October 25th Market Overview

Happy Friday everyone.

The markets close out a bumpy week with the Nasdaq hitting a fresh record high.

The Dow is on the struggle bus with its fifth consecutive daily decline. Tech sector is looking really strong through the earning landscape.

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Let's dig in...

Executive Summary

• Nasdaq Composite achieves historic milestone, touching 18,690.01 before settling lower, set for seventh straight weekly gain

• Dow Jones tracks for worst week since September, with 27 of 30 components declining

• Consumer sentiment ends October on unexpected high note, marking third straight monthly improvement

• Bond market stabilizes after turbulent week, providing relief to equity market

Market Overview

Tech is up leading the greens today.

The Q’s are reaching new highs.

Key Market Drivers

1. Consumer Resilience: Final October University of Michigan sentiment rises to 70.5 from 68.9 preliminary reading

2. Inflation Outlook: Year-ahead consumer expectations decrease to 2.7%, down from initial 2.9% estimate

3. Economic Data: Friday’s durable goods orders show -0.8% decline, better than -1.0% forecast

4. Earnings Momentum: Tech sector strength builds ahead of next week’s crucial reporting cycle

Stock Spotlight

• $SKX delivers stellar Q3 performance after Friday’s close

  • Revenue: $2.35B (+15.9% YoY)

  • Wholesale segment: +20.6% growth

  • International revenue: +16% increase

  • Stock gains 5.1% in after-hours trading
    

• $DECK exceeds expectations

  • Revenue surges 20% to $1.31B

  • HOKA brand revenue: +34.7% YoY to $570.9M

  • UGG brand revenue: +13% YoY to $689.9M

  • Shares up 14% in Friday’s session
    

• $HCA faces obstacles

  • Shares plunge 10% after Hurricane Helene impact

  • Q3 adjusted EBITDA: $3.27B vs $3.28B expected

  • Additional $200M-$300M hurricane-related hit expected in Q4

Big Name Updates

• $AAPL struggles after Friday downgrade

  • KeyBanc cuts to Underweight from Sector Weight

  • Price target implies 13% downside

  • China smartphone sales dip 0.3% amid Huawei competition
    

• $NVDA leads Magnificent Seven gains

  • Shares advance 0.7% Friday

  • Approaches $AAPL’s market cap

  • Powers tech sector’s weekly outperformance
    

• $META benefits from analyst optimism

  • Bernstein raises price target to $675

  • Shares climb 1.2% Friday

  • JPMorgan highlights as top pick for upcoming earnings

Other Notable Company News

• $TPR soars 14% as merger block viewed positively

• $CPRI tumbles 47% after deal termination

• $SAVE surges 18% on restructuring plans

• $LHX gains 3.5% on earnings beat, guidance raise

Sector Watch

Bond Market

Treasury yields end volatile week lower, with 10-year yield at 4.21% and 2-year at 4.07%. Corporate bonds show stress, as $JNK heads for worst week since April (-0.6%) and $MUB declines 0.9% weekly. Sevens Report notes bond market weakness often leads equity markets.

Policy Watch

• Federal judge halts $TPR’s $8.5B acquisition of $CPRI

• Biden administration greenlights first U.S. lithium mine

• Consumer sentiment data shows election uncertainty weighing on outlook

• ECB signals flexibility for December policy decision

What to Watch

1. Next Week’s Tech Earnings Surge:

   • $MSFT, $META, $AMZN report after $TSLA’s strong showing

   • Analyst expectations elevated after Netflix beat

   • Focus on AI initiatives and forward guidance

2. Critical Economic Data:

   • October non-farm payrolls release

   • PCE inflation reading

   • Q3 GDP final revision

   • Impact on November Fed meeting expectations

3. Bond Market Dynamics:

   • Treasury auction schedule next week

   • Yield curve movements after recent steepening

   • Corporate bond spread behavior

   • Municipal bond market stability

4. Pre-Election Market Sentiment:

   • Ten days until presidential election

   • Potential volatility increase

   • Sector rotation considerations

   • Impact on Fed policy expectations

P.S. 
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Thanks for reading 🙂

- John