Morning in New York: Consumers Face a Test Ahead of the Fed Meeting

A daily review and forecast of events in the U.S. stock market by Mikhail Denislamov, Deputy Director of Capital Markets Research at Freedom Broker.

The Fed’s decision and the earnings reports from Microsoft and Alphabet on Wednesday remain the key events of the week, so we expect the market to trade in a wait-and-see mode today. Intraday guidance will come from signals regarding consumer demand. At 10:00 a.m. Eastern Time (ET), the Conference Board will release the October Consumer Confidence Index: the consensus forecast calls for a decline to 81 points from 81.9 points. Today, consumer resilience will be tested by earnings reports from Coca-Cola (KO), Royal Caribbean (RCL), and Hilton (HLT), followed after the close by Visa (V), which will reveal trends in payment volumes. The main point of interest will be management’s comments on the impact of high gas prices on consumer behavior. Shares of these companies have risen sharply over the past few weeks as capital has flowed into more stable businesses. This raises the bar for expectations ahead of the earnings reports.

At 8:30 a.m. ET, preliminary data on durable goods orders for September will be released. The consensus expects a 1.9% month-over-month increase following a 0.1% decline, and a 0.6% increase excluding transportation following a 0.2% increase. Our forecast for the figure excluding transportation is more modest at 0.4%. We do not expect a significant impact on the market, but the data will refine GDP estimates for the third quarter: our model points to 2.6% annualized, compared to the consensus of 3.2%. At 10:00 a.m. ET, data on new home sales for September will also be released (consensus: 651,000, following 684,000).

The U.S. Treasury will auction $70 billion in five-year notes. This is the second of three major auctions this week, following the auction of $69 billion in two-year notes, and it will gauge demand for Treasuries on the first day of the Fed meeting.

Before the market opens, the focus will be on earnings reports from Boeing (BA), Coca-Cola (KO), UPS (UPS), Royal Caribbean (RCL), Hilton (HLT), Freeport-McMoRan (FCX), and American Tower (AMT). After the market closes, Visa (V), SK hynix (SKHY), Robinhood (HOOD), Waste Management (WM), Baker Hughes (BKR), EQT (EQT), and Enphase Energy (ENPH) will report their financial results. Among AI beneficiaries, investors will be particularly interested in SKHY—management’s new guidance on the memory market will impact the semiconductor segment.

U.S. index futures are trading sideways. We expect moderate volatility, which may intensify following the release of data, and assess the risk balance as neutral. Support comes from Celestica’s strong earnings report and signs of sustained demand for AI infrastructure. Constraints remain in the form of 10-year Treasury yields near 5%, high oil prices, and caution ahead of the Fed’s decision and earnings reports from megacaps. We see near-term support for the S&P 500 around 7,640 points, with resistance near 7,705 points.

— Celestica (CLS) shares are up nearly 17% on the back of its third-quarter earnings report and its first forecast for 2027. Revenue rose 83% year-over-year to $5.83 billion, beating the consensus estimate of $5.46 billion, while adjusted EPS came in at $3.30. Both figures exceeded the company’s own guidance. The revenue forecast for 2026 has been raised to $21 billion, compared to a consensus estimate of $20.6 billion; for 2027, the company expects $40 billion in revenue and adjusted EPS of $21.50; however, the free cash flow guidance for the current year has been lowered to $460 million from $600 million. In our view, the forecast supports expectations of continued growth in AI hardware purchases by major cloud providers in 2027, which is positive for other data center infrastructure providers.

— Cadence Design Systems (CDNS) shares are up about 3%. Revenue for the third quarter increased 22% year-over-year to $1.63 billion, compared to a consensus estimate of $1.61 billion; adjusted EPS came in at $2.11, compared to a consensus estimate of $2.05. The full-year revenue forecast has been raised to $6.39–6.42 billion, compared to a consensus estimate of $6.32 billion, and adjusted EPS has been raised to $8.37–8.43, compared to a consensus estimate of $8.15, and the board of directors approved an additional $2.5 billion share buyback. The order backlog reached $8.2 billion. Management attributes the growth prospects to the integration of AI agents into chip and system design.

