MARKET WRAP

Today was another low-volatility chop, with the SPX making a brief morning attempt to break out of its recent range before fading to close with a smaller gain. For the week the SPX was higher by about +0.3%. That leaves it less than 1% from its all time highs, while QQQ is about 1.5% away, with IWM already touching highs yesterday before a slight fade today. On the day: SPX +0.2%, QQQ +0.4% and IWM -0.4%.

Elsewhere, the fed fund futures are still pricing in about an 87% chance for a rate cut next week. However, yields have been creeping higher the past few days. The US10YY finishes the week at 4.14%. That’s the highest level in 3 weeks, with treasuries perhaps already looking beyond next week’s FOMC. The VIX closed the week at 15.40, it’s lowest level since September. Bitcoin is $89.5k, with a bit of a bounce from this morning’s lows.

Notable Moves Today: The sectors were once again fairly mixed today, with Tech generally the leader. Small caps took a breather after IWM got back to its highs yesterday.

Today’s RiskReversal Pod: Dan and Guy, Michael Kantrowitz of Piper Sandler where he breaks down his HOPE framework—Housing, Orders, Profits, Employment—using it to navigate today’s mixed macro signals, inflation and rate dynamics, the K-shaped economy, and what all of it suggests for credit, consumers, AI’s labor impact, and his cautiously optimistic setup for 2026.

MRKT MATRIX: TODAY’S TOP STORIES

• S&P 500 gains for a fourth day, nears record after light inflation reading (CNBC)

• Core inflation rate watched by Fed hit 2.8%, delayed September data shows, lower than expected (CNBC)

• Are Industry Analysts Overestimating S&P 500 EPS For 2026? (FactSet)

• Netflix to Buy Warner Bros. in Historic $72 Billion Deal (Bloomberg)

• Netflix’s Warner Purchase is an $82.7 Billion Blunder (The Information)

• Apple Departures Point to Challenges for iPhone’s Dominance (WSJ)

• SpaceX Tells Investors It’s Aiming For 2026 IPO (The Information)

WHAT’S NEXT?

The Week That Was

The SPX was essentially unchanged on the week—a tight, low-energy consolidation after last week’s +5% surge. As I’ve mentioned throughout the week, it’s pretty typical to see this kind of lull after a burst of volatility: once the market rips higher and implied vol collapses, the setup flips from being supercharged by thin liquidity and short gamma to being dampened by aggressive options selling and the heavy liquidity that comes with it. That dynamic was on full display this week.

Looking Ahead

Looking ahead, next week is all about the FOMC. The market has fully priced in a December rate cut, which may open the door for a “sell the news” reaction—though it could also be the last piece of the puzzle for a year end grind to 7k. We’ll see. We’re also heading into the final meaningful batch of earnings, with AVGO and ORCL standing out as some last earnings season sentiment checks on the broader AI trade.

We’ll be back this Sunday with a full preview of the week ahead.

TODAY’S EPISODES

Watch RiskReversal Podcast’s newest episode: Stop Waiting For A Crash! Why The "Recession" Is Already Over

In this episode of the Risk Reversal Podcast, hosts Dan Nathan and Guy Adami welcome ⁠Michael Kantrowitz⁠, Chief Investment Strategist and Head of Portfolio Strategy at Piper Sandler. The discussion delves into Kantrowitz's HOPE framework, which stands for Housing, Orders, Profits, and Employment, and its relevance in the current economic climate. They discuss the nuanced macroeconomic indicators and the impact of inflation, interest rates, and employment on the economy and market forecasts. Kantrowitz emphasizes the importance of analyzing specific economic data points and the K-shaped economy. The conversation also touches on home equity, credit spreads, consumer confidence, manufacturing, and the potential implications of AI on the labor market. Kantrowitz presents a cautiously optimistic view of the economic landscape for 2026, predicting improved conditions in cyclical sectors despite ongoing uncertainties.

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