Stocks Lower into Final Hour on Higher Long-Term Rates, Earnings Outlook Jitters, Profit-Taking, Tech/Consumer Discretionary Sector Weakness

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 36.28 -.11%
• US 10-Year T-Note Yield 4.10% +2.0 basis points
• 3-Month T-Bill Yield 3.85% -3.0 basis points

• China Iron Ore Spot 105.7 USD/Metric Tonne -.8%
• Dutch TTF Nat Gas(European benchmark) 31.0 euros/megawatt-hour -2.6%

• Citi US Economic Surprise Index 13.4 +1.0 point

• Citi Eurozone Economic Surprise Index 20.5 +14.9 points

• Citi Emerging Markets Economic Surprise Index 19.2 +1.4 points
• S&P 500 Current Quarter EPS Growth Rate YoY(285 of 500 reporting) +10.9% -.3 percentage point
• S&P 500 Blended Forward 12 Months Mean EPS Estimate 297.93 +.25:  Growth Rate +13.8% +.1 percentage point, P/E 23.0 -.2
• S&P 500 Current Year Estimated Profit Margin 13.55% unch.
• NYSE FANG+ Current Quarter EPS Growth Rate YoY(5 of 10 reporting) +3.7% -3.9 percentage points
• NYSE FANG+ Blended Forward 12 Months Mean EPS Estimate 485.03 +.89: Growth Rate +19.4% +.2 percentage point, P/E 35.0 -.3
• Bloomberg US Financial Conditions Index .69 +3.0 basis points
• Bloomberg Euro-Zone Financial Conditions Index 1.20 unch.
• Bloomberg Global Trade Policy Uncertainty Index 2.6 -.3 point
• US Yield Curve 48.0 basis points (2s/10s) +1.25 basis points
• US Atlanta Fed GDPNow Q2 Forecast +3.9% unch.
• US Recession Within 6 Months Probability(3M/18M Forward Yld Curve Spread) 34.5% -1.3 percentage points

• Cleveland Fed Inflation Nowcast Core PCE YoY +2.85% unch.: CPI YoY +2.96% -1.0 basis point
• 1-Year TIPS Spread 2.75 -11.0 basis points
• 10-Year TIPS Spread 2.30 +1.0 basis point
• Highest target rate probability for Jan. 28th FOMC meeting: 57.6% (+6.2 percentage points) chance of 3.5%-3.75%. Highest target rate probability for March 18th meeting: 43.7%(+5.1 percentage points) chance of 3.5%-3.75%. (current target rate is 3.75-4.0%)
  

Overseas Futures:

• Nikkei 225 Futures: Indicating -197 open in Japan 
• China A50 Futures: Indicating +1 open in China

• DAX Futures: Indicating +80 open in Germany

Portfolio:

• Slightly Higher: On gains in my industrial/biotech sector longs, emerging market shorts and index hedges
• Disclosed Trades: Added to my (IWM)/(QQQ) hedges
• Market Exposure: Moved to 50% Net Long

Bear Radar

Style Underperformer:

• Large-Cap Growth -1.0%
  

Sector Underperformers:

• 1) Electrification -3.5% 2) Social Media -3.1% 3) Healthcare Providers -3.0%

Stocks Falling on Unusual Volume: 

• WERN, ATRC, BACQ, RYI, DVA, AGI, LRN, MUSA, AMP, LUMN, BA, WLK, EXR, AAP, FI, EHC, SN, VNT, MO, REVG, ETD, OPCH, CAVA, PBI, WING, META, UTZ, CVNA, PI, BAX, IP, TEX, RBLX, FSS, CI, EBAY, CMG, EME, ITRI, IART, SFM, APLS and FMC

Stocks With Unusual Put Option Activity:

• 1) BAX 2) LUMN 3) CMG 4) AR 5) RYAM

Stocks With Most Negative News Mentions:

• 1) CI 2) FLYE 3) BAX 4) IART 5) FMC

Sector ETFs With Most Negative Money Flow:

• 1) KRE 2) XLP 3) XRT 4) IGV 5) PAVE

Charts:

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

Bull Radar

Style Outperformer:

• Large-Cap Value +.2%

Sector Outperformers:

• 1) Networking +3.2% 2) Road & Rail +1.6% 3) Pharma +1.5%

Stocks Rising on Unusual Volume:

• EBS, MTSR, FORM, PRM, GH, VIAV, CHRW, CRML, IMVT, IDR, INDV, INSM, GKOS, OMCL, CAH, NEGG, MAX, DGNX, JOE, MBX, VKTX, EWTX, WCC, NRIX, SIRI, CMPR, XPO, CALX, LAUR, FOX, ORN, FTK, VRNS, FOXA, CAI, GPCR, TGEN, FCFS, AME, TAL, UUUU, WSR, COMM, GRAL, GFS, ROL, FTAI, EXTR, OSW, LCII, EVER, HII, ALGN, VTR, ING, NTCT, AXS, TT, NTCT, BDC, LHX, ABVX, CBZ, MELI, EQIX, LKQ, ASX, EXLS, NOW, TS, KEX, WULF, LOGI, SCI, SQM, ASPI, LBTYK, NCNO, LLY, IDCC, MTG, ASPI, TNET, BMY, CNX, DOCU, NAVI, VRSK, SPGI, SKWD, MMYT, SNCY, WHD, ROIV, IRT, INVH, AUGO, PUMP, REYN, GOOG and ALSN

