Stocks Slightly Higher into Final Hour on FOMC Commentary, AI Infrastructure Build-Out Optimism, Earnings Outlooks, Tech/Biotech Sector Strength

Economic/Market Gauges:

• North American Investment Grade CDS Index 60.0 -.9%
• BofA Private Credit Proxy Index 67.4 +.1% 
• Bloomberg US Securitized MBS/ABS/CMBS Avg. OAS .35 -2.0 basis points
• BofA Global Financial Stress Indicator .10 -7.0 basis points
• European Financial Sector CDS Index 72.6 -1.5% 
• Emerging Market CDS Index 167.0 +.3% 
• Israel Sovereign CDS 61.5 +.2% 
• Bloomberg Global Trade Policy Uncertainty Index .4 unch.
• US Morning Consult Daily Consume Sentiment Index 84.2 -1.5

• Citi US Economic Surprise Index 52.7 -.4

• Citi Eurozone Economic Surprise Index 4.5 -.9

• Citi Emerging Markets Economic Surprise Index 29.7 +1.3
• S&P 500 Current Quarter EPS Growth Rate YoY(201 of 500 reporting) +37.9% +.3 percentage point
• S&P 500 Blended Forward 12 Months Mean EPS Estimate 413.17 +.23:  Growth Rate +25.9% +.1 percentage point, P/E 18.7 unch.
• S&P 500 Current Year Estimated Profit Margin 16.39% unch.
• NYSE FANG+ Current Quarter EPS Growth Rate YoY(3 of 10 reporting) +499.8% unch.
• NYSE FANG+ Blended Forward 12 Months Mean EPS Estimate 1,096.46 +.60: Growth Rate +63.3% +.1 percentage point, P/E 16.8 -.1
• Bloomberg US Financial Conditions Index .92 +6.0 basis points
• US Yield Curve 32.75 basis points (2s/10s) +7.0 basis points
• Bloomberg Industrial Metal Index 175.9 -.1%
• Dutch TTF Nat Gas(European benchmark) 98.5 euros/megawatt-hour +2.6%
• US Recession Within 6 Months Probability(3M/18M Forward Yld Curve Spread) 10.9% -.7%
• US Atlanta Fed GDPNow Q3 Forecast +3.3% -.1 percentage point
• US 10-Year T-Note Yield 5.03% +4.0 basis points
• 1-Year TIPS Spread 2.70 +6.0 basis points

• Highest target rate probability for Dec. 9th FOMC meeting: 82.6% (+4.3 percentage points) chance of 4.0%-4.25%. Highest target rate probability for Jan. 27th meeting: 57.0%(+4.4 percentage points) chance of 4.0%-4.25%. (current target rate is 3.75-4.0%)
  

Overseas Futures:

• Nikkei 225 Futures: Indicating +690 open in Japan 
• China A50 Futures: Indicating -147 open in China
• KOSPI 200 Futures: Indicating +22 open in South Korea 

• DAX Futures: Indicating +115 open in Germany

Portfolio:

• Higher: On gains in my tech/industrial/biotech/energy sector longs 
• Disclosed Trades: None
• Market Exposure: 75% net long

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

Earnings of Note 
Company/Estimate 

Before the Open: 

• (AGCO)/.87
• (ALGM)/.24
• (MO)/1.51
• (ATI)/1.37
• (AVY)/2.32
• (BAX)/.52
• (BWA)/1.25
• (BMY)/1.10
• (BC)/1.35
• (BG)/2.41
• (CAT)/7.06
• (LNG)/4.28
• (CRH)/2.06
• (CROX)/3.31
• (DHI)/3.01
• (LLY)/5.68
• (EME)/8.37
• (FSS)/1.32
• (FTAI)/1.43
• (HOG)/.47
• (HSY)/2.11
• (HWM)/1.37
• (H)/.76
• (ICE)/1.97
• (LHX)/2.95
• (LGND)/2.33
• (MA)/5.17
• (MRK/2.09
• (NCLH)/.93
• (PWR)/5.02
• (SAIA)/3.30
• (STM)/.38
• (TROW)/2.63
• (THC)/4.68
• (TT)/4.73
• (VMC)/2.81
• (XPO)/1.58 

