Morning Reads

Morning Reads

Open Interest Changes



Tech earnings are beginning to pour in and the market is watching. That's because the largest tech companies in the S&P 500 (SP500), like the Magnificent 7, have been responsible for the majority of the index's 11% YTD advance, which stalled in September and is still looking for its next catalyst. Meta Platforms (META) and Amazon (AMZN) are also set to report results this week, but the festivities kicked off in AH trading on Tuesday with two of the biggest players in the industry.

The beat: Microsoft (MSFT) climbed 3.9% to $343/share after posting fiscal first-quarter results that topped expectations, aided by strong growth in its Azure cloud business. Enthusiasm also continues to build for the company's new artificial intelligence products, like the coming AI-powered assistant for Microsoft 365 called "Copilot." Opening the books a bit deeper, heavy investment in AI was seen in capital expenditures, which soared 70% Y/Y to a record $11.2B, while Microsoft's cloud computing services may further benefit from the coming revolution. Microsoft in charts

The miss? Shares of Alphabet (GOOGL) fell 6.1% AH to $130/share despite the company handily topping earnings expectations with its best revenue growth in five quarters. One big area traders focused on, especially in the wake of Microsoft's earnings, was the expansion of Google's cloud division, whose servers power the firm's AI programs. Sales growth there slowed to 22% last quarter, coming in below expectations of 26%, which is troublesome for a company looking to get a bigger slice of the AI pie as its Search and Advertising businesses mature. Alphabet in charts

SA commentary: "Robust performances in the Search and YouTube businesses are likely being overshadowed by a sharp deceleration in Google Cloud and management's guidance for capex spending," wrote Investing Group Leader Ahan Vashi, who added that in light of the post-Q3 selloff, GOOGL stock now looks fairly valued. "Assuming a base case P/FCF (exit) multiple of ~20x for 2027-28, Alphabet's stock could rise from $130 to $252.6 per share at a CAGR rate of 14.21% over the next five years." (9 comments)


Apple (AAPL) has backed the Biden administration's push for a U.S. right-to-repair bill, as the iPhone giant shifts its stance after years of complaints over the high costs of fixing its devices. It has also committed to make the components, tools and documentation needed for fixing its hardware available to independent repair shops and consumers nationwide. Apple is already required to do so in California, which passed its Right to Repair Act earlier this month, but a national right-to-repair law, in which Apple sees "real value," will likely push other companies to follow suit. The bill is expected to help American consumers save $49.6B annually. (6 comments)

Addictive algorithms

Meta Platforms (META) has been sued by California and more than two dozen U.S. states, which allege that Instagram and Facebook exploit young people for profit and feed them addictive content. "In seeking to maximize financial gains, Meta has repeatedly misled the public about the substantial dangers of its social media platforms," the lawsuit claimed. New York Attorney General Letitia James blamed Meta and other social media firms for children and teenagers suffering from "record levels of poor mental health." Meta, Snap (SNAP), TikTok and Google (GOOGGOOGL) are all facing hundreds of similar lawsuits. Note that Meta will post its Q3 results after the bell today. (119 comments)

Drivers needed

General Motors' (GM) Cruise is pausing its self-driving operations in San Francisco, after California ordered it to remove such cars from state roads, citing safety concerns. The state's Department of Motor Vehicles, which previously directed Cruise to cut its robotaxi fleet by 50%, also suspended the firm's driverless testing permits. The development follows a series of accidents involving Cruise cars, which had already prompted an investigation by the National Highway Traffic Safety Administration. The heightened scrutiny will likely add pressure on GM, which is also facing roadblocks in its electric-vehicle plans due to the UAW strike that was just expanded to its Texas assembly plant. (24 comments)

Today's Markets

In Asia, Japan +0.7%. Hong Kong +0.6%. China +0.4%. India -0.8%.
In Europe, at midday, London +0.1%. Paris -0.2%. Frankfurt -0.1%.
Futures at 6:30, Dow flat. S&P -0.4%. Nasdaq -0.6%. Crude -0.3% to $83.48. Gold -0.2% to $1,983.20. Bitcoin -0.7% to $34,182.
Ten-year Treasury Yield +2 bps to 4.86%.

Today's Economic Calendar

7:00 MBA Mortgage Applications
10:00 New Home Sales
10:00 State Street Investor Confidence Index
10:00 EIA Petroleum Inventories
11:00 Survey of Business Uncertainty
11:30 Results of $26B, 2-Year FRN Auction
1:00 PM Results of $52B, 5-Year Note Auction
4:35 PM Jerome Powell's Speech

Companies reporting earnings today »

What else is happening...

Earnings misses are being punished more than beats are being rewarded.

SunPower (SPWR) plunges on plan to restate certain financial results.

Visa (V) earnings beat consensus on resilient spending and volumes.

China unveils fresh stimulus, although economic growth fears linger.

Coca-Cola (KO) rallies as strong pricing drives Q3 organic sales beat.

Best day in 15 years: Verizon (VZ) boosts guidance for free cash flow.

General Electric (GE) soars after strong results, higher guidance.

Snap (SNAP) fluctuates after jumping postmarket on earnings beat.

Teladoc Health (TDOC) slides on soft outlook; plans operational review.

Arm (ARM), Nvidia among possible winners in new chip development.

Known to most as Uranium Pinto Beans, Jason has more than 15 years under his belt of trading stocks, options and currencies. His expertise primarily lies in chart analysis, and he has a strong eye for undervalued stock. Because he’s got the ability to identify great risk/reward trades he usually enjoys taking the path less traveled and reaping the benefits from the adventure.

He is a co-founder of Option Millionaires, and he is best known for his weekly webinars with Scott, as well as his high level training webinars and charts found in the forums.

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