— Whirlpool (WHR) shares are down nearly 9%. Third-quarter revenue fell 8.8% year-over-year to $3.68 billion, compared to a consensus estimate of $3.93 billion, and the adjusted loss was $0.21 per share, while the consensus had expected a profit. The company lowered its full-year guidance for the third time this year: adjusted EPS was revised down to a loss of about $1.30 from a profit of $2.50–3.00, and revenue was revised down to $14.5 billion from $15 billion. Management cited weak demand in North America and rising costs for raw materials, fuel, and logistics.

— Noble Corporation (NE) is down about 4% following a report that showed the company struggled to translate high oil prices into profits. Adjusted loss came in at $0.57 per share, compared with an expected profit of $0.23, although revenue of $729 million exceeded the consensus estimate of $713 million. The company raised its 2026 capital expenditure forecast to $680–705 million and reported new contracts worth approximately $560 million. Despite the improvement in the order backlog, management expects a significant recovery in rig utilization primarily in the second half of 2027.

Trading on October 26 on U.S. stock exchanges ended with gains. The S&P 500 rose 0.70%, the Nasdaq-100 rose 1.09%, the Dow Jones rose 0.28%, and the Russell 2000 gained 0.38%. Growth stocks outperformed (+1.08% versus +0.31% for value stocks among large-cap companies), and market breadth remained moderate: the number of advancing stocks exceeded the number of declining stocks by a factor of 1.12 on the NYSE and 1.11 on the Nasdaq. The tech sector (XLK: +1.69%) led the gains, while the semiconductor ETF SMH rose 2.74%. However, over the past 20 trading sessions, XLK and SMH have lost 4.22% and 9.73%, respectively: today’s gains do not yet make up for their losses. Anthropic filed for an IPO on the Nasdaq, bolstering the AI trade. Meta Platforms (META: −1.9%) announced that it had raised $35 billion and plans to raise up to $60 billion starting in 2027; the scale of the funding heightened concerns about dilution. Amazon CEO Andy Jassy reported that AWS capacity for 2026 is sold out, most of the large blocks for 2027 are reserved, and a significant portion of 2028 capacity has already been contracted. Lumentum (LITE: +8.2%) and Coherent (COHR: +5.8%) partially recovered from the October 22 sell-off. The communications services sector (XLC: −1.57%) lagged behind, driven by declines in media and telecommunications companies, including Charter (CHTR: −5.9%).

The Treasury yield curve flattened: the yield on 2-year bonds rose by 3 basis points to 4.71%, while the yield on 10-year bonds fell by 1 basis point to 4.98%, and the 30-year yield fell by 3 basis points to 5.30%. The rise at the short end reflects expectations of a Fed rate hike in December. WTI fell 1.4% to $101.76 per barrel amid diplomatic efforts: Iran, Turkey, Pakistan, and Saudi Arabia agreed to continue negotiations.

The Chicago Fed National Business Activity Index rose in September from −0.08 points to 0.07 points, compared with a consensus estimate of −0.10 points. The Dallas Fed’s Manufacturing Activity Index rose in October from 9.8 points to 13.4 points, compared with a consensus estimate of 8.8 points, although production growth slowed and price pressures intensified.

Verizon’s (VZ: −3.5%) earnings report was mixed: adjusted EPS came in at $1.31, beating the consensus estimate of $1.27, while revenue of $34.3 billion fell short of the consensus. The company raised its full-year guidance, and postpaid mobile subscriber growth reached 406,000, but broadband subscriptions disappointed investors. Range Resources (RRC: +17.7%) will be acquired by EQT (EQT: −1.4%) in a stock swap valued at approximately $12.8 billion. Instacart (CART: +7.9%) rose, while DoorDash (DASH: −6.1%) fell on reports that DoorDash is in advanced negotiations to acquire Instacart.

This article was AI-translated and verified by a human editor