global central banks took most of Wednesday's 10 year sale, and yields eased afterward. Today's $22 billion 30 year sale tests whether that demand reaches the longest bonds. A weak result lifts long term rates, the fastest route for small caps into a correction.

Delta Earnings (Friday, Before the Open)
Delta usually reports first among major airlines, and it will set its holiday-quarter outlook with Brent above $100. In July, higher fares covered more than half its added fuel costs. If that share drops, airline profit forecasts for the quarter are too high.

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