Pre-market market developments. 1. On Friday, October 30, before the US market opened, the three major US stock index futures were trading mixed. As of press time, Dow futures rose 0.09%, S&P 500 Index futures fell 1.05%, and Nasdaq futures dropped 2.53%. 2. As of press time, Germany's DAX Index fell 0.65%, the UK's FTSE 100 Index rose 0.18%, France's CAC 40 Index gained 0.08%, and the Euro Stoxx 50 Index declined 0.93%. 3. As of press time, WTI crude oil rose 2.05% to $104.09 per barrel. Brent crude oil climbed 2.22% to $113.26 per barrel.
Market news: The AI trade has cooled significantly, and safe-haven buying is flowing into US Treasuries! The "anchor of global asset pricing" is on track for its first monthly decline in eight months. The AI computing and semiconductor stocks are experiencing a sell-off, and US Treasuries are once again demonstrating their portfolio hedging value. During Asian trading hours on October 30, US Treasuries extended gains, with the 10-year yield briefly falling to around 4.90%. The US benchmark Treasury yield has declined nearly 40 basis points cumulatively in October, on track to record its first monthly decline since February of this year. Meanwhile, the Bloomberg US Treasury Return Index has risen about 2% for the month, on pace for its best monthly performance since February 2025. The former measures yield changes, while the latter measures bond investment returns. Together, these two sets of data point to one conclusion: US Treasuries are absorbing strong safe-haven demand triggered by declining risk appetite in tech stocks.
Bank of America misjudged the Fed's October rate decision and maintained a hawkish outlook: two more rate hikes expected by March next year. Bank of America believes that future inflation trends may still force the Fed to take further action, and the Fed will raise rates two more times in the coming months, pushing the federal funds rate target range up to 4.25% to 4.5% by March 2027. This forecast was adjusted after the Fed's October meeting decided to pause rate hikes, and it keeps the bank among the more hawkish institutions on Wall Street regarding the monetary policy outlook. Bank of America economists now expect the Fed to raise rates by 25 basis points each in December 2026 and March 2027, and then hold rates in the 4.25% to 4.5% range until the end of 2027. Previously, the bank had expected the Fed to hike rates at the October meeting. Bank of America also believes that the Fed statement signals a desire to adjust policy at a more gradual pace, because policymakers are still uncertain about how restrictive current interest rates are for the economy. The bank also warned that if Warsh is neither willing to provide policy guidance nor use practical actions to surprise the market, his influence could gradually diminish.
Has Warsh's rate hike pause left a "mess"? The market is turning its attention to the Treasury Department's quarterly financing plan next week. The US Treasury Department's quarterly financing plan, to be released next week, is drawing intense market attention. Investors expect the Treasury to adjust the structure of government bond issuance to provide some buffer for the Fed's decision to pause rate hikes in October, especially against the backdrop of still-high inflation and strong US economic growth. Gennadiy Goldberg, head of US rates strategy at TD Securities, and his team expect the Treasury may signal next week that it will reduce the auction sizes of 10-year and 30-year Treasuries next year. At the same time, the Treasury may increase issuance of 2-year to 10-year notes to ease the pressure from rising long-term bond yields. If the Treasury adjusts the issuance structure by reducing long-term bonds and increasing the supply of medium- and short-term notes, the practical effect would be to ease supply pressure in the long-term bond market and thereby push down long-term Treasury yields. Lower long-term yields would help reduce mortgage costs, control corporate financing expenses, and also lighten the interest burden the US government bears to fund the fiscal deficit.
Tech stocks endured a brutal October, and hedge fund short selling is becoming a risk amplifier! Bigger volatility may be lurking in the AI trade. Tech stocks pulled back 8% in October, yet hedge funds did not respond by fully exiting AI trades. Instead, they adjusted their risk hedging strategies. Strategist Simon White pointed out that funds are reducing short positions in individual stocks and instead shorting the Nasdaq index through index tools such as QQQ. This change may appear to be merely a trading strategy adjustment, but it could alter the volatility mechanism of the entire market. Previously, relatively low correlation among individual stocks helped suppress the VIX index. Even as tech companies kept borrowing heavily to finance massive AI capital expenditures, overall market volatility remained relatively mild. Now, hedging at the index level is increasing, and the likelihood of stocks moving in the same direction is also rising. Crowded trades, leverage, and correlation are all climbing at the same time, which could expose risks that were previously masked by the low-volatility environment.
