Morning in New York: The market is under pressure from Apple's earnings report and is awaiting the election results

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 midterm elections will be the focus of today’s session. In our view, market participants may refrain from building up their positions until the election results are in. Historically, the market has tended to rise after elections. Under similar circumstances, the S&P 500 has moved higher six months and one year later. However, it is too early to count on a guaranteed rally.

The market’s reaction to Apple’s (AAPL) earnings report will also influence trading. A disappointing outlook from the company regarding margins could put pressure on the stock. Under these circumstances, AMD’s (AMD) earnings report, which will be released after the market closes, will serve as an important benchmark for the AI sector. Following a wave of debt and equity offerings by tech companies, investors will continue to seek confirmation that demand for accelerators is driving shipment growth without compromising profitability.

The main macroeconomic event of the day will be the September JOLTS data—the first labor market statistics since last week’s Fed meeting, at which the interest rate was raised again. Market consensus forecasts suggest an increase in the number of job openings from 7.08 million to 7.13 million. Analysts at Freedom Broker believe that weaker figures would call into question the sustainability of hiring and reduce the likelihood of a rate hike in December (by the end of last week, the market had priced in such a scenario at approximately 73%).

Industrial orders data for September will also be released (consensus: +1.15% MoM, August: +0.1%).

The Wall Street Journal reported that U.S. forces carried out strikes on the Iranian island of Qeshm. Vice President J.D. Vance expressed optimism about the prospects for a diplomatic resolution to the conflict and noted that the White House still has “military and non-military” options available. Against this backdrop, WTI prices are rebounding toward $96.8 per barrel after falling more than 7% on Monday.

Before the market opens, Pfizer (PFE), Shopify (SHOP), Eaton (ETN), and Marathon Petroleum (MPC) will report earnings before the market opens, while Advanced Micro Devices (AMD), Super Micro Computer (SMCI), and Arista Networks (ANET) will report after the market closes.

U.S. index futures are showing mixed trends. We assess the risk balance as neutral amid heightened volatility. Buying is supported by continued demand for stocks outside the tech sector. Pre-election uncertainty and expectations of further monetary tightening are limiting upside potential.

— Apple (AAPL) shares are down more than 4% as investors were alarmed by the gross margin forecast of 45–46% for the current quarter. However, the September figure of 47.9% included about 1 percentage point of a one-time positive effect from duty refunds; without that, the margin would have been approximately 46.9%. Management attributes the further decline primarily to rising memory chip prices and additional costs associated with launching Siri’s AI features. The memory shortage may also limit Mac and iPad shipments. That said, results for the fourth quarter of fiscal year (FY) 2026 exceeded average market expectations. Revenue grew 12% year-over-year to $114.5 billion, and EPS came in at $2.1 versus a consensus estimate of $1.99. iPhone sales increased by 17%, but iPad revenue declined by 10%, falling short of expectations.

— Palantir Technologies (PLTR) shares are down more than 5%, despite a 96% year-over-year increase in quarterly revenue and an upward revision to its full-year guidance. Total Contract Value (TCV) from new contracts with U.S. commercial customers fell 31% quarter-over-quarter to $1.46 billion, and its year-over-year growth slowed from 153% to 11%. Management partly attributes this to the shorter terms of new agreements. At the same time, commercial revenue in the U.S. increased by 148% year-over-year, and the value of contracts signed over the past 12 months rose by 62%. The mixed trend in TCV is fueling investor caution amid the company’s high valuations, although it does not yet indicate a sustained slowdown in demand.

— Fabrinet (FN) and Advanced Energy Industries (AEIS) are up nearly 9% and more than 11%, respectively. Their strong earnings reports pointed to continued demand for AI infrastructure, despite the previous day’s sell-off in the sector. Fabrinet’s revenue in the first quarter of fiscal 2027 rose 51% year-over-year to a record $1.47 billion, and its forecast for the next three months significantly exceeded the market consensus. Advanced Energy increased its revenue by 50% year-over-year. Against the backdrop of these earnings reports, shares of Aehr Test Systems (AEHR) and Lattice Semiconductor (LSCC) also rose.

— onsemi (ON) announced the acquisition of Ferric, a developer of power solutions for AI processors, for $600 million in cash, with a potential additional payment of up to $175 million upon the achievement of revenue targets. The transaction, which is expected to close by the end of 2026, will enable the company to expand its presence in the AI data center segment. In light of this, onsemi has raised its revenue target for this segment for 2030 by $500 million, bringing the projected total to over $3 billion.

Trading on November 2 on U.S. stock exchanges ended mixed, near the day’s lows. The S&P 500 fell 0.51%, and the Nasdaq-100 dropped 1.39%; the Dow Jones rose 0.41%, and the Russell 2000 fell 0.21%. The rebound in the AI sector did not continue. Chipmakers , optical component manufacturers, and AI cloud providers saw corrections. As a result, the IT sector (XLK: −2.95%) ended up among the underperformers. The energy sector (XLE: −3.96%) led this list, driven by the collapse in oil prices. The consumer discretionary sector (XLY: +2.41%) emerged as the top performer, supported by apparel retailers, homebuilders, and restaurant chains. Market breadth was positive: on the NYSE, there were 1.76 advancing stocks for every declining stock, and the equally weighted RSP outperformed the S&P 500 by approximately 120 basis points.

WTI prices fell by more than 7% on reports of developments in the Iran negotiations. However, against this backdrop, the yield on 10-year bonds remained virtually unchanged (4.9%), while the yield on 30-year bonds fell by about 1 basis point to 5.28%.

The ISM Manufacturing Purchasing Managers' Index (PMI) for October rose from 54.5 in September to 55.5 points (consensus: 54.6; Freedom Broker forecast: 54.4). The production subindex reached its highest level since 2021, new orders increased marginally, and the prices subindex declined. Construction spending in September fell by 1.9% MoM (consensus: +0.4%), however, August’s figure was revised upward from +0.9% to 2%. The Treasury plans to borrow $618 billion from October through December (August target: $628 billion).

A wave of offerings has intensified pressure on the AI sector. Oracle (ORCL: −8.8%) announced that it would raise $20 billion equally through a stock offering and a bond offering. The amount corresponds to the additional financing limit through FY2030 announced a week earlier, excluding the refinancing of existing debt. The shares are being offered at an 11.2% discount to Friday’s closing price. Alphabet (GOOGL) entered the European debt market with a €6 billion bond offering, while Meta Platforms (META) is currently only considering raising at least $20 billion through a debt issuance. Marvell Technology (MRVL: −12.7%) confirmed the acquisition of Lumentum (LITE: −18.6%) for $115 billion in a stock-for-stock deal. Outside the tech sector, strong earnings reports boosted IDEXX Laboratories (IDXX: +21.8%), which raised its full-year forecast, and Marriott International (MAR: +4.3%), whose EPS guidance exceeded market expectations.

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