Ten Stories Moving the Market

Ten Stories Moving the Market:

Microsoft posted increasing growth in its cloud business and kept its capital expenditures in check, satisfying investors amid a drumbeat of concern that spending on artificial intelligence won’t pay off – Bloomberg. (Why you should care – Azure sales grew 48% compared to Wall Street’s expectation for 44%, and are expected to grow 50% in the current quarter)

Alphabet’s search and advertising sales disappointed in the most recent quarter, reinforcing investors’ fears that Google is losing ground to AI rivals despite pouring hundreds of billions of dollars into the technology – Reuters. (Why you should care – the company reported negative free cash flow of $9.07 billion compared to expectations for near breakeven)

Marvell Technology is in advanced talks to buy data center optics maker Lumentum Holdings, a potential megadeal amid the race to scale up in the artificial intelligence sector; a deal could be announced as soon as next week – Bloomberg. (Why you should care – an announcement is likely to spur demand for shares of other optical networking companies like Coherent, Applied Optoelectronics, and Ciena, among others)

Oracle said it expects capital spending to peak this fiscal year and next as it builds more cloud-computing capacity, sees free cash flow turning positive in the second half of fiscal 2028, and pledged to raise no more than $20 billion in additional AI financing through fiscal 2030 - Reuters. (Why you should care - The financing cap and a clear timeline to positive cash flow should ease fears that AI buildouts are being funded by ever-rising debt, a key worry hanging over AI infrastructure stocks)

The Federal Reserve held interest rates steady after last month’s increase, buying time to decide whether more rate hikes are needed to keep energy costs and an artificial-intelligence building boom from seeping into broader inflation – WSJ. (Why you should care - the Fed upgraded its assessment of the economy, noting that activity is "expanding at a strong pace," domestic spending remains resilient, and capital investment is robust, led largely by high-tech and artificial intelligence infrastructure)

Federal Reserve Chairman Kevin Warsh said the central bank will hold rate decisions at seven of its eight meetings in 2027, using one to discuss “broad monetary policy strategy” without a vote or policy statement, and will move to six rate decisions and two strategy meetings in 2028 - Bloomberg. (Why you should care - Fewer rate decisions, combined with less forward guidance, mean each remaining meeting carries more weight and could bring bigger market moves around the decisions)

FedEx is paying more to hire extra truckers, a cost that weakened margins in ‌its core U.S. express delivery segment in the third quarter and is expected to hit even harder in the holiday season quarter, according to the package delivery firm – Reuters. (Why you should care – investors rotating out of AI into “real economy” stocks for safety may find rising labor and transportation costs squeezing margins there instead)

ServiceNow said quarterly subscription revenue will grow as much as 23% in the current period, about in line with Wall Street estimates; current remaining performance obligations will expand more than 18% in the period ending in December, compared with the expectation for 19% - Bloomberg. (Why you should care – the company said annual contract value for AI customers will hit $1.7 billion by year end compared to the $1.5 billion forecast just three months ago)

At a time investors are uneasy about rising government debt loads, the U.K. unveiled a budget that slightly reduces the country’s fiscal shortfall, but puts off any major policies to reduce debt or get the sluggish economy growing faster; U.K. Chancellor John Healey unveiled modest tax rises and spending increases that will see Britain’s budget deficit narrow slightly to 4.2% of economic output for the current fiscal year that runs through March, down from 4.4% this past year – WSJ. (Why you should care – the decision highlights the difficult problems facing other European nations ahead of elections next year)

Italian Prime Minister Giorgia Meloni’s governing coalition approved a budget for next year that complies with EU fiscal rules, amid mounting concerns about potential contagion from France’s deepening debt crisis – FT. (Why you should care - a rules-compliant budget helps shield Italian bonds from French debt contagion, easing fears of a wider eurozone bond selloff)

Economic Calendar:

Earnings: AMZN, LLY, MA, INTC, MRK, CAT, LIN, GILD, SNDK, BMY, MO, SYK, SBUX, TT, ICE, PWR, MDLZ, HWM, RSG, AJG, DLR, CRH, MPWR, XEL, LHX, CARR, AMP, COIN, DHI, ILMN, TWLO, WEC, RMD, HSY, VMC, CTSH, WTW, DXCM, EME, IR, ARES, RDDT, WST, VLTO, INCY, TROW, EIX, BG, FSLR, LNT, FDXF, KIM, GDDY, WY, AVY, ERIE, TXT, BAX, DVA, HII, AOS, NCLH

U.S. - GDP for 3Q (8:30 a.m.)

U.S. - PCE Price Index for September (8:30 a.m.)

U.S. - Personal Income and Spending for September (8:30 a.m.)

U.S. - Initial Jobless Claims (8:30 a.m.)

U.S. - Continuing Claims (8:30 a.m.)

European Central Bank Monetary Policy Announcement (9:15 a.m.)

ECB’s Lagarde (President) Speaks (9:45 a.m.)

Bundesbank's Mauderer (Vice President) Speaks (10:30 a.m.)

U.S. - EIA Natural Gas Storage (10:30 a.m.)

Treasury Auctions $44 Billion in 7-Year Notes (1 p.m.)

Fed's Balance Sheet Update (4:30 p.m.)

Japan - Tokyo CPI for October (7:30 p.m.)

Japan - Industrial Production for September (7:50 p.m.)

Bank of Japan Monetary Policy Announcement (11 p.m.)