Stocks Modestly Higher into Final Hour on Earnings Outlook Optimism, Diminished AI Infrastructure Build-Out Worries, Technical Buying, Tech/Power Sector Strength

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 36.2 -.03%
• US 10-Year T-Note Yield 4.13% +1.0 basis point
• 3-Month T-Bill Yield 3.87% +2.0 basis points

• China Iron Ore Spot 104.4 USD/Metric Tonne unch.
• Dutch TTF Nat Gas(European benchmark) 30.9 euros/megawatt-hour -2.4%

• Citi US Economic Surprise Index 7.7 -.2 point

• Citi Eurozone Economic Surprise Index 26.5 +.6 point

• Citi Emerging Markets Economic Surprise Index 30.5 +.9 point
• S&P 500 Current Quarter EPS Growth Rate YoY(467 of 500 reporting) +11.4% unch.
• S&P 500 Blended Forward 12 Months Mean EPS Estimate 302.51 +.06:  Growth Rate +15.6% +.1 percentage point, P/E 21.9 unch.
• S&P 500 Current Year Estimated Profit Margin 13.51% unch.
• NYSE FANG+ Current Quarter EPS Growth Rate YoY(7 of 10 reporting) +10.0% unch.
• NYSE FANG+ Blended Forward 12 Months Mean EPS Estimate 500.03 +.63: Growth Rate +23.1% +.2 percentage point, P/E 32.1 unch.
• Bloomberg US Financial Conditions Index .25 -13.0 basis points
• Bloomberg Euro-Zone Financial Conditions Index 1.01 -17.0 basis points
• Bloomberg Global Trade Policy Uncertainty Index 1.5 -.1
• US Yield Curve 53.25 basis points (2s/10s) -1.0 basis point
• US Atlanta Fed GDPNow Q2 Forecast +4.2% +.1 percentage point
• US Recession Within 6 Months Probability(3M/18M Forward Yld Curve Spread) 35.7% +.1 percentage point

• Cleveland Fed Inflation Nowcast Core PCE YoY +2.85% unch.: CPI YoY +2.96% unch.
• 1-Year TIPS Spread 2.56 -4.0 basis points
• 10-Year TIPS Spread 2.28 unch.
• Highest target rate probability for Jan. 28th FOMC meeting: 49.6% (-.4 percentage point) chance of 3.5%-3.75%. Highest target rate probability for March 18th meeting: 43.2%(+1.8 percentage points) chance of 3.5%-3.75%. (current target rate is 3.75-4.0%)
  

Overseas Futures:

• Nikkei 225 Futures: Indicating +705 open in Japan 
• China A50 Futures: Indicating -54 open in China

• DAX Futures: Indicating +100 open in Germany

Portfolio:

• Higher: On gains in my utility/tech/industrial sector longs and emerging market shorts 
• Disclosed Trades: Covered some of my (IWM)/(QQQ) hedges 
• Market Exposure: Moved to 75% Net Long

Bear Radar

Style Underperformer:

• Small-Cap Value -.4%

Sector Underperformers:

• 1) Energy -2.0% 2) Insurance -1.2% 3) Biotech -1.2%

Stocks Falling on Unusual Volume: 

• STRC, DASH, NTES, EQNR, LEGN, LOGI, IRM, NICE, GLBE, ENR, BLSH, CEVA, EOSE, ACM, MSTR, ES, POWL, CRCL, QFIN, METC, VREX, WIX and AGIO 

Stocks With Unusual Put Option Activity:

• 1) LEN 2) IEF 3) COMM 4) GPN 5) SGML

Stocks With Most Negative News Mentions:

• 1) AGIO 2) ES 3) IPAR 4) ADM 5) PRGO

Sector ETFs With Most Negative Money Flow:

• 1) IYW 2) XLY 3) IGM 4) XLC 5) XLV

Charts:

• ETFs Falling on Unusual Volume
• Stocks Falling on Unusual Volume

Bull Radar

Style Outperformer:

• Large-Cap Growth +.6%

Sector Outperformers:

• 1) Nuclear +2.5% 2) Semis +1.1% 3) Gold & Silver +1.1%

Stocks Rising on Unusual Volume:

• SEMR, SGML, EXAS, LZB, FULC, AMTM, PACS, GPCR, TMDX, NRIX, MOD, DY, HNGE, KYIV, MP, MAZE, UPWK, LITE, EAT, GEV, INBX, SBSW, GKOS, LOW, VIK, U, SQM, CAI, GH, AS, FTAI, AOSL, LMND, DRD, GRRR, PHVS, FROG, NUVL, IDXX, GOOG, LB, MH, WMG and TCMD

Stocks With Unusual Call Option Activity:

• 1) LEN 2) TOI 3) DASH 4) KC 5) VLO

Stocks With Most Positive News Mentions:

