Morning in New York: Fed rhetoric and corporate reporting in focus

Daily review and forecast of events on the U.S. stock market from Mikhail Denislamov, Deputy Director of Freedom Capital Markets Research.

U.S. Transportation Secretary Sean Duffy announced a 10 percent reduction in capacity at the nation's 40 largest airports starting Nov. 7, affecting about 3,500 to 4,000 flights a day. The head of the Federal Aviation Administration (FAA) Brian Bedford noted that this is a preventive measure aimed at minimizing risks amid the worsening shortage of air traffic controllers due to the ongoing 36-day shutdown. The current government shutdown has become the longest in U.S. history. Authorities expect additional flight cancelations, the duration of the restrictions has not yet been determined.

Most important for traders this Thursday will be comments from other Fed officials after its Chairman Jerome Powell warned that a rate cut in December is "not a foregone conclusion" following the FOMC meeting that ended a week ago. Fed Deputy Governor Michael Barr, New York FRB President John Williams, his counterparts in Cleveland, Philadelphia and St. Louis - Beth Hammack, Anna Paulson and Alberto Musalem - and Governor Christopher Waller are scheduled to speak today. Their assessments of the economy and labor market will be carefully analyzed, especially as the release of official macro data continues to be delayed by the aforementioned shutdown.

Almost 80% of the companies in the S&P 500 Index have already reported for the third quarter. Their profits increased by about 12.7% on average, compared to the initial forecast of 7.2%. The share of companies whose results exceeded expectations is more than 80%, which indicates a favorable corporate backdrop despite moderate macroeconomic risks.

Before the opening of the main session, financial results will be presented by D-Wave Quantum (QBTS), Vistra Energy (VST), Datadog (DDOG), Warner Bros. Discovery (WBD), ConocoPhillips (COP), AstraZeneca (AZN) reported record revenues of $15.2 billion, while Iren Ltd (IREN), MP Materials (MP), Opendoor Technologies (OPEN), NuScale Power (SMR), SoundHound AI (SOUN) and Archer Aviation (ACHR) will report after the main session.

Futures on US indices show weak negative dynamics. We assess the balance of risks as neutral with average volatility. We focus on S&P 500 fluctuations in the range of 6750-6850 points (from -0.7% to +0.8% of the previous session's closing level).

- Qualcomm (QCOM) is down 3% in the premarket, although the issuer reported earnings per share of $3 and revenue of $11.27 billion, with average market expectations of $2.87 billion and $10.77 billion, respectively. Despite record annual revenues for the QCT division, as well as a 27% increase in automotive and IoT chip sales, investors were negative on the cautious outlook for the current quarter.

- Shares of DoorDash (DASH) are losing over 8% in the premarket after reporting underperforming EPS expectations of just $0.55 with average forecasts of $0.68. Meanwhile, service revenue rose to $3.45 billion on higher gross order value. At the same time, the report reflected an increase in expenses due to the recent completion of the acquisition of Deliveroo for $2.9 bln.

- Snap 's (SNAP) quarterly release was a positive surprise for the market. The company's revenue reached $1.51 billion, exceeding the forecast of $1.49 billion, and the number of active users continued to increase. An additional driver of growth of quotations of the social network was the announcement of partnership with Perplexity AI, according to which Snap from 2026 will receive $ 400 million for the integration of technology in the interface Snapchat. On this news, the company's shares added more than 18% on the premarket.

-AppLovin (APP) reported third-quarter earnings of $2.45 per share with a consensus of $2.38 and revenue of $1.4 billion versus expectations of $1.34 billion (+68% YoY). The company reported strong results in its gaming and e-commerce advertising segments, and announced a $3.2 billion increase in its buyback program. APP shares are up more than 6% against this backdrop.

Trading on November 5 on the U.S. stock exchanges ended on a positive territory. S&P 500 grew by 0.37%, Nasdaq 100 rose by 0.72%, Dow Jones added 0.48%, and Russell 2000 - 1.54%. Most broad market sectors closed in the plus column. Consumer durables (XLY: +1.22%) and mining companies (XLB: +0.59%) led the way. Only suppliers of consumer staples (XLP: -0.07%) and the real estate industry (XLRE: -0.02%) showed about zero negative dynamics. The shares of the "Magnificent Seven" companies were again moving in a multidirectional direction. Tesla (TSLA: +4.01%) and Alphabet (GOOGL: +2.44%) looked better than the market.

The focus of attention of stock exchange players was the hearings in the U.S. Supreme Court (SCOTUS) on the case of import tariffs imposed under the IEEPA law. Some conservative justices are skeptical about the legality of the duties imposed by President Trump. Analysts note that a ruling in this case may not be handed down until weeks, if not months, from now.

The number of new jobs in the private sector, according to ADP data for October, amounted to 42,000 with a forecast of 30,000, which was the first significant improvement after two months of decline. This result was achieved by large companies, while the SME sector is optimizing its workforce.

The ISM Services PMI rose to 52.4 points in October (forecast: 50.8), reaching an eight-month high. The new orders subindex rose to 56.2, the highest level since October 2024. However, the price component rose to 70 points, adding to concerns about inflationary pressures. A similar index from S&P Global US stood at 54.8 points, indicating a steady strengthening in activity despite rising costs.

- A strong quarterly report led Lemonade (LMND: +34.2%) shares to soar. The company beat expectations on revenue, earnings and premium volume, improved its outlook for the fourth quarter and full year 2025, and noted a 30% acceleration in IFP premium growth and strong growth in auto insurance.

-Rivian (RIVN: +23.4%) reported third-quarter results better than analysts' average forecasts thanks to increased demand for electric vehicles following changes to tax credit rules. Management reaffirmed 2025 delivery volume guidance in the range of 41,500-43,500 vehicles and announced the launch of production of the R2 lineup in the first half of 2026 - on track.

-Lumentum Holdings (LITE: +23.6%) reported a quarter in which its revenue and profit exceeded the upper end of its guidance range and gave a positive guidance for the next three-month period. Analysts noted an increase in orders from customers in the artificial intelligence and telecommunications sectors, as well as Lumentum's strengthening position in the optical modules segment.

-Trex Company (TREX: -31.1%) posted weak earnings and worsened its own guidance for 2025. The composite building materials manufacturer reported weaker demand in the home remodeling segment and increased competition from Azek. The company also warned of risks of declining profitability and higher marketing costs.

-Apple (AAPL: +0.4%) is close to striking a deal with Alphabet (GOOGL: +2.41%) for about $1 billion to integrate the Gemini language model into its Siri voice assistant. The agreement could be an important step in expanding the AI capabilities of Apple's ecosystem in the face of strong competition from OpenAI and Microsoft.

- Reuters reports that Tesla (TSLA: +4.01%) is preparing to approve a revamped compensation package for Elon Musk. Despite opposition from some shareholders, analysts believe that the bonus, estimated to be worth tens of billions of dollars, will eventually be approved. A positive decision would signify investor support for the company's AI and autonomous driving strategy.

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