Market Update and Key Earnings Reports
The major stock indices recorded their third consecutive day of gains, with attention turning to what lies ahead. CNBC’s morning show “Squawk Box,” hosted by Becky Quick, Joe Kernen, and Andrew Ross Sorkin, will delve into key economic indicators and company earnings.
Tomorrow’s data includes initial jobless claims, expected at 200,000, while personal income for September is predicted to increase by 0.3%. Consumer spending is also forecasted to rise by 0.6%, and the Personal Consumption Expenditures (PCE) price index is anticipated to show a monthly gain of 0.5%, contributing to a yearly increase of 3.7%.
On the bond market front, Treasury Secretary Scott Bessent shared his insights on “Squawk Box,” downplaying concerns over AI-related debt. He noted that while neoclouds represent a small share of the financial ecosystem, financing continues effectively, with companies like Meta choosing to finance through equity. In a similar discussion, Jeffrey Gundlach from DoubleLine suggested that the market is struggling to accept ratings for AI-adjacent businesses, comparing it to the initial market reactions to triple-B subprime ratings. He also indicated a likely interest rate hike in December.
As for Treasury yields, the 10-year yield settled at 5%, while the two-year yield was at 4.691%. Other short-term yields varied, with six-month at 4.334% and one-month at 3.98%. Several ETFs, including the iShares iBoxx High Yield Corporate Bond ETF (HYG), reported dividend yields above 6%.
Company Updates
Caterpillar shares have fallen 15% over the past three months and are down 33.5% since their June peak. Despite these losses, the stock has risen 36% year-over-year, partly due to demand related to AI data center construction.
Merck, on the other hand, has seen a 7% increase in shares over the last three months, although they remain 10% below their August high.
Microsoft reported better-than-expected results, leading to a 3% rise in after-hours trading, although it remains about 3.5% off its peak. There’s also discussion about lower-than-anticipated capital expenditures affecting neoclouds, which may hint at reduced spending.
Alphabet’s third-quarter earnings failed to meet expectations, causing shares to drop nearly 10% in after-hours trading. Over the past few months, this stock has declined 21% from its May high.
Chipotle’s earnings missed forecasts, but the company reported an increase in same-store sales. CEO Scott Boatwright expressed confidence in the company’s strategy despite current challenges. Shares climbed 7% in after-hours trading, though they are still down 30% from their January high.
Rivian is expected to release its earnings on Thursday, facing a 30% drop over the last three months and a steep 50% decline since December. Amazon and Intel are also set to report, with Amazon up 10% recently but down from its August high, while Intel has also gained 10% yet remains far from June levels.
We’ll have more updates on these developments as they unfold.