ANZ raised its oil price forecast to $105, saying even a Middle East ceasefire cannot stop oil prices from rising. ANZ on Friday raised its Brent crude oil price forecast, arguing that the eight-month Iran war has significantly weakened the global oil market's ability to respond to supply shocks. Even if the Middle East situation does not escalate further, transportation restrictions, refining bottlenecks, and falling inventories may still keep supply tight. ANZ raised its year-end Brent crude price forecast from $95 per barrel to $105 per barrel, on the premise that the Middle East conflict does not see a new round of escalation. ANZ noted that although oil transportation flows through the Strait of Hormuz have largely recovered, the related transport efficiency is only about 60% of pre-war levels. This means that the recovery in crude oil export flows has not yet brought about a synchronized normalization of the entire supply chain. Transportation capacity, shipping arrangements, and refining links still face constraints, making actual deliveries persistently difficult. Even if logistics conditions do not worsen further, the current delivery tightness, especially restrictions in the shipping sector, may make it difficult for the global oil market to rebuild inventories.
Individual stock news: US tech stocks are broadly declining in pre-market trading. On Friday before the US market opened, as of press time, Intel (INTC.US) plunged nearly 26%, while AMD (AMD.US) and SanDisk Corp. (SNDK.US) fell more than 8%. Amazon.com (AMZN.US), SK Hynix (SKHY.US), Seagate Technology (STX.US), and Western Digital (WDC.US) dropped more than 7%. Micron Technology (MU.US) fell more than 5%, while Qualcomm (QCOM.US), SpaceX (SPCX.US), and Broadcom (AVGO.US) declined more than 4%. TSMC (TSM.US) and Oracle (ORCL.US) fell nearly 4%, and Nvidia (NVDA.US) dropped nearly 3%. In optical communications stocks, Credo Technology (CRDO.US) and Coherent (COHR.US) fell more than 8%, while Astera Labs (ALAB.US) and Corning (GLW.US) declined more than 6%, and Marvell Technology (MRVL.US) dropped nearly 6%.
Intel (INTC.US) Q4 guidance fell far short of expectations, with the PC business remaining weak. The earnings report showed that Intel's Q3 revenue rose 21% year-over-year to $16.5 billion billion, and adjusted earnings per share were 52 cents, both above market expectations. The performance across business segments was clearly divergent. The Data Center and AI (DCAI) segment became the core growth engine, with Q3 revenue of $7.318 billion, surging 78% year-over-year, and operating profit of $3.039 billion, with a margin of 41.5%. The Client Computing and Physical AI group (CCPG), related to personal computers (PC), performed weakly, with revenue of $8.097 billion, down 5% year-over-year, and operating profit also contracting. Management said demand for server CPUs is high, but supply has become the biggest constraint, and the company is easing tight supply of Xeon processors by increasing factory capacity and improving yields. The company also said it expects the PC market slowdown to last at least until the first half of 2027. In terms of guidance, the company expects fourth-quarter revenue of $15 billion to $16 billion and adjusted earnings per share of 25 cents, both significantly below expectations. The pressure on results was partly due to an explosion at its Israel factory, which is expected to reduce Q4 revenue by about $300 million and lower gross margin by about 200 basis points. The company also raised its 2026 capital expenditure forecast from $18 billion to $20 billion and expects a further increase in 2027.