After the Close: 

• (AMZN)/1.97
• (DLR)/1.99
• (FSLR)/4.67
• (GILD)/2.19
• (ILMN)/1.36
• (IR)/.90
• (INTC)/.41
• (MTZ)/2.95
• (MHK)/2.58
• (RDDT)/1.33
• (RBLX)/-.43
• (SNDK)/46.67
• (SKYW)/3.07
• (SPXC)/2.12
• (SBUX)/.72
• (MSTR)/20.19
• (SYK)/3.55
• (TWLO)/1.47
• (WY)/.04 

Economic Releases 

8:30 am EST

• Personal Income for Sept. is estimated to rise +.3% versus a +.2% gain in Aug.
• Personal Spending for Sept. is estimated to rise +.6% versus a +.9% gain in Aug.
• Core PCE Price Index MoM for Sept. is estimated to rise +.3% versus a +.2% gain in Aug.
• Initial Jobless Claims for last week is estimated to rise to 198K versus 194K the prior week. 
• Continuing Claims is estimated to fall to 1720K versus 1728K prior. 
• 3Q GDP is estimated to rise +3.2% versus a +2.2% gain in 2Q.
• 3Q Personal Consumption is estimated to rise +3.4% versus a +3.8% gain in 2Q.
• The GDP Price Index for 3Q is estimated to rise +3.2% versus a +6.1% gain in 2Q. 

Upcoming Splits

• None of note

Other Potential Market Movers

• The Atlanta Fed GDPNow Q4 update, Fed's weekly balance sheet report, Dallas Fed PCE for Sept. and the weekly EIA natural gas inventory report 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 -1.0% Below 100-Day Average 
• Nasdaq/NYSE Volume Ratio 12.9 -.7
• 6 Sectors Rising, 5 Sectors Declining
• 42.0% of Issues Advancing, 55.6% Declining 
• TRIN/Arms .98 -36.8%
• Non-Block Money Flow +$26.3M
  
• 43 New 52-Week Highs, 99 New Lows
• 42.1% (-.3%) of Issues Above 200-day Moving Average
• Average 14-Day RSI 57.8 +2.6

Polymarket: 

• Will China invade Taiwan by June 30th 2027? 6.0% unch.
• Strait of Hormuz traffic returns to normal by November 30th 6.0% unch.
• Iran agrees to end enrichment of uranium by Dec. 31st 13.0% -1.0 percentage point
• Israel withdraws from Lebanon by December 31st 4.0% unch.
• US Invades Iran before 2027 19.0% unch.
• US announces end of Iranian blockade by November 30th 21.0% -2.0 percentage points

Other

• Bloomberg Global Risk-On/Risk-Off Index 128.8 +1.3%
• Global Monitor Iran Instability Index 65.0 -3.0
• Strait of Hormuz Oil Tanker Traffic Curtailed Estimate 45.0% +5.0 percentage points
• US High-Yield Tech Sector OAS Index 433.5 -10.75 basis points
• France Sovereign CDS 95.8 -2.2%
• Bloomberg Cyclicals/Defensives Index 268.0 +.7%
• Morgan Stanley Growth vs Value Index 142.8 +1.2%
• CNN Fear & Greed Index 35.0 (FEAR) +2.0
• 1-Day Vix 13.9 +10.9%
• Vix 17.4 -.9%
• Total Put/Call .78 -11.4%

Wednesday Watch

Night Trading 

• Asian equity indices are +.50% to +2.75% on average. 
• Asia Ex-Japan Investment Grade CDS Index 76.0 -2.0 basis points  
• China Sovereign CDS 37.75 -1.0 basis point.
• China Iron Ore Spot 89.5 USD/Metric Tonne -.02%. 
• Crude Oil 101.10/bbl. +1.2%. 
• Gold 4,071.2 USD/t oz. -.1%. 
• Swiss Franc/Offshore Chinese Renminbi Cross 8.04 -.03%.
• Bloomberg Emerging Markets Currency Index 33.37 -.04%.
• Bloomberg Global Risk-On/Risk Off Index 128.2 +.8%.
• US 10-Year Yield 5.0% unch.
• Japan 30-Year Yield 3.87% +1.0 basis point.
• Volatility Index(VIX) futures 19.1 +.5%.
• Euro Stoxx 50 futures -.18%. 
• S&P 500 futures +.01%.
• NASDAQ 100 futures +.07%.

