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Key Takeaways Markets Await Shutdown Resolution As Investors Eye Fed Rate Debate Earnings Strength Highlights Efficiency Gains Amid Rising Layoffs And AI Adoption Metals Rebound And Bitcoin Flirts With $100K As Volatility Looms Markets were mixed on Tuesday as everyone waits on Congress to reopen the government. The S&P 500 gained 0.2% and the Dow Jones Industrial Average added 1%. Tech stocks fell with the Nasdaq Composite dropping 0.25% and the Russell 2000 closed the day unchanged. Volume was light as it was Veteran's Day and bond markets were closed. There are really three main themes at play currently: earnings, the shutdown and interest rates. Earnings for the third quarter have been much better than expected, rising over 13% year-over-year. The profit growth has thus far exceeded revenue growth, suggesting increased efficiencies. As layoff have been mounting, this might suggest AI adoption is proving profitable for those companies that have made investments in it. But I'd like to see more than one quarter of profit growth before getting too excited. The government shutdown is the wild card in all this and is also going to have a direct impact on interest rates. The House is expected to vote on legislation that would reopen the record-setting shutdown, as soon as today. It will take a little while for the government to ramp back up and industries such as airlines and travel-related destinations will likely see a hit to fourth quarter growth. Additionally, the reopening of government will mean the resumption of economic data, something markets have been flying blind without. That data will prove crucial as the next Fed meeting approaches. Investors will likely want to mark down December 10th as that is the next Federal Reserve Open Market Committee (FOMC) meeting. Right now, there is a roughly 65% chance we will see a quarter-point interest rate cut at that meeting, according to the CME Fed Watch Tool. However, according to the Wall Street Journal, Fed members expressed significant disagreement over that cut at the last meeting. I'm not sure what a FOMC fight would look like (I imagine there to be a lot of naming calling with comparisons to economists neither you nor I have ever heard of), but according to the Journal, the last meeting was contentious. Equities seem to be trading as if the cut is baked in, therefore, when government functions resume, do not be surprised if markets see some volatility as those reports are released. In the meantime, there are a couple of big earnings that will take place after the close tonight and before markets open tomorrow. First up will be Cisco Systems. Analysts are expecting earnings of $0.98 per share. What I always find interesting about Cisco is their commentary regarding global economic conditions. Their products are used so widely that I view them as something of a bellwether for the overall global economy. Then tomorrow morning, we'll hear from Disney. MORE FOR YOU There are a few things I'm interested in hearing from Disney. First, with airline travel being hindered of late, I am curious if travelers are not booking as much holiday travel or even possibly canceling plans out of fear of delayed flights. The situation could also be affected by increasing job layoffs and people cutting back on travel plans as a result. Second, if you are a YouTube TV subscriber, you've been without Disney-owned channels, which include their flagship ESPN. Negotiations are continuing between YouTube TV and Disney, but as of this morning, there is still no deal to bring the network back. This could also have implications for Alphabet next quarter and is something to keep in mind. A couple other stocks on my radar today include Advanced Micro Devices and Lyft. AMD said they expect increased revenue growth as a result of strong data center demand. Those shares are higher by nearly 5% in premarket. Shares of OKLO Inc. are higher by 3% following their earnings. Oklo is a supplier of energy for data centers and has seen its stock soar in the past year before pulling back of late. For today, I'm awaiting any news on the government shutdown. Equities are flirting with all-time highs on hopes the shutdown will end this week. But I'm interested if this is a buy the rumor, sell the news type of rally. I'm also keeping an eye on bitcoin which has been flirting with $100K. That seems to be a key technical level worth eyeing. Lastly, I'm watching both silver and gold. After pulling back following a torrid run, but metals are regaining lost ground. Metals are often seen as a safe haven and could be a proverbial canary in the coal mine as we await the government reopening and producing data the Fed needs to decide what is next for monetary policy. As always, I would stick with your investing plans and long-term objectives.
