Pre-market market movements. On Thursday, October 29, US stock index futures were mixed ahead of the opening bell. As of press time, Dow futures were up 0.02%, S&P 500 futures were down 0.15%, and Nasdaq futures were down 0.92%.
As of press time, Germany's DAX index was up 1.06%, the UK's FTSE 100 was up 0.48%, France's CAC 40 was up 1.03%, and the Euro Stoxx 50 was up 0.40%.
As of press time, WTI crude oil was down 1.31% at $101.43 per barrel. Brent crude was down 1.33% at $110.16 per barrel.
Market News
US third-quarter GDP and September PCE data are coming! The US Bureau of Economic Analysis will release the preliminary estimate of third-quarter GDP alongside September PCE data tonight. These two major data releases arrive just as the Federal Reserve has decided to keep the federal funds rate target range unchanged at 3.75% to 4.00%. The market broadly expects US third-quarter real GDP annualized growth to accelerate sharply to 3.2% from 2.2% in the second quarter. As the Fed's preferred inflation gauge, the September PCE price index is likely to remain above the official 2% target for the 68th consecutive month, meaning elevated inflation has persisted for nearly six years. The market expects headline PCE to rise 0.5% month-over-month in September, affected by higher crude oil prices, with the year-over-year rate rebounding to a range of 3.6% to 3.7% from 3.4% last month. Core PCE, which strips out food and energy, better reflects persistent inflation pressure in services and other sectors. The market anticipates September core PCE to rise 0.3% month-over-month, with the year-over-year rate edging up to 3.1% from 3.0%. If third-quarter GDP ultimately exceeds 3.2% and core PCE breaks above 3.1%, this combination would send a dual signal of economic resilience and accelerating inflation. If the labor market shows no substantive deterioration before the December 8-9 monetary policy meeting, Fed officials will find it difficult to justify delaying further tightening.
Six Years of Inflation Pressure and Two Dissenting Votes: A December Rate Hike Is "Locked and Loaded," with Another Possible in March Next Year?
Fed Chairman Warsh on Wednesday kept the Fed on track to raise rates again this year, though he insisted on refusing to provide any clear guidance on the future policy path. Within his self-imposed communication boundaries, Warsh signaled through his assessment of a strong economy and warnings about persistent inflation that the Fed's mission is not yet complete. This stance reinforced market expectations that after holding steady on Wednesday, officials will raise borrowing costs in December and could hike once more in early 2027. For Deutsche Bank Senior US Economist Brett Ryan, Warsh's refusal to call financial conditions "tight," combined with his optimistic assessment of growth, effectively confirms the Fed's September projection of "one more hike this year." "He is saying they will tighten further, just not saying it explicitly," Ryan noted.
Nomura Report Reveals "AI Growth Panic" Is Fading! Earnings Delivery and Capital Flows Fuel Tech Stock Rebound Led by AI Computing Theme
The latest research report from Nomura cross-asset strategist Charlie McElligott shows that the AI trading theme is emerging from a previous round of AI computing and tech growth panic, which was amplified by concerns over surging AI financing costs, overcrowded positioning, and accelerated hedge fund deleveraging. The strategist emphasized that large-scale AI financing finding takers, semiconductor giants and the two major cloud computing giants broadly delivering strong results, and Anthropic's IPO filing disclosure have collectively eased the two-week-old "AI growth panic," while the clearing of crowded positions and excessive leverage has also created conditions for a market recovery.
Middle East Tensions Flare Again: Iran Rejects Ceasefire Draft, US Reportedly Planning Post-Election Military Action Against Iran
According to media reports, Tehran cannot accept the ceasefire proposal draft submitted by Qatar this week and has made clear it will not make any concessions on the nuclear issue. The US has notified multiple Gulf Arab states through diplomatic and military channels to prepare for a "short and intense military operation" after the US midterm elections on November 3. In the previous week, Houthi forces launched multiple rounds of missile and drone attacks on Saudi Arabia's Ministry of Defense, two international airports, and oil facilities. The charter cost for very large crude carriers from the Arabian Gulf to the Mediterranean has doubled from $16 per barrel to $32 per barrel.