Amazon.com (AMZN.US) Q3 revenue slightly missed expectations, AWS revenue surged 39%, capital expenditure far exceeded expectations, and free cash flow turned negative. The earnings report showed that Amazon.com's Q3 net sales rose 12% year-over-year to $201.94 billion, slightly below market expectations. Diluted earnings per share were $1.89, down about 3% year-over-year. Core AWS revenue rose 39.3% year-over-year to $45.98 billion, the highest single-quarter growth rate in nearly five years, with an operating margin of 38.7%. On the earnings call, CEO Andy Jassy expected AWS growth to exceed 40% in both 2027 and 2028, with annual revenue potentially exceeding $1 trillion over the next 5 to 10 years, calling AI a "once-in-a-lifetime opportunity." At the same time, e-commerce revenue growth slowed, and the company's holiday season sales outlook suggests that the online business may struggle to rebound quickly. Third-quarter capital expenditure reached $77.26 billion, far above market expectations of $57.47 billion. Free cash flow over the past 12 months was negative $42.36 billion. Looking ahead to Q4 2026, Amazon.com expects net revenue of $240 billion to $247 billion, up 12% to 16% year-over-year. It expects operating profit of $28.5 billion to $33.5 billion, above the $25 billion in the same period last year. The company maintained its 2026 capital expenditure estimate of about $220 billion and expects spending to increase significantly in 2027.
SanDisk Corp. (SNDK.US) Q1 revenue surged 378% year-over-year to $11 billion, with data center business revenue soaring nearly 17 times. The earnings report showed that driven by surging NAND flash demand from AI infrastructure construction and rising product prices, SanDisk Corp.'s fiscal 2027 first-quarter revenue reached $11.031 billion, up 378% year-over-year and 23% quarter-over-quarter. Adjusted earnings per share were $49.51, up about 26% from $39.25 in the previous quarter, compared with $1.22 in the same period last year. Non-GAAP gross margin reached 85.1%, up 55.2 percentage points from 29.9% in the same period last year and up 0.5 percentage points from 84.6% in the previous quarter. The data center business became SanDisk Corp.'s fastest-growing segment, with revenue of $4.8 billion, up 61% from the previous quarter and surging 1,682% from the same period last year, faster than the company's estimate of overall market growth for the quarter. Looking ahead to the second quarter of fiscal 2027, SanDisk Corp. expects revenue of $12.2 billion to $12.6 billion. Based on the midpoint of $12.4 billion, that would represent about 12% growth from $11.031 billion in the first fiscal quarter. It expects second-quarter GAAP gross margin of 84.4% to 85.4% and non-GAAP gross margin of 84.5% to 85.5%, implying profitability may remain at a high level. It expects second-quarter adjusted earnings per share of $55 to $57. Based on the midpoint of $56, that would represent about 13% growth from $49.51 in the first fiscal quarter.
Starbucks (SBUX.US) Q4 US business rebounded better than expected, but new fiscal year growth guidance slowed to 4%. The earnings report showed that Starbucks Q4 revenue was $9.14 billion, down about 4% year-over-year, below market expectations of $9.22 billion. The decline mainly stemmed from the China retail business no longer being consolidated after shifting to a licensed joint venture model with Boyu Capital. Profitability was strong, with adjusted earnings per share of $0.80, up 54% year-over-year, above analysts' expectations of $0.72. Global same-store sales grew 7.2%, the fifth consecutive quarter of positive growth, above market expectations of about 6%. US same-store sales rose 7.7%, exceeding expectations, helped by store renovations and strong performance of the coffee chain's autumn menu products. North America grew 7.9%. International markets grew only 0.9%, below expectations of 3.2%, as lower transaction volumes offset higher average ticket prices. However, maintaining the current growth rate will become increasingly difficult in the future. Starbucks expects North American same-store sales to grow about 4% in the fiscal year that began in late September, indicating a slowdown after three consecutive quarters of growth above 7%.
Gilead Sciences (GILD.US) Q3 delivered both good and bad news: it raised full-year sales guidance, but Biktarvy will face a 38% US Medicare price cut. The earnings report showed that Gilead Sciences Q3 revenue was $8.3 billion, above market expectations of $7.8 billion. Adjusted earnings per share were $2.55, significantly beating market expectations of $2.19. Driven by double-digit growth in its flagship HIV drug pipeline, Gilead Sciences Q3 product sales rose 13% year-over-year to $8.3 billion, exceeding market expectations. Excluding COVID drug Veklury (remdesivir), "base business" sales rose 16% year-over-year to $8.2 billion, the fastest year-over-year base business growth in more than a decade. Based on the strong performance, Gilead raised its full-year 2026 product sales guidance to $31 billion to $31.3 billion, compared with the previous $30.1 billion to $30.4 billion. As of press time, Gilead Sciences rose more than 5% in Friday's US pre-market trading.
