Anna's Markets Recap

_{Just facts, you think for yourself}

Saturday, 5:07 AM

November 1, 2025

Good morning news friend! Here is a quick recap of what happened in the markets this week. 📰🌟

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What Moved Markets Last Week

The trading week of October 27, 2025, began with record-setting optimism, as the S&P 500 climbed 1.2% and the Nasdaq Composite jumped 1.9% on Monday. This sentiment was tied to market anticipation of a widely expected interest rate cut from the Federal Reserve.

On Wednesday, October 29, the Federal Reserve delivered the 25-basis-point cut as forecasted. With the cut already priced in, market focus shifted entirely to forward guidance. Federal Reserve Chairman Powell’s “cautious tone” during the subsequent press conference was perceived negatively by investors, contributing to a broad market slide on Thursday.

The market attempted a rebound on Friday, October 31, but the gains were dangerously narrow. For the full week, the S&P 500 managed a 0.7% gain, while the Nasdaq Composite rose 2.2%. Friday's strength was almost entirely attributable to Amazon, whose earnings-driven surge offset heavy losses from Microsoft and Meta.

This divergence highlighted a deep split in market internals. While the Nasdaq’s 2.2% gain looks strong, the Russell 2000 index, a barometer for smaller U.S. companies, fell 1.4% for the week. This split suggests capital fled "real economy" exposure and crowded into a few mega-cap names.

This economic caution was validated by consumer data released during the week. The Conference Board Consumer Confidence Index, released Tuesday, fell to 94.6. This was confirmed on Friday by the University of Michigan's sentiment survey, which fell for the third consecutive month to a low of 53.6, with consumers citing persistent inflation and a weakening labor market.

In the bond market, the 10-year U.S. Treasury yield finished the week near 4.08%, reflecting the volatility around the Federal Reserve's guidance.

Gold: The metal began the week strong on rate cut expectations, hitting a new all-time price record of $4,381 per ounce. Following this peak, the price corrected sharply due to profit-taking, ending the week consolidating near $4,120 per ounce.

Crude Oil: The price of crude oil was a negative driver for the energy sector. Exxon Mobil explicitly cited "weaker crude prices" as the reason for its Q3 revenue miss, indicating a soft commodity price environment during the period.

Tech and Growth

This week’s technology earnings created a stark divide. The market ignored simple "beats" and focused exclusively on the cost and profitability of Artificial Intelligence (AI) spending.

The Winners: AI Spending as Profit

• Amazon (AMZN): Reporting on Thursday, Amazon crushed revenue and EPS estimates. The stock surged 14% in after-hours trading, driven by a 38% profit growth surge in its AWS division. This validated performance led investors to reward Amazon's decision to raise its AI capex forecast, viewing it as a necessary investment to meet proven demand.

• Alphabet (GOOGL): Reporting on Wednesday, Alphabet posted its first-ever $100 billion revenue quarter, beating on both the top and bottom lines. The stock jumped 7.85% as Google Cloud revenue surged 34%. As with Amazon, investors saw Google's high capex as directly funding explosive, profitable growth.

The Losers: AI Spending as Cost

• Microsoft (MSFT): Despite beating revenue and EPS estimates on Wednesday, the stock fell 3.7% in after-hours trading. The positive results were nullified by forward guidance. Management reversed its prior forecast, stating capex would now increase, and admitted that Azure demand had exceeded capacity, resulting in lost revenue. The market punished this as a failure to execute.

• Meta (META): Reporting on Wednesday, Meta’s stock tumbled 11.3% on Thursday. While revenue beat, a massive one-time tax charge obscured EPS. The real driver for the collapse was guidance. Management warned that 2026 expenses for AI and the metaverse would grow “significantly faster,” which the market punished as uncontrolled, speculative spending.

Other Key Movers

• Apple (AAPL): Reported Q4 earnings on Thursday, beating forecasts. The stock rose a modest 1.5%, supported by 15% growth in Services and optimistic holiday guidance.

• Netflix (NFLX): Announced a 10-for-1 forward stock split on Thursday. The stock rose 2-3% in after-hours trading, as the announcement signaled management's confidence.

• NVIDIA (NVDA): The stock rose 2.8% on Monday. On Tuesday, the company announced major partnerships with Eli Lilly (for an AI drug discovery supercomputer) and Johnson & Johnson (to integrate AI into surgical platforms).

Banks and Financials

The financial sector demonstrated a clear "Beat-and-Drop" trend, as investors focused on a weak consumer outlook rather than past-quarter results.

• Mastercard (MA): Reported Q3 earnings on Thursday, narrowly beating forecasts. Despite the beat, the stock fell 2.1% in pre-market trading, suggesting investors are "selling the news" in anticipation of a slowdown in future consumer spending.

• Visa (V): Reported Q4 earnings on Tuesday, posting a similarly minor beat. The stock’s reaction was muted, reflecting the same cautious outlook.

• Bank of America (BAC): Announced on Monday, October 27, that it would redeem €1.75 billion in senior notes as part of routine balance sheet management.

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Consumer Goods and Healthcare

This week confirmed two powerful, non-cyclical growth trends: the expansion of the AI arms race into healthcare and the boom in GLP-1 obesity drugs reshaping retail.

Pharmaceuticals & Healthcare

• Eli Lilly (LLY): Had a dominant week. On Tuesday, it announced its major AI collaboration with NVIDIA. On Wednesday, it announced a partnership with Walmart to sell its Zepbound obesity drug directly. On Thursday, Lilly reported Q3 earnings that crushed revenue and EPS estimates, driven by soaring sales of its GLP-1 drugs. The stock jumped over 5% in pre-market trading.

• Johnson & Johnson (JNJ): On Monday, the company released positive new Phase 3 data for several treatments. On Tuesday, J&J announced its own NVIDIA partnership to use AI in its surgical robotics platform.

• AbbVie (ABBV): Reported Q3 earnings on Friday, beating headline estimates. However, the stock fell 4.4% in another "Beat-and-Drop." Investors focused on a 38% year-over-year decline in adjusted EPS and a sales miss in the key Aesthetics (Botox) portfolio.

• UnitedHealth Group (UNH): Reported Q3 earnings on Tuesday, beating both EPS and revenue forecasts. In a "Beat-and-Raise," the stock rose 3.83% after the company raised its full-year 2025 earnings outlook.

Energy and Industrials

The energy sector's performance was tied directly to underlying commodity prices, making earnings beats irrelevant in the face of revenue weakness.

• Exxon Mobil (XOM): Reported Q3 earnings on Friday, October 31. Despite beating EPS estimates, the stock fell 1.94% in pre-market trading. Investors focused on the revenue miss, which the company attributed to a "lower oil price environment" and "weaker crude prices." The negative reaction overshadowed a 4% dividend increase.

• Home Depot (HD): Announced its 2025 Innovation Award Winners on Wednesday, a routine event that was not a significant stock driver.

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Baked with love,

Anna Eisenberg ❤️

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