Individual Stock News
AI Sparks "Optical" M&A: Marvell Technology (MRVL.US) Eyes Lumentum (LITE.US), Potentially Ranking Among Top Ten Largest Tech Deals in History. According to people familiar with the matter, Marvell Technology is in advanced talks to acquire data center optical component maker Lumentum. In the race to scale up in artificial intelligence, this could become a heavyweight deal. If the acquisition of Lumentum succeeds, the transaction could rank among the top ten largest tech and telecom M&A deals ever. Lumentum produces lasers and other optical technologies used to transmit massive amounts of data at extremely high speeds. This hardware underpins the AI boom, enabling data centers and telecom companies to transmit information between servers, facilities, and other locations. Marvell is a semiconductor manufacturer that purchases lasers from Lumentum, so the deal could simplify its supply chain. Marvell has been increasing its bets on optical and photonic technologies that connect data center equipment. Earlier this year, the company acquired photonics firm Celestial AI. As of press time, in Thursday's pre-market session, Marvell Technology fell over 11%, while Lumentum rose nearly 6%.
Alphabet (GOOGL.US) Q3 Cloud Revenue Surges 103% Year-over-Year, Free Cash Flow Turns Negative, Shares Plunge Pre-Market. The earnings report showed Alphabet Q3 total revenue of $127.6 billion, up 25% year-over-year but below the market expectation of $128.2 billion. Operating profit was $40.6 billion, up 30% year-over-year. Earnings per share came in at $2.12, below the market expectation of $2.99. Google Cloud was the biggest highlight of the quarter, with revenue reaching $30.709 billion, surging 103% from $15.157 billion a year earlier and hitting a record high. Google said the strong cloud growth was mainly driven by continuously expanding demand for enterprise AI infrastructure, enterprise AI solutions, and core cloud services under Google Cloud Platform (GCP). Additionally, TPU system sales also contributed significantly to revenue growth. Google is building AI infrastructure for itself and its customers, pushing capital expenditures to record levels. Investors are increasingly pressuring the company to prove that this spending is generating returns. The company's Q3 equity investments generated an $8.7 billion loss, dragging down net income. This contrasts sharply with investment gains recorded a year earlier and a massive gain in the second quarter, which largely came from its stakes in SpaceX and Anthropic. Affected by increased TPU inventory and a $5.2 billion EU fine, free cash flow for the quarter was negative $9.1 billion, marking the second consecutive quarter of negative free cash flow. The company maintained its full-year 2026 capital expenditure guidance of $195 billion to $205 billion and expects capital expenditures to continue rising significantly in 2027. As of press time, Alphabet was down nearly 11% in Thursday's pre-market session.
Microsoft (MSFT.US) Q1 Revenue Rose 19% Year-over-Year to Nearly $92.3 Billion, Azure Revenue Jumped 48%. Data showed the company's quarterly revenue reached $92.279 billion, up 19% year-over-year, exceeding the market expectation of 17% growth. Non-GAAP adjusted net income reached $36.422 billion, up 18% year-over-year. Adjusted earnings per share were $4.89, up from $4.13 a year earlier, representing 18% year-over-year growth. The cloud computing business continued to be an important driver of Microsoft's performance growth. In the first fiscal quarter, Microsoft Azure revenue reached $33.165 billion, up 48% from $22.384 billion a year earlier, also exceeding the market expectation of 44% growth, reflecting continuously expanding enterprise demand for cloud computing and AI infrastructure. In terms of cash flow, Microsoft's first-quarter operating cash flow reached $58 billion, up about 29% from $45.057 billion a year earlier. Meanwhile, the company continued to increase infrastructure investment. Capital expenditures for property and equipment purchases in the quarter reached $39.367 billion, up about 103% from $19.394 billion a year earlier. As of press time, Microsoft was up nearly 2% in Thursday's pre-market session.
DoorDash (DASH.US) officially announced the acquisition of Instacart. The two parties agreed to acquire Instacart at $65 per share, with a total equity value of approximately $17 billion. At least 75% of the total transaction consideration will be paid in cash, and Instacart shareholders can choose cash, DoorDash stock, or a combination of both.
Dual Inflection Points in AI Foundry and Advanced Packaging Drive Growth as KLA Corporation (KLAC.US) Posts Tenth Consecutive Quarter of Revenue Growth, Q2 Guidance Beats Expectations. The earnings report showed the company's quarterly revenue was $4.136 billion, up 28.9% year-over-year, above the market expectation of $4.04 billion. Revenue has now grown year-over-year for 10 consecutive quarters. Non-GAAP diluted earnings per share were $1.22, above the expected $1.18. Guidance was the biggest highlight of this earnings report: the company expects December quarter revenue of $4.7 billion plus or minus $200 million, with the midpoint about 4.8% above the consensus estimate, implying year-over-year growth of approximately 42.5%. Non-GAAP diluted earnings per share guidance was $1.44 plus or minus $0.11, also above expectations. The midpoint of this guidance represents approximately 14% sequential revenue growth from this quarter, indicating strong confidence in the sustainability of AI-driven demand. As of press time, KLA Corporation was up nearly 4% in Thursday's pre-market session.