Record monthly active users cannot hide concerns: Pinterest (PINS.US) Q3 revenue and profit both missed expectations, and Q4 guidance was weak. The earnings report showed that Pinterest's third-quarter revenue was $1.174 billion, up 12% year-over-year, below the market average expectation of $1.21 billion. Adjusted earnings per share were $0.46, missing market expectations of $0.49. Adjusted EBITDA was $339 million, also slightly below expectations of $348 million. In the third quarter, Pinterest's global monthly active users rose 10% year-over-year to 661 million, a record high. US and Canada users grew 4% to 107 million. European users rose 7% to 161 million. Users in other regions grew 13% to 394 million. But user growth did not translate into revenue at the same pace. In terms of guidance, Pinterest expects fourth-quarter revenue of $1.425 billion to $1.475 billion, with a midpoint of $1.45 billion, below market expectations of $1.52 billion. Adjusted EBITDA guidance was $538 million to $588 million, also below market expectations of $605 million. As of press time, Pinterest fell more than 9% in Friday's US pre-market trading.
Revenue missed expectations and trading volume halved, while Coinbase (COIN.US) Q3 turned profitable on Bitcoin gains. The earnings report showed that Coinbase Q3 total revenue was $1.216 billion, down about 35% year-over-year and below expectations of $1.233 billion. GAAP net income was $719 million, with diluted earnings per share of $2.51, reversing a prior streak of losses. The market had previously expected a net loss of about $35 million. But profit came almost entirely from $715 million in unrealized gains on its crypto asset investment portfolio, as Bitcoin prices rose about 39% in the third quarter. Transaction revenue was $590 million, halved year-over-year, down 44%, but above market expectations of about $527 million. Subscription and services revenue was $570 million, up 3% quarter-over-quarter and accounting for nearly half of revenue, including $307 million in stablecoin revenue. New businesses became the biggest highlight, with annualized revenue from prediction markets exceeding $200 million, and daily trading users rising more than 60% quarter-over-quarter, making it one of the fastest-growing products in company history. As of press time, Coinbase fell more than 5% in Friday's US pre-market trading.
Roblox (RBLX.US) Q3 daily active users fell below expectations: the pain of child safety reforms continues. Roblox's third-quarter user numbers missed analyst expectations, and people are also questioning whether a new hit game can reverse the recent decline in user engagement caused by stricter child safety measures. The earnings report showed that the company's revenue was $1.572 billion, up 16% year-over-year. Net loss narrowed to $230 million, with a loss per share of $0.32, better than market expectations of $0.42. Adjusted EBITDA was $138 million, far above $46 million in the same period last year. User data became the main drag. Daily active users (DAU) were 138 million, down 9% year-over-year, below analysts' expectations of 145.8 million. User engagement hours were about 34 billion, down 15% year-over-year. Bookings were $1.697 billion, down 12% year-over-year, but above Wall Street expectations of $1.63 billion and the upper end of the company's own guidance. The company attributed the decline to a high base in 2025 and the impact of child safety measures. As of press time, Roblox plunged more than 17% in Friday's US pre-market trading.
Sanofi (SNY.US) Q3 profit far exceeded expectations, with strong Dupixent demand masking patent cliff concerns. Data showed that Sanofi's third-quarter net sales were 14.444 billion euros, up 16.2% year-over-year and up 14.3% at constant exchange rates. Among that, Dupixent sales reached 5.7 billion euros, about $6.4 billion, up 34.8% year-over-year, surpassing 5 billion euros in a single quarter for the second time in history and also above analysts' expectations of 5.2 billion euros, driving profit above expectations. Earnings per share excluding certain items were 3.55 euros, far above analysts' expectations of 2.80 euros. Driven by demand growth for its best-selling skin and asthma drug Dupixent (dupilumab), Sanofi raised full-year sales and profit expectations for the second consecutive quarter. The French drugmaker said Friday that at constant exchange rates, full-year sales are expected to grow at a low double-digit percentage, above the previous forecast of 10%. Earnings per share excluding certain items are expected to grow at a mid double-digit percentage. However, Dupixent's sales performance also highlights Sanofi's deep reliance on the drug. The drug will begin losing patent protection in the early 2030s, and Sanofi has not yet found a credible alternative source of revenue. As of press time, Sanofi rose more than 3% in Friday's US pre-market trading.