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 Finish Higher on Mideast War Resolution Hopes, AI Infrastructure Build-Out Optimism, Declining Eurozone Sovereign Debt Angst, Tech/Transport Sector Strength

Economic/Market Gauges:

• North American Investment Grade CDS Index 60.8 -2.8%
• BofA Private Credit Proxy Index 67.3 +2.8% 
• Bloomberg US Securitized MBS/ABS/CMBS Avg. OAS .37 -1.0 basis point
• BofA Global Financial Stress Indicator .17 -3.0 basis points
• European Financial Sector CDS Index 73.7 -3.4% 
• Emerging Market CDS Index 166.8 -4.0% 
• Israel Sovereign CDS 61.4 -4.0% 
• Bloomberg Global Trade Policy Uncertainty Index .4 -.1
• US Morning Consult Daily Consume Sentiment Index 85.7 +.6

• Citi US Economic Surprise Index 53.1 +7.1

• Citi Eurozone Economic Surprise Index 5.4 -2.8

• Citi Emerging Markets Economic Surprise Index 28.4 +1.8
• S&P 500 Current Quarter EPS Growth Rate YoY(161 of 500 reporting) +37.6% +.4 percentage point
• S&P 500 Blended Forward 12 Months Mean EPS Estimate 412.95 +.10:  Growth Rate +25.8% unch., P/E 18.7 +.1
• S&P 500 Current Year Estimated Profit Margin 16.39% unch.
• NYSE FANG+ Current Quarter EPS Growth Rate YoY(3 of 10 reporting) +499.8% unch.
• NYSE FANG+ Blended Forward 12 Months Mean EPS Estimate 1,095.86 +.15: Growth Rate +63.2% unch., P/E 16.9 +.2
• Bloomberg US Financial Conditions Index .86 +6.0 basis points
• US Yield Curve 25.75 basis points (2s/10s) -1.25 basis points
• Bloomberg Industrial Metal Index 176.0 +1.3%
• Dutch TTF Nat Gas(European benchmark) 96.81 euros/megawatt-hour +.1%
• US Recession Within 6 Months Probability(3M/18M Forward Yld Curve Spread) 11.6% +.8%
• US Atlanta Fed GDPNow Q3 Forecast +3.4% -.1 percentage point
• US 10-Year T-Note Yield 5.0% +1.0 basis point
• 1-Year TIPS Spread 2.64 -4.0 basis points

• Highest target rate probability for Dec. 9th FOMC meeting: 78.0% (+5.2 percentage points) chance of 4.0%-4.25%. Highest target rate probability for Jan. 27th meeting: 52.4%(-.4 percentage point) chance of 4.0%-4.25%. (current target rate is 3.75-4.0%)
  

Overseas Futures:

• Nikkei 225 Futures: Indicating +1,170 open in Japan 
• China A50 Futures: Indicating +80 open in China
• KOSPI 200 Futures: Indicating +19 open in South Korea 

• DAX Futures: Indicating +150 open in Germany

Portfolio:

• Higher: On gains in my tech/industrial/biotech sector longs 
• Disclosed Trades: Covered some of my (QQQ) hedges, then added them back
• Market Exposure: 75% net long

Bear Radar

 Style Underperformer:

• Mid-Cap Value -.1%

Sector Underperformers:

• 1) Energy -3.8% 2) Gambling -2.4% 3) Computer Services -1.9%

Stocks Falling on Unusual Volume: 

• WING, PSO, MG, BMI, HUBB, AWI, BRO, CTAS, HSBC, HCA, AVLN, WELL, EEFT, AIT, UNF, BA, XYL and INOD

Stocks With Unusual Put Option Activity:

• 1) CDNS 2) CART 3) CMG 4) CNC 5) BA

Stocks With Most Negative News Mentions:

• 1) AWI 2) DKS 3) PZZA 4) UNCY 5) ONON

Sector ETFs With Most Negative Money Flow:

• 1) DRAM 2) ARKG 3) XBI 4) XLP 5) IYZ

Charts:

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