ServiceNow (NOW.US) Q3 Net Income Fell Nearly 45% Year-over-Year to $277 Million. Data showed the company's quarterly revenue reached $4.106 billion, up 20.5% year-over-year and up 20% at constant currency. GAAP net income was $277 million, down about 45% from $502 million a year earlier. GAAP diluted earnings per share were $0.27, down from $0.48 a year earlier. As ServiceNow's largest revenue source, subscription revenue in the third quarter reached $3.988 billion, up 21% year-over-year and up 20.5% at constant currency. Professional services and other revenue was $118 million, up 10% year-over-year. As of the end of September, the company's current remaining performance obligations (cRPO) reached $13.65 billion, up 20.5% year-over-year. Total remaining performance obligations (RPO) reached $29.7 billion, up 22% year-over-year. AI business became a key highlight of ServiceNow's quarterly report. The company announced it would further raise its 2026 AI annual contract value (ACV) target to $1.7 billion, a 70% increase from the $1 billion target set at the beginning of the year. This marks the second time ServiceNow has raised this target this year. As of press time, ServiceNow was down over 19% in Thursday's pre-market session.
Fortinet (FTNT.US) Q3 Results Beat Expectations, Yet Shares Plunge Pre-Market. The earnings report showed Fortinet achieved total third-quarter revenue of $2.08 billion, up 20% year-over-year, exceeding the market expectation of $2.06 billion. Billings, which reflect backlog orders, reached $2.34 billion, up 29% year-over-year. It is worth noting that the 20% year-over-year revenue growth, while not low in absolute terms, showed signs of deceleration compared to previous quarters. Non-GAAP diluted earnings per share were $0.91, above the market expectation of $0.86. Cash flow was another highlight of this earnings report. Third-quarter operating cash flow reached $946 million, free cash flow was $865 million, and the free cash flow margin was as high as 41.6%. The company raised its 2026 revenue guidance to $8.125 billion to $8.215 billion, billings guidance to $9.568 billion to $9.718 billion, and Non-GAAP diluted earnings per share expectation to $3.54 to $3.58. This is the company's third increase to its billings guidance this year, highlighting management's confidence in demand sustainability. However, due to stretched valuations, decelerating revenue growth, and underperformance in the services segment, as of press time, Fortinet was down nearly 26% in Thursday's pre-market session.
STMicroelectronics (STM.US) Q3 Results Mixed with Guidance Beating Expectations, Growth Supported by AI and Satellite Communication Demand. Data showed the company's third-quarter revenue was $3.76 billion, up 17.9% year-over-year, exceeding market expectations. Non-GAAP earnings per share were $0.37, slightly below market expectations. Looking ahead, the company expects fourth-quarter revenue midpoint of $4.15 billion, up about 10.5% sequentially, above the market expectation of $4.12 billion. Gross margin is expected to be 39.0%, compared to the market's previous estimate of 38.2%. STMicroelectronics' customers include Apple and Tesla. CEO Jean-Marc Chery said in July that fourth-quarter revenue would accelerate, driven by AI data center and low-earth-orbit satellite communication demand. However, investors remain cautious about the semiconductor sector, concerned about the sustainability of AI infrastructure spending and competition from Chinese chipmakers.
FedEx (FDX.US) Delivers First Report Card After Freight Spin-Off: Revenue and Profit Beat Expectations, Full-Year Guidance Raised. The earnings report showed FedEx third-quarter revenue of $22.9 billion, up about 12% from $20.4 billion a year earlier, above the market expectation of $22.42 billion. On profitability, adjusted operating income was $1.2 billion, with an adjusted operating margin of 5.3%. Adjusted earnings per share were $3.74, up about 28% from $2.93 a year earlier, beating the market expectation of $3.36. The company's net income for the quarter was $290 million, down from $650 million a year earlier. The sharp fluctuation in net income was mainly affected by one-time items, including losses related to short-term investments, debt extinguishment gains, and certain restructuring costs. Based on strong quarterly performance, FedEx raised its 2026 calendar year adjusted earnings per share guidance from the previous $16.90 to $18.10 to $18 to $18.60. It also raised its 2026 revenue growth forecast from the previous 11% year-over-year growth to approximately 12%.
