Equity futures are pointing to a lower open this Thursday, but the weakness is narrow. S&P 500 futures are down 0.36% at 7755.25 and Nasdaq futures are off 1.12%, almost entirely because Alphabet (GOOGL) is down 11.33% after its earnings report. That move has revived the AI-spending debate that has periodically unsettled the mega-cap complex. ServiceNow and Fortinet are also sharply lower on their results, and semiconductors are under pressure, with AMD down 2.46% and AVGO down 2.37%. Microsoft (MSFT +2.65%) is the exception, its report apparently easing some concerns about cloud monetization. Amazon (AMZN -2.24%) is trading lower ahead of its own report.
Beneath the surface, the pre-market tape is constructive. Eight of 11 sectors are trading higher, and investors appear to be rotating into defensive and rate-insensitive areas rather than exiting equities. Health Care is leading at +2.20%, paced by Eli Lilly (LLY +4.15%). Consumer Staples is up 1.65%, with Walmart (WMT) adding 2.30%. Financials are up 1.48%, led by Mastercard (MA +2.24%) and Visa (V +1.85%). The cyclical side is less uniform: Caterpillar (CAT) is down 12.73%, turning Industrials negative even as RTX (+1.85%) and GE (+0.86%) trade higher.
The macro data offered something for both bulls and bears. Q3 advance GDP came in at 3.4%, above the 3.2% consensus, and the GDP price index slowed to 2.2% from 3.2% expected. Quality was weaker than the headline, however. Final sales rose just 1.7% against 3.5% expected, implying a sizable inventory contribution. Real personal spending was flat in September, and personal income rose only 0.2%. Core PCE matched forecasts at 0.3% m/m and 3.1% y/y, while headline PCE rose to 3.6% y/y. Initial claims fell to 194K and continuing claims to 1.701 million, so the labor market looks tight. Taken together with yesterday's Fed hold at 4.00%, none of this challenges the market's view that policy is on hold: Polymarket assigns a 97% probability to no rate cuts in 2026.
Derivatives positioning argues for caution heading into the open. SPY put/call volume is running at 4.28, 25-delta skew sits at 9.7% in favor of puts, and IV rank is 62 with an implied move of ±0.8%. Gamma exposure has been negative for 11 straight sessions through Wednesday, and today's preliminary read shows a modest positive tilt. The SPY 765 put wall and the 770 call wall bracket the near-term range, with zero-gamma at 772. A sustained break below 765 would raise the risk of dealer hedging amplifying downside moves. Overseas, European markets are firmer (DAX +1.13%, FTSE +0.62%) and the Nikkei gained 1.10%, while the Hang Seng slipped 0.59%.
Looking ahead, today's calendar includes the 7-year note auction (prior 5.085%), which will test the rates backdrop, along with EIA natural gas storage. Friday brings the Employment Cost Index and the Chicago PMI. Next week is heavy: ISM Manufacturing on Monday, the midterm elections on Tuesday, ISM Services on Wednesday, and October nonfarm payrolls on Friday (consensus 40K). Geopolitics remains a live variable for crude, which is holding above $100 while Polymarket prices just 39% odds that the US-Iran ceasefire lasts through November 30. Until mega-cap tech stabilizes, the cap-weighted indices are likely to lag the broader market.
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