• 1) CEG 2) VENU 3) EXAS 4) AMTM 5) NUVB

Sector ETFs With Most Positive Money Flow:

• 1) IBB 2) SMH 3) ARKK 4) XLF 5) VHT

Charts:

• ETFs Rising on Unusual Volume
• Stocks Rising on Unusual Volume

Tomorrow's Earnings/Economic Releases of Note; Market Movers

Earnings of Note 
Company/Estimate 

Before the Open:

• (BBWI)/.39
• (ROAD)/1.09
• (J)/1.68
• (NTES)/14.64
• (SCVL)/.52
• (VIPS)/2.91
• (WMT)/.60
• (WMG)/.37 

After the Close: 

• (CPRT)/.39
• (ESE)/2.13
• (GAP)/.59
• (INTU)/3.09
• (POST)/1.88
• (ROST)/1.42
• (VEEV)/1.95 

Economic Release 

8:30 am EST

• Initial Jobless Claims for last week are estimated at 227K.
• Continuing Claims are estimated at 1945K.
• The Change in Non-Farm Payrolls for Sept. is estimated at 50K versus 22K in August.
• The Unemployment Rate for Sept. is estimated at 4.3% versus 4.3% in Aug.
• Average Hourly Earnings MoM for Sept. is estimated to rise +.3% versus a +.3% gain in Aug.
• The Philly Fed Business Outlook Index for Nov. is estimated to rise to 1.0 versus -12.8 in Oct. 

10:00 am EST

• Existing Home Sales for Oct. is estimated to rise to 4.08M versus 4.06M in Sept.

11:00 am EST

• The Kansas City Fed Manufacturing Activity Index for Nov. is estimated to fall to 3.0 versus 6.0 in Oct. 

Upcoming Splits

• None of note

Other Potential Market Movers

• The Fed's Goolsbee speaking, Fed's Paulson speaking, Fed's Cook speaking, weekly EIA natural gas inventory report, (PODD) investor day, (MRNA) analyst day, (EAT) annual meeting, (WDC) annual meeting, (TEL) investor day and the Needham Tech Week could also impact global trading tomorrow.

US Equity Market Hours

• 9:30 am - 4:00 pm EST

Mid-Day Market Internals

NYSE Composite Index:

• Volume Running -8.9% Below 100-Day Average 
• Nasdaq/NYSE Volume Ratio 13.6 +2.8
• 7 Sectors Declining, 4 Sectors Rising
• 33.6% of Issues Advancing, 64.3% Declining 
• TRIN/Arms 1.09 +60.3% 
  
• Non-Block Money Flow -$78.8M
  
• 27 New 52-Week Highs, 110 New Lows
• 54.2% (-2.3%) of Issues Above 200-day Moving Average
• Average 14-Day RSI 39.2 -3.4

Polymarket:

• Supreme Court Rules in Favor of Trump's Tariffs? 23.0% -1.0 percentage point
• Will there be another US government shutdown by January 31st? 32% unch.
• Will China invade Taiwan by end of 2026? 14.0% -1.0 percentage point
• US-Venezuela military engagement by Dec. 31st 38.0% -1.0 percentage points

Other:

• Bloomberg Global Risk-On/Risk-Off Index 85.7 +.7%
• US High-Yield Tech Sector OAS Index 436.25 -3.25 basis points
• Bloomberg Cyclicals/Defensives Index 249.8 +.5%
  
• Morgan Stanley Growth vs Value Index 163.3 +.9%
• CNN Fear & Greed Index 10.0 (EXTREME FEAR) -3.0
• 1-Day Vix 22.5 +7.6%
  
• Vix 24.3 -1.3%
  
• Total Put/Call .98 +7.7%

Wednesday Watch

Night Trading 

• Asian equity indices are -.25% to +.5% on average. 
• Asia Ex-Japan Investment Grade CDS Index 70.0 +2.5 basis points.
• China Sovereign CDS 46.75 +1.75 basis points.
• China Iron Ore Spot 104.3 USD/Metric Tonne -.1%. 
• Swiss Franc/Offshore Chinese Renminbi Cross 8.88 -.09%.
• Bloomberg Emerging Markets Currency Index 36.2 -.03%.
• Bloomberg Global Risk-On/Risk Off Index 85.5 +.5%.
• US 10-Year Yield 4.12% unch.
• Volatility Index(VIX) futures 21.9 +.6%.
• Euro Stoxx 50 futures +.13%. 
• S&P 500 futures -.10%.
• NASDAQ 100 futures -.20%.

Morning Preview Links

BOTTOM LINE: Asian indices are mostly higher, boosted by industrial and financial shares in the region. I expect US stocks to open mixed and to rally into the afternoon, finishing modestly higher.  The Portfolio is 50% net long heading into the day.