Commodity Cost Headwinds Intensify to $2.5 Billion, Yet Ford Motor (F.US) Q3 Core Profit Still Edged Up 4%, Full-Year Guidance Lower Bound Raised. The earnings report showed the company's quarterly revenue was $49.5 billion, down 2% year-over-year. Adjusted earnings per share were $0.49, up 9% year-over-year, beating the consensus estimate of $0.40. Core profitability metrics edged up against the headwinds: adjusted EBIT was $2.7 billion, up 4% year-over-year, with an adjusted EBIT margin of 5.4%, up 0.3 percentage points year-over-year. However, quarterly automotive segment revenue was $46.08 billion, slightly below the expected $46.24 billion. Cost discipline and strong demand for pickup trucks and SUVs are helping Ford withstand pressure from inflation and the Iran war. The company raised the lower bound of its full-year adjusted EBIT guidance from $10 billion to $10.5 billion to $11 billion, and increased its full-year commodity cost headwind estimate from about $2 billion to nearly $2.5 billion, with pressure coming from higher copper and steel prices, diesel prices raising freight costs, and chip price increases. The adjusted free cash flow guidance remained unchanged at $6 billion to $7 billion.
Total (TTE.US) Q3 Profit Doubled to $9.1 Billion, Refining Margins Soared to Historic Highs. Total's Q3 results showed that benefiting from reduced global refined product supply after the US-Israel war with Iran, Q3 adjusted net income was $9.1 billion, the highest level since the first quarter of 2022, up 127% year-over-year and 51% quarter-over-quarter, above the $8.3 billion consensus estimate from 12 analysts compiled by LSEG. IFRS net income was $8.26 billion, more than doubling year-over-year and setting a quarterly record. The downstream business was a major highlight of the quarter, driven by European refining margin indicators rising to $33.2 per barrel (2.5 times quarter-over-quarter) and refinery throughput increasing nearly 10%, downstream adjusted net operating income reached $4.07 billion, up 77% quarter-over-quarter, setting a quarterly record. Total reiterated its $25 billion share buyback plan for the fourth quarter and said it would repurchase another $25 billion in the first quarter of 2027, at the high end of the guidance range given last month. As of press time, Total was up over 2% in Thursday's pre-market session.
Shell (SHEL.US) Q3 Profit Beat Expectations to Hit Second-Highest in History, Quarterly Buyback Increased to $5 Billion. The earnings report showed Shell's Q3 non-GAAP adjusted net income was $10.814 billion, up 99% year-over-year, above analysts' forecast of approximately $10.33 billion. This was the company's highest quarterly profit since the initial months following the full-scale Russia-Ukraine war in early 2022, and its second-highest quarterly earnings in history. The surge in profit this period is directly attributable to geopolitics: the Iran war and the Russia-Ukraine conflict have temporarily halted a significant portion of global fuel production capacity, allowing still-operating refineries to enjoy excess profits. The supply gap in diesel, gasoline, and other refined products has translated into windfall gains for remaining producers. Alongside profit, shareholder returns were also increased: the fourth-quarter share buyback scale was significantly raised from $3 billion to $5 billion. With two wars pushing refining margins to historic highs and the downstream business recording its strongest quarterly performance ever, management chose to accelerate returning this windfall to shareholders. As of press time, Shell was up over 3% in Thursday's pre-market session.
New Drug Combinations Drive Growth as Bristol-Myers Squibb (BMY.US) Q3 Results Beat Expectations. Thanks to continued volume growth from its "Growth Portfolio" products, the company's Q3 results exceeded expectations, and it raised its full-year revenue guidance. Data showed Bristol-Myers Squibb third-quarter total revenue was $13.069 billion, up 7% year-over-year, better than market expectations. Among this, US market revenue was $9.074 billion, up 9% year-over-year. International market revenue was $3.995 billion, up 3% year-over-year. By product portfolio, "Growth Portfolio" revenue was $7.662 billion, up 12% year-over-year, mainly driven by products including Opdivo Qvantig, Breyanzi, Reblozyl, Camzyos, and Opdualag. Non-GAAP diluted earnings per share were $1.35, down from $1.63 a year earlier but still better than market expectations. Bristol-Myers Squibb raised its full-year 2026 revenue guidance from the previous approximately $49 billion to $50 billion to approximately $49.75 billion to $50.25 billion, mainly reflecting broad-based continued growth momentum across its product portfolio.