AstraZeneca (AZN.US) Q3 profit growth exceeded expectations, with oncology drugs as the main growth driver. At constant exchange rates (CER), AstraZeneca Q3 total revenue rose 7% year-over-year to $16.209 billion, product sales were $15.066 billion, up 5%, and alliance revenue was $1.107 billion, up 36%. Core earnings per share were $2.79, up 19% year-over-year. Reported earnings per share were $2.02, up 26%. According to expectations compiled by MarketBeat, the market had originally expected quarterly core earnings per share of $2.60 and revenue of $16.0 billion, so actual results were about 7% and 1% higher, respectively. Structurally, the oncology business continued to bear the main growth burden: revenue was $7.765 billion, up 17% year-over-year, accounting for 48% of total revenue. The company reiterated its full-year 2026 CER guidance: mid-to-high single-digit growth in total revenue, low double-digit growth in core EPS, and a core tax rate of 18% to 22%. It also plans to raise the full-year dividend to $3.30 per share. As of press time, AstraZeneca rose nearly 5% in Friday's US pre-market trading.
Exxon Mobil (XOM.US) Q3 results exceeded expectations, with a booming refining business as the driver. Exxon Mobil Q3 total revenue and other income were $113.164 billion, up 32.7% year-over-year. Net income attributable to shareholders was $15.413 billion, up 104%. Reported earnings per share were $3.72, up 111%. Adjusted earnings per share were $4.23. According to market consensus expectations, the market had originally expected quarterly adjusted earnings per share of $4.03 and revenue of $106.02 billion, so actual results were about 5% and 7% higher, respectively. The jump in profit mainly came from refining. The Energy Products segment reported profit of $7.169 billion, up 31% quarter-over-quarter, and adjusted profit of $9.053 billion, up 121% quarter-over-quarter. The indicative refining margin for the quarter rose to $50.3 per barrel from $29.0 in the previous quarter, and crude unit utilization at US Gulf Coast refineries reached 100%.
BP (BP.US) Q3 profit soared to an 18-year high: refining became a "money printer," and the CEO's reforms received a strong tailwind. Benefiting from surging refining margins, BP's quarterly profit jumped to its highest level in 18 years, giving CEO Meg O'Neill a strong boost in reforming the UK energy giant. BP said in a statement Friday that third-quarter adjusted net income was $8.46 billion, above $2.21 billion in the same period last year and far exceeding the market's previous expectation of $7.3 billion. More than half of profit came from the segment that includes refining and trading. The customer and products division, which includes oil trading and refining, posted quarterly profit of $4.8 billion, while the division's full-year 2025 profit was $5.3 billion. Net debt fell sharply to $13.87 billion from $22.3 billion three months earlier, exceeding the company's original target by a year ahead of schedule.
High oil prices combined with a strong refining business drove Chevron (CVX.US) Q3 net income up 180% year-over-year. Driven by high oil prices and record US refining margins, the company's earnings rose to the fourth-highest in history and broadly exceeded analyst expectations. The earnings report showed that Chevron's third-quarter net income attributable to shareholders was $9.9 billion, up about 180% from $3.5 billion in the same period last year. Adjusted earnings per share were $5.28, 35 cents above the analyst average estimate. Refining was the key engine behind Chevron's better-than-expected quarter. The segment's third-quarter profit reached $4.93 billion, a record high and about four times the same period last year. Although the company reduced its share buyback scale to $2.5 billion, it remained within the full-year guidance range. In terms of capital allocation, Chevron used excess profit mainly for debt reduction for the second consecutive quarter, more conservative than Shell and Repsol, both of which raised buybacks by more than 65%.
Important economic data and event preview: At 00:00 Beijing time the next day, 2027 FOMC voting member and San Francisco Fed President Daly will deliver remarks at the opening ceremony of the San Francisco Fed's 2026 Economic Research Workshop. At 00:30 Beijing time the next day, 2028 FOMC voting member and St. Louis Fed President Musalem will speak.
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