To The Moon

According to Woofun AI, Wall Street closed Tuesday with a striking divergence, as traditional blue-chip stocks and the healthcare sector led a strong rally that pushed the Dow Jones Industrial Average up by more than 500 points, while tech giants lagged.

After-hours attention quickly shifted to major developments: SpaceX (SPCX.US) reported third-quarter revenue of $14.58 billion, up 161% year over year. At the same time, Musk confirmed that SpaceX and the Tesla (TSLA.US) board have set up a special committee to formally begin merger discussions. Meanwhile, Super Micro Computer (SMCI.US) saw its shares surge about 15.6% in after-hours trading thanks to preliminary results guidance that beat expectations. By contrast, although Netflix (NFLX.US) beat profit expectations, its shares plunged more than 5% after hours due to a bleak fourth-quarter outlook and lowered ad revenue expectations.

As of Tuesday's close in U.S. markets, major indexes moved in different directions. The Dow rose 1.02% to 52,495.88. The S&P 500 edged up 0.28% to 7,712.57. The Nasdaq Composite slipped 0.02% to 26,424.82. The Russell 2000, reflecting small-cap performance, was strong, gaining 1.65% to 2,773.42. Market panic eased somewhat, with the VIX falling 6.13% to 17.31. Among the S&P 500's 11 sectors, nine climbed. Healthcare led with a gain of about 2.3%; real estate rose about 1.7%; utilities and financials each gained more than 1%. Consumer discretionary, consumer staples, materials, energy and industrials also closed higher. The only two declining sectors were communication services, down 0.89%, and information technology, down about 0.3%.

The "Magnificent Seven" stocks were mixed, with five falling and two rising. Meta (META.US) fell 1.59%, Alphabet C (GOOG.US) fell 1.11%, Apple (AAPL.US) fell 1%, Microsoft (MSFT.US) fell 0.31%, and Nvidia (NVDA.US) fell 0.29%. Tesla bucked the trend with a 1.54% gain, while Amazon (AMZN.US) edged up 0.07%. The Philadelphia Semiconductor Index fell 0.29%, with 11 of its 30 components rising and 19 falling. Lam Research (LRCX.US) dropped 3.21%, ARM (ARM.US) dropped 3.07%, and AMD (AMD.US) dropped 0.62%; TSMC (TSM.US) rose 1.16%, and Qualcomm (QCOM.US) rose 1.26%. Storage stocks were mixed: Western Digital (WDC.US) rose 3.44%, Seagate (STX.US) rose 2.17%, SanDisk (SNDK.US) fell 0.42%, and Micron (MU.US) fell 0.98%.

Most Chinese concept stocks rose, with the Nasdaq Golden Dragon China Index up 0.68% at 5,719.25. XPeng (XPEV.US) rose 7.60%, and Li Auto (LI.US) rose 5.67%. Earnings season significantly shaped blue-chip moves. 3M (MMM.US) rose 5.78% after adjusted earnings per share beat expectations and it raised its full-year guidance; Northrop Grumman (NOC.US) gained more than 4% after its report. General Motors (GM.US) fell nearly 7% due to cost pressures and a weak sales outlook, and its board-approved $20 billion buyback plan failed to reverse the decline.

In bonds, late New York trading saw the 10-year Treasury yield fall about 2.7 basis points to 5.1126%, while the 2-year yield rose about 1.3 basis points to 4.7804%. In commodities, WTI November crude futures fell 1.80% to $101.79 a barrel; Brent December crude futures fell 0.69% to $108.79 a barrel. COMEX December gold futures fell 0.42% to $4,142.50 an ounce. In crypto, Bitcoin traded around $83,100 and Ethereum around $2,450.

Woofun AI-compiled data showed that SpaceX's third-quarter results grew explosively, with revenue of $14.58 billion and net profit of $4.4 billion, compared with a loss a year earlier. After the earnings release, its shares rose more than 8% at one point after hours. On the conference call, Musk said the SpaceX and Tesla boards had formed a special committee to discuss a merger. He stressed that a merger has many advantages but made clear it is not yet decided and still requires shareholder support. SpaceX's growth this quarter was mainly driven by its superintelligence business, which generated $7.56 billion in revenue, up about 830% year over year, accounting for about 52% of total revenue and becoming the company's largest revenue source for the first time. New cloud service agreements, the consolidation of Cursor, and Grok-related products together drove this growth. However, profit contribution still came mainly from connectivity, including Starlink, which posted operating profit of about $2.37 billion, while the superintelligence business had operating profit of about $430 million. Notably, SpaceX's third-quarter capital expenditure reached $19.59 billion, exceeding revenue for the quarter, mostly for AI computing infrastructure. New business revenue is rising quickly, but it remains to be seen whether profit growth can keep pace with the huge scale of investment.

Super Micro Computer disclosed preliminary results for the first quarter of fiscal 2027, expecting net sales of $18.5 billion to $19.5 billion, significantly above its previous guidance of $14.5 billion to $15.5 billion. The company attributed the growth mainly to increased demand for AI platforms. Profitability also beat prior expectations, with gross margin expected at 12% to 12.5%, versus previous guidance of 10.4% to 10.8%, with the improvement mainly due to changes in customer and product mix. Revenue and gross margin both exceeding guidance pushed the shares up about 15.6% after hours. Against widespread market concerns about returns on AI investment, this preliminary report provided concrete data supporting improved server demand and product profitability. The figures are unaudited preliminary estimates, and the official earnings report is scheduled for release on November 3.

Netflix reported third-quarter revenue of $12.87 billion, up 11.8% year over year; earnings per share were $0.87, above the market expectation of $0.82. However, the market focused more on next quarter's growth potential. The company expects fourth-quarter revenue of $13.44 billion and earnings per share of $0.67, both below analyst estimates. Ad business expectations were also cut, with Netflix expecting full-year ad revenue of about $2.7 billion, down from a prior expectation of about $3 billion, because some ad product features were launched more slowly than expected. The company now expects full-year revenue of $51.1 billion, slightly below the midpoint of its previous forecast range. Quarterly profit beating expectations failed to offset investor concerns about future growth, sending Netflix shares down more than 5% after hours.

Geopolitical factors continued to unsettle energy markets. Oil prices rose before falling on Tuesday, with negotiation news intensifying intraday volatility. At one point, the market heard that the United States and Iran might soon reach an agreement, and crude oil quickly retreated, falling more than 3% at one point. Later, diplomats involved in the talks said reports of an "imminent agreement" were incorrect, and oil pared its losses. Middle East supply risks have not disappeared, and short-term oil prices remain vulnerable to negotiation and military headlines. This decline cannot be taken as evidence that the two sides have reached an agreement.

Key items to watch today include Jensen Huang's GTC Berlin keynote at 17:00 Beijing time, with the market looking for new progress from Nvidia in European AI infrastructure, enterprise applications and industrial cooperation. After the U.S. market close, early Thursday Beijing time, Meta, Tesla and Lam Research will report earnings. For Meta, the focus will be ad growth and capital expenditure; for Tesla, automotive margins, cash flow, and management's response to a potential merger; and for Lam Research, semiconductor equipment demand and next-quarter guidance.

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