Eli Lilly (LLY.US) Q3 Results Beat Expectations, Full-Year Revenue Guidance Raised to $91 Billion to $92 Billion. The earnings report showed Eli Lilly Q3 revenue was $24.397 billion, up 39% year-over-year, above the LSEG expectation of approximately $22.6 billion, with volume growth of 53% and realized price decline of 15%. Non-GAAP earnings per share were $7.48, up 7% year-over-year, above the LSEG/IBES expectation of $6.49. Two core products continued to grow volumes: Mounjaro global revenue was $10.723 billion, up 65% year-over-year, and Zepbound was $5.352 billion, up 49%. KeyProducts totaled $17.1 billion, with immunology, oncology, and neuroscience revenue doubling year-over-year. In terms of guidance, full-year revenue guidance was raised from $85 billion to $87 billion to $91 billion to $92 billion, and the performance margin was raised from 49.0% to 50.5% to 52.0% to 52.5%. However, underlying earnings improvement was offset by acquired R&D expenses, and full-year adjusted earnings per share guidance was lowered from $35.50 to $36.50 to $35.00 to $36.00. As of press time, Eli Lilly was up over 4% in Thursday's pre-market session.
Merck (MRK.US) Q3 Results Beat Expectations: Keytruda and Gardasil Perform Well, Full-Year Guidance Raised. The earnings report showed Merck Q3 total revenue was $18.085 billion, up 5% year-over-year (up 4% excluding currency effects), above the LSEG-compiled analyst average estimate of $17.31 billion. Adjusted earnings per share were $2.49, far exceeding the expected $2.08. The company also raised its full-year guidance on the same day: the low end of its 2026 revenue range was lifted from $66.3 billion to $66.8 billion, and full-year adjusted earnings per share guidance was raised from $2.66 to $2.76 to $2.77 to $2.82. However, this "beat" contained a caveat the company itself pointed out: approximately $550 million of the quarterly pharmaceutical sales growth came from procurement timing, meaning customers purchased ahead of schedule. Based on official data, the quarterly total revenue increase was approximately $809 million, of which about 70% was not new demand but demand pulled forward.
Caterpillar (CAT.US) Q3 Results Beat Expectations, Yet Shares Plunge Pre-Market. Driven by volume growth and price realization, Caterpillar Q3 sales and revenue were $20.68 billion, up 17% year-over-year. Adjusted earnings per share were $7.20, above the market expectation of approximately $7.03. All three major segments grew. Energy and Transportation segment sales were $8.78 billion, up 18% year-over-year. Construction Industries sales were $7.98 billion, up 18% year-over-year. Resource Industries sales were $4.62 billion, up 15% year-over-year. The company said its backlog reached a record high again but did not disclose the specific amount, nor did it provide quantitative full-year guidance in the press release. As of press time, Caterpillar was down over 9% in Thursday's pre-market session.
Lloyds (LYG.US) Q3 Pretax Profit Beat Expectations, Impairment Charges Surged 78% Year-over-Year. Lloyds third-quarter profit exceeded market expectations, mainly driven by growth in net interest income and fee income, and the bank maintained its full-year guidance. Data showed that in the three months ended September 30, Lloyds net interest income was 3.8 billion pounds (approximately $5.1 billion), up 10% year-over-year, in line with expectations. Quarterly pretax profit was 2.33 billion pounds, above the analyst average estimate of 2.29 billion pounds. CEO Charlie Nunn said in a statement that the bank has "continued revenue growth, improving operating leverage, and strong and stable credit performance." Quarterly underlying impairment charges rose to 313 million pounds, up 78% year-over-year, reflecting a "deteriorating economic outlook" and the impact of rising interest rates.
Volume and Price Both Rising as Linde PLC (LIN.US) Q3 Results Beat Expectations. Thanks to volume growth and pricing improvement across all regions, Linde PLC Q3 sales and adjusted earnings both exceeded expectations. Data showed the company's third-quarter sales were $9.404 billion, up 9% year-over-year, exceeding analysts' expectations of $9.14 billion. Underlying sales grew 5% year-over-year, mainly driven by 3% price increases and 2% volume growth, with growth concentrated in electronics, chemicals and energy, and manufacturing end markets. Adjusted net income was $2.122 billion, up 7% year-over-year. Adjusted diluted EPS was $4.59, up 9% year-over-year, exceeding analysts' expectations of $4.52.
Key Economic Data and Event Preview
Beijing time 20:30 US September personal spending month-over-month. Beijing time 20:30 US September PCE price index. Beijing time 20:30 US third-quarter real GDP annualized preliminary estimate. Earnings preview for Friday morning: Amazon (AMZN.US), Intel (INTC.US), SanDisk (SNDK.US), Starbucks (SBUX.US), Gilead Sciences (GILD.US), Coinbase (COIN.US), Pinterest (PINS.US), Roblox (RBLX.US), Vale (VALE.US). Friday pre-market: BP (BP.US), Exxon Mobil (XOM.US), Chevron (CVX.US), AbbVie (ABBV.US), Regeneron Pharmaceuticals (REGN.US).
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