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Wednesday, October 23

Some of the largest macro moves in the market today include: US Dollar Index +0.4%. Copper -1.6%. USD/JPY +1.2%. Some of the largest moves among US mega-cap stocks include: Exxon Mobil Corp (XOM) -0.7%. 

Recent market movements are significantly influenced by rising U.S. Treasury yields, which have reached their highest levels since July at approximately 4.23%. This increase is attributed to expectations surrounding the Federal Reserve's monetary policy and upcoming economic data releases, including existing home sales figures scheduled for later today.

In addition to yield fluctuations, mortgage applications in the U.S. fell sharply by 6.7% last week following a substantial decline of 17% previously reported; this trend reflects heightened borrowing costs due to increasing interest rates as investors anticipate less dovish Fed policies moving forward.

The Bank of Canada is also set to announce its monetary policy decision shortly, with consensus predicting a potential rate cut between 25 and 75 basis points amid ongoing concerns about economic divergence from the United States. This could further impact currency valuations across major pairs like USD/CAD leading into significant political events such as the upcoming U.S. elections on November 5th.

SPDR Dow Jones Industrial Average ETF Trust (DIA) [-0.5%]
The SPDR Dow Jones Industrial Average ETF Trust (DIA) has seen a decline of 0.5% since Tuesday. The Warren Buffett Indicator has reached a historic milestone of 200%, surpassing levels recorded during both the Dot Com Bubble and the Global Financial Crisis. Significant movements among the ETF's holdings include a notable drop in McDonald's shares due to an E. coli outbreak linked to its Quarter Pounder hamburgers, which has resulted in multiple reported cases across several states. This incident has contributed to a substantial pre-market decline for McDonald's. Additionally, gold prices have surged to a record high amid heightened demand for safe-haven assets, despite a strong dollar and rising Treasury yields. In the broader market context, the S&P 500 Index has also decreased by 0.14%, reflecting overall market sentiment that may be influencing DIA's performance.

United States Oil Fund LP (USO) [-1.6%]
The United States Oil Fund LP (USO) has experienced a decline of 1.6% in pre-market trading, aligning with broader trends in crude oil prices. Recently, Brent crude fell significantly, while West Texas Intermediate saw its largest weekly decline in over a year. This downturn follows reduced fears regarding the Middle East conflict and subsequent downward revisions in demand forecasts by energy agencies. Additionally, API reported an unexpected rise in U.S. crude inventories, which contrasts with earlier expectations. The market is also responding to rising Treasury yields, which have tempered expectations for aggressive Federal Reserve rate cuts, further complicating the outlook for oil prices. Social media discussions among BRICS leaders regarding geopolitical tensions have also included mentions of USO, though their impact on the fund remains uncertain.

QCOM | -2.8% | -5.4B
Qualcomm Inc | Semiconductors
Qualcomm Inc. has experienced a notable decline of 2.7% in pre-market trading, attributed to the recent announcement from Arm Holdings regarding the cancellation of their architectural license agreement. This decision, which includes a 60-day notice period, poses significant risks to Qualcomm's operations, particularly affecting its ability to generate approximately $39 billion in annual revenue from chip sales. The cancellation escalates ongoing legal disputes, notably concerning Qualcomm's acquisition of Nuvia, with allegations of contract breaches. Analysts suggest that this timing may be a strategic move by Arm to influence a pre-trial settlement ahead of the scheduled trial in December. In the wake of this news, Qualcomm shares fell substantially in premarket trading, reflecting heightened concerns about the implications of the license cancellation.

ENPH | -15.6% | -1.7B
Enphase Energy Inc | Semiconductor Materials & Equipment
Enphase Energy Inc. shares are under significant pressure, having dropped sharply in pre-market trading following disappointing Q3 financial results. The company reported a net income of $45.8 million, a decline from $113.9 million year-over-year, with adjusted earnings per share at $0.65, missing analyst expectations of $0.77. Revenue fell to $380.9 million, below the consensus estimate of $392.1 million. For Q4, Enphase projected revenue between $360 million and $400 million, significantly lower than the anticipated $434 million. Analysts have reacted by adjusting price targets downward, with Guggenheim downgrading the stock to sell and setting a target of $73. Social media discussions highlighted a "double miss" in earnings and revenue, and concerns about a slowdown in European demand, despite a 43% increase in U.S. revenue compared to the previous quarter.

MCD | -6.8%| -14.5B
McDonald's Corp | Restaurants
McDonald's Corp shares have dropped significantly following reports from the CDC linking an E. coli outbreak to its Quarter Pounder hamburgers. This outbreak has affected 49 individuals across 10 states, resulting in 10 hospitalizations and one death. Investigators are working to identify the contaminated ingredient, suspected to be slivered onions from a single supplier. In response, McDonald's has removed these ingredients from its supply chain and temporarily suspended Quarter Pounder sales in several regions, including Colorado and Kansas. The stock experienced a decline of over 10% in after-hours trading, with pre-market activity reflecting a further decrease of approximately 7.4%. Social media discussions emphasize concerns about the outbreak's implications, with some posts noting skepticism regarding its severity and comparisons to past food safety issues faced by other fast-food chains.

KO |-2.1%|-6.1B
Coca-Cola Co | Soft Drinks & Non-alcoholic Beverages
Coca-Cola Co reported its third-quarter results, posting adjusted earnings per share of 0.77, surpassing the consensus estimate of 0.74. Revenue reached 11.9 billion, exceeding expectations of 11.6 billion but reflecting a slight decline from 11.953 billion in the same quarter last year. The company reaffirmed its fiscal 2024 forecast, projecting organic revenue growth of approximately 10% and comparable EPS growth between 5% and 6%. Despite these positive metrics, shares fell in premarket trading due to concerns over declining volumes, particularly in the away-from-home sector. Social media discussions noted a drop of 2.1% in premarket trading following the earnings release. Additionally, McDonald's Corp experienced a significant decline, which may have influenced Coca-Cola's performance given their historical correlation within the consumer goods sector.

SBUX | -3.5% | -3.7B
Starbucks Corp | Restaurants
Starbucks Corp's shares have declined following the announcement of disappointing preliminary fourth-quarter results and the suspension of fiscal year 2025 guidance. The company reported a drop in consolidated net revenues, with global comparable store sales down significantly. Preliminary earnings per share were notably below expectations. The results were driven by a decline in U.S. comparable store sales and a substantial drop in China. CEO Brian Niccol emphasized the necessity for a strategic reset to stimulate growth. In a somewhat contradictory move, the board approved an increase in the quarterly dividend, marking the 14th consecutive annual increase. Social media discussions highlighted concerns regarding competition and soft consumer demand, particularly in China, where comparable store sales fell sharply.

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