Market setup
Last week brought pressure on the NASDAQ and S&P 500, with heavy weakness in the technology trade, especially the neoclouds. Meta (META) fell hard, testing its 200-day moving average. The broadening-out trade weakened too. Both earnings and geopolitical risk drove the back half of the week. Traders expected tensions to escalate over the weekend; that did not happen. Iran may speak with Gulf countries today about the US-Iran conflict, Lebanon, and other parts of the region. Crude oil is down over 2%, which is adding a bid to equities.
This week's calendar: core PCE, the FOMC meeting, and some MAG 7 earnings reports - all of which could stir volatility. Equity traders are searching for a trending market, something absent for about a month and a half.
Neoclouds under pressure
Elon Musk posted on X that xAI closed a $40 billion debt financing deal to buy GