Market Wrap
Published
The S&P 500 fell 0.5% as technology weakness overwhelmed a broad rotation into energy and defensive sectors, with the Nasdaq Composite closing down 1.23% to 27,201.31 while the Dow Jones Industrial Average eked out a 0.09% gain to 51,227.15. The split reflects a market pulling money out of semiconductors and AI infrastructure names and into oil, staples, and financials as yields stay near their highest levels since 2002 and the Hormuz standoff adds a second layer of stress.
Energy was the clear leader, with the sector up 2.9% as WTI crude settled 3.64% higher at $91.49 a barrel after the deadliest Houthi attacks yet on Riyadh, including strikes on King Khalid Airport and a damaged Saudi plane at the airport. Brent had spiked as much as 5% above $105 overnight before paring gains after Trump posted that the US will not attack Iran before the November 3 midterms, while insisting the Hormuz blockade stays in full force. Treasury Secretary Hassett said refineries are coming back online. Shell evacuated personnel from five Gulf of Mexico platforms (Mars, Olympus, Ursa, Vito and Appomattox) and BP pulled non-essential staff from Argos, Atlantis and Mad Dog, adding a direct hit to US output alongside the Hormuz disruption. Iran's foreign minister said Tehran is still reviewing US proposals and will respond within days, while its atomic energy chief said the country will not abandon uranium enrichment.
Technology fell 1.8%, led by semiconductors: Oracle dropped 5.7%, Micron fell 5.0%, Intel fell 5.3%, Broadcom fell 4.6%, AMD fell 4.5%, and Nvidia and Applied Materials each fell 2.9%. Consumer Staples jumped 2.1% on broad strength, with Philip Morris up 4.7% and Constellation Brands up 4.4%. Financials rose 0.9%, led by FactSet up 5.4% and Cboe up 5.1%. Real Estate gained 0.7% while Health Care slipped 0.4% and Utilities dipped 0.2%, dragged by Constellation Energy down 4.9%.
Fed officials kept up a steady drumbeat on policy. Governor Waller said more rate increases are likely needed but don't have to come in consecutive moves, and that the Fed can use "signaling" instead of firm forward guidance. Vice Chair Musalem said inflation remains elevated from demand pressures and supply shocks, and that AI investment and government deficits are pushing yields higher and keeping borrowing costs structurally elevated. Minutes from the Fed's last meeting showed all 19 officials supported the September hike as a precaution against inflation risk.
Company News
- Chipotle jumped 6.1% and Starbucks fell on a Financial Times report that Starbucks had explored a takeover of Chipotle; Starbucks later said it remains focused on its existing turnaround strategy.
- PepsiCo reported Q3 EPS of $2.34, beating estimates, and raised full-year revenue growth guidance to about 6%, but cut core EPS growth guidance to 2.5-3.5% from a prior 5-7% range on rising input costs.
- Levi Strauss beat on EPS at $0.48 despite revenue coming in light, raised full-year EPS and margin guidance, and announced a $100 million buyback.
- Viatris agreed to acquire Pacira BioSciences for $36.50 per share in cash, valuing the deal at $1.65 billion.
- Coca-Cola is seeking to unwind its $5 billion Costa Coffee acquisition and is looking to sell the chain.
- General Dynamics named Danny Deep as CEO effective January 2027, succeeding Phebe Novakovic, who becomes Executive Chairman.
- Amazon cut fewer than 1,000 jobs in its latest round of layoffs.
- Samsung Electronics posted operating profit of 107.4 trillion won, above estimates, though revenue of 195 trillion won missed.