Spooky Close

Wall Street left investors spooked as the month ended on a sour note. Tech earnings took a hit, and the Fed’s cautious signals on economic health added to the unease.

⚡ Closing Bell:

• Dow Jones: ⬇️ -0.9% to 41,763.5 – Only utilities and energy sectors scraped out gains.

• S&P 500: ⬇️ -1.9% to 5,705.5 – First monthly loss since May, with declines across most sectors.

• Nasdaq: ⬇️ -2.8% to 18,095.2 – Biggest drop of the day, led by Microsoft and other Big Tech laggards.

With five-month streaks broken for both the Dow and S&P, October ended with tech stocks leading the slide, down 3.6% on the day, while utilities and energy found rare green.

Sector Recap:

① Technology (S5INFT): ⬇️ -3.6%
Tech bore the brunt of the sell-off, with Microsoft’s 6.1% decline and Meta’s 4.1% slide following disappointing earnings. Microsoft’s cautious guidance on Azure and Meta’s unexpected spending sent shivers through the sector, making it one of the roughest days since September.

② Utilities (S5UTIL): ⬆️ +1%
Utilities stood out as the top-performing sector, with Entergy (ETR) surging 15.2% on talk of expanding U.S. nuclear capabilities—a safe haven amid tech turbulence.

Movers:

• Paycom Software (PAYC): ⬆️ +21.4% Paycom surged 21% as the S&P’s top performer after beating Q3 expectations, giving traders a rare dose of optimism.

• Comcast (CMCSA): ⬆️ +3.4% Comcast gained after reports of a possible spin-off of its cable brands to address cord-cutting trends, alongside a strong Q3 report.

• Microsoft (MSFT): ⬇️ -6.1% Microsoft slumped after issuing lower-than-expected growth forecasts for Azure, with Q2 growth projected at 31-32%, down from last quarter’s 34%. Investors reacted quickly, marking Microsoft as a top tech laggard.

• Estee Lauder (EL): ⬇️ -20.9% Estee Lauder took the steepest drop on the S&P, nearly 21%, after pulling fiscal 2025 guidance. Weak Asia retail sales and dividend cuts left investors jittery.

• Nvidia (NVDA): ⬇️ -4.7% to $132.76 – Concerns over AI demand stability weighed on Nvidia, despite its role as the go-to AI chip provider.

• Meta (META): ⬇️ -4.1% – Heavy Q3 AI investment fueled spending concerns.

GAS-PEDAL:

🚗 Carvana shares surged 19% after the online car seller smashed Q3 estimates, with quarterly sales doubling to $3.6B as costs fell. Car buyers are increasingly turning to used cars, boosting Carvana and rival CarMax.

U-turn: Carvana has been on the rebound after a tough 2022 when plummeting sales and high debt nearly led to bankruptcy.

Sticking with Old Wheels: The pandemic sent new car prices soaring as automakers struggled with a supply shortage of 8 million vehicles. Today, the price gap between new and used cars has hit a record $20K, with cars under $25K now a rare sight. As a result, Americans are keeping their vehicles on the road longer than ever—now averaging nearly 13 years per vehicle.

Consumers Shift Gears: With used car prices down 5% year-over-year (compared to a 1% drop for new cars), pre-owned vehicles are gaining traction. Carvana, buoyed by easing interest rates and stabilizing demand, has even raised its annual earnings forecast, predicting a strong Q4 finish.

Amazon’s AI Ambitions Fuel Q3 Gains

Amazon reported impressive Q3 results, with double-digit revenue growth on the back of its AI and cloud expansions.

• Net Sales: $158.9B (+11% YoY)

• AWS Revenue: $27.5B (+19%)

• Net Income: $15.3B—well above expectations.

💸 Driving Factors: AI & Cloud
AWS led Amazon’s growth with new generative AI tools like Rufus, the latest in Amazon’s AI-powered initiatives, and a major push in cloud infrastructure with Databricks and Graviton4. CEO Andy Jassy’s focus on AI and cloud growth is a bid to stay ahead of Microsoft and Google.

🛒 Retail & Prime Day Wins
Record-breaking Prime Big Deal Days added new brands like AllSaints and Estée Lauder, with Amazon also entering budget shopping to compete with rivals like Temu and Shein.

Five Stocks to Watch

• Apple (AAPL): ⬇️ -1.82% – Closed down despite beating Q4 expectations with $94.9B in revenue.

• Amazon (AMZN): ⬇️ -3.28% – Fell over 3% as investors remain cautious despite solid Q3.

• Intel (INTC): ⬇️ -3.5% – Dropped after a surprising EPS loss, highlighting its ongoing struggles.

• Peloton (PTON): ⬇️ +27.82% – Soared after beating Q1 sales estimates, spiking interest in a potential comeback.

• Tesla (TSLA): ⬇️ -2.99% – Dip as it holds strong in California’s EV market, yet navigates regional challenges.

Commodities Check: ✔️

• Oil: ⬆️ +2.8% → $70.52/barrel – Lifted by U.S. inventory declines and potential OPEC production delays.

• Gold: ⬇️ -1.6% → $2,757/oz – Long-term uptrend remains well supported by bullish fundamentals.

• Bitcoin: ⬇️ -4% – Risk-off sentiment contributed to the drop.

Economic Rundown:

❗Mixed Signals for Growth

• Consumer Spending: Surged in September, suggesting robust Q4 growth but stirring Fed rate cut speculation.

• Fed Watch: Inflation held steady, leaving a 25-basis-point cut likely for next week.

• Jobless Claims: Fell unexpectedly to 216,000, the lowest since May, while employers cut 55,597 jobs—a 24% drop from September but up 51% YoY.

  

• Treasury Yields: The 10-year yield rose to 4.28%, while the 2-year remained at 4.16%, signaling steady bond demand.

• Dollar: A softer dollar as Treasury yields edged up reflects cautious optimism around the Fed’s next move.

Get a Serious Trading Platform and a Sweet Bonus.
» Find out more

Today:

• U.S. employment report: Bureau of Labor Statistics report is expected to show slowing U.S. job gains, with forecasts of 101,000 new jobs (down from last month’s 254,000). With inflation pressures and consumer strength at play, the Fed’s November rate cut decision will hinge on these numbers.

#TRUTH:

“It does not matter how slowly you go, as long as you do not stop.” — Confucius

The stinger

Disclaimer

This letter is not offering investment, trading, or investment advice nor is based on any individual portfolio or business operation. We are not a registered investment, stock nor commodity advisor. One should consult with their own registered advisor to discuss investment strategies that are appropriate for their business or personal goals, risk tolerance and financial situation. Information in this report and on any website is derived from a variety of source believed to be reliable however no representation is made that the information is accurate, complete or correct. These lessons, newsletter and site content is not intended nor shall not constitute or be construed as an offer or recommendation to “buy”, “sell”, “trade” or invest in any securities, commodities, futures, options or other asset referred to in said lessons, reports or newsletters. Rather, this research is intended to identify situations and circumstances that those in the trading community should be aware of to better help assess and improve their own risk management skills.