Stocks With Unusual Call Option Activity:

• 1) FMC 2) LKQ 3) ROIV 4) CWAN 5) ALLY

Stocks With Most Positive News Mentions:

• 1) GH 2) PRM 3) FORM 4) VIAV 5) GPRK

Sector ETFs With Most Positive Money Flow:

• 1) IYW 2) FDN 3) XLV 4) XLF 5) XLK

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:

• (ABBV)/1.77
• (AGCO)/1.22
• (AON)/2.91
• (CNI)/1.77
• (CBOE)/2.54
• (CHTR)/9.23
• (CVX)/1.71
• (CHD)/.74
• (CL)/.89
• (D)/.95
• (XOM)/1.82
• (GWW)/9.95
• (LEA)/2.74
• (LYB)/.81
• (MGA)/1.25
• (NWL)/.18
• (PIPR)/3.17
• (RBC)/2.74 

After the Close: 

• None of note

Economic Releases 

8:30 am EST 

• Personal Income for Sept. is estimated to rise +.4% versus a +.4% gain in Aug.
• Personal Spending for Sept. is estimated to rise +.4% versus a +.6% gain in Aug.
• The Core PCE Price Index MoM for Sept. is estimated to rise +.2% versus a +.2% gain in Aug.
• The 3Q Employment Cost Index is estimated to rise +.9% versus a +.9% gain in 2Q. 

9:45 am EST

• The MNI Chicago PMI for Oct. is estimated to rise to 42.0 versus 40.6 in Sept. 

Upcoming Splits

• None of note

Other Potential Market Movers

• The Atlanta Fed GDPNow Q4 update, Fed's Logan speaking, Fed's Bostic speaking, Dallas Fed PCE for Sept. and the US Baker Hughes oil rig count could also impact global trading tomorrow.

US Equity Market Hours

• 9:30 am - 4:00 pm EST

Thursday Watch

Around X:

• @Business 

• US President Trump says he and Chinese President Xi would have “a very successful meeting” on Thursday to quell an expansive trade fight that has shaken global markets.
• The European Central Bank is set to keep interest rates unchanged for a third meeting, awaiting year-end projections that will offer greater clarity on harm caused by trade tensions and France’s fiscal crisis.
• Artificial intelligence startup OpenAI is preparing to file for an initial public offering as soon as next year that could give the company a market capitalization of $1 trillion, Reuters reported.
• Get up to speed on what's moving global markets.  
• Here's what you need to know to start your day. 

• @ZeroHedge

• Meta, Google, Microsoft Capex Wrap.
• *TRUMP: INSTRUCTED DEPT OF WAR TO START TESTING NUCLEAR WEAPONS. *TRUMP: PROCESS WILL BEGIN IMMEDIATELY. 
• Biden's Jack Smith 'Enemies List' Scandal Widens As 400 Republican Targets Revealed.
• Newsom's Prostitution Law Creates Disturbing New Sex Market In LA.
• California's Retirement Fund Lost 71% Of $468M Investment In Clean Energy And Won't Say How.
• Putin Hails Test Of Nuclear Super Torpedo Capable Of Unleashing 'Radioactive Tidal Waves'
  .
• Market Liquidity Turns Critical As BofA Says "Room For Fed To Restart Balance Sheet Growth"
  .
• Trump declares victory against climate 'hoax' after Bill Gates comments: AFP
  .
• *TRUMP: SOUTH KOREA WILL BUILD SUBMARINE IN PHILADELPHIA
  .
• After Years Of Climate Doom Propaganda, Bill Gates Admits World Won't End.
• "Coming into today market was pricing in a 92% probability of a cut on 12/10. Post Jay Pow Presser this is now 63%. Felt like a bit of an overreaction." - GS.
• Do Antidepressants Work For Kids? Key Evidence Is Corrupt Study.
• *TRUMP: SOUTH KOREA AGREES TO $350B DEAL. *TRUMP: GAVE SOUTH KOREA APPROVAL TO BUILD A NUCLEAR SUBMARINE. *TRUMP: SOUTH KOREA WILL GET LOWER TARIFF. 
• Leading Construction Indicator Signals Data Center Buildout Tsunami Nears.
• Meta Tumbles, Microsoft Slides, Alphabet Soars After Mag 7 Earnings Deluge.

• @CNBC

• Samsung’s third-quarter profit more than doubles, beating estimates as chip recovery gathers pace.
• Asia-Pacific markets set for mixed open after Fed casts doubt on another rate cut in December.
• Google expects 'significant increase' in capital expenditure in 2026, execs say.
• Meta CEO Mark Zuckerberg defends AI spending: 'We're seeing the returns'.
• Thursday's big stock stories: What’s likely to move the market in the next trading session
  .
• Stock futures move lower after tech earnings put focus back on AI trade: Live updates
  .
• Here are the five key takeaways from the Fed meeting and Powell news conference
  .
• Stocks making the biggest moves after hours: Alphabet, Meta, Starbucks, Microsoft and more.

• @TheTranscript

• $MSFT Microsoft CFO expects capacity constraints to remain at least through FY ending June '26. “We're accelerating the amount of capacity we're bringing online, we will continue to balance Azure revenue growth with the growing needs across our first party apps and AI solutions. Our own R&D efforts, and the end of life server replacements. Therefore, we now expect to be capacity constrained through at least the end of our fiscal year.”
• Alphabet CEO: "On Cloud, I would point out a clear sign of momentum: the number of deals greater than $1B that we’ve signed in the first three quarters of this year exceeds the total from the previous two years combined. We’re definitely seeing strong momentum and executing at pace."
• $META Zuck to accelerate AI compute build-out. "To date, we keep on seeing this pattern where we build some amount of infrastructure to what we think is an aggressive assumption, and then we keep on having more demand to be able to use more compute.."
• $META CEO in concluding the Q3 25 call: "I think it's pretty early, but I think we're seeing the returns in the core business that's giving us a lot of confidence that we should be investing a lot more. And we want to make sure that we're not underinvesting."
• ServiceNow CFO: "Q3 was an exceptional quarter, with standout performances across the board" $NOW: +4% AH.

Night Trading 

• Asian equity indices are -.25% to +.5% on average. 
• Asia Ex-Japan Investment Grade CDS Index 63.5 -1.25 basis points.
• China Sovereign CDS 40.5 -1.0 basis point.
• China Iron Ore Spot 107.2 USD/Metric Tonne +.04%. 
• Swiss Franc/Offshore Chinese Renminbi Cross 8.88 +.06%.
• Bloomberg Emerging Markets Currency Index 36.3 -.1%.
• Bloomberg Global Risk-On/Risk Off Index 86.9 -.5%.
• US 10-Year Yield 4.06% -1.0 basis point.
• Volatility Index(VIX) futures 18.6 -1.8%.
• Euro Stoxx 50 futures +.44%. 
• S&P 500 futures +.33%.
• NASDAQ 100 futures +.35%.

Morning Preview Links

BOTTOM LINE: Asian indices are mostly higher, boosted by technology and industrial shares in the region. I expect US stocks to open mixed and to rally into the afternoon, finishing modestly higher.  The Portfolio is 75% net long heading into the day.

Stocks Reversing Slightly Lower into Final Hour on Less Dovish FOMC Commentary, Higher Long-Term Rates, Profit-Taking, Consumer Discretionary/Financial Sector Weakness

Economic Gauges:

• S&P 500 Current Quarter EPS Growth Rate YoY(222 of 500 reporting) +11.2% -.8 percentage point
• S&P 500 Blended Forward 12 Months Mean EPS Estimate 297.58 +.16:  Growth Rate +13.7% +.1 percentage point, P/E 23.2 +.1
• S&P 500 Current Year Estimated Profit Margin 13.55% +1.0 basis point
• NYSE FANG+ Current Quarter EPS Growth Rate YoY(1 of 10 reporting) +7.6% unch.
• NYSE FANG+ Blended Forward 12 Months Mean EPS Estimate 484.14 +.19: Growth Rate +19.2% +.1 percentage point, P/E 35.3 +.3
• Bloomberg US Financial Conditions Index .66 -3.0 basis points
• Bloomberg Euro-Zone Financial Conditions Index 1.20 unch.
• Bloomberg Global Trade Policy Uncertainty Index 2.9 -.1 point
• US Yield Curve 46.75 basis points (2s/10s) -1.75 basis points
• US Atlanta Fed GDPNow Q2 Forecast +3.9% unch.
• US Recession Within 6 Months Probability(3M/18M Forward Yld Curve Spread) 35.8% -1.5 percentage points

• Cleveland Fed Inflation Nowcast Core PCE YoY +2.85% unch.: CPI YoY +2.97% unch.
• 1-Year TIPS Spread 2.86 -5.0 basis points
• 10-Year TIPS Spread 2.29 -1.0 basis point
• Highest target rate probability for Dec. 10th FOMC meeting: 65.2% (-25.7 percentage points) chance of 3.5%-3.75%. Highest target rate probability for Jan. 28th meeting: 51.1%(+3.9 percentage points) chance of 3.5%-3.75%. (current target rate is 4.0-4.25%)
  

Overseas Futures:

• Nikkei 225 Futures: Indicating -197 open in Japan 
• China A50 Futures: Indicating +1 open in China

• DAX Futures: Indicating +80 open in Germany

Portfolio:

• Higher: On gains in my tech/industrial/utility sector longs 
• Disclosed Trades: Added to my (IWM)/(QQQ) hedges
• Market Exposure: Moved to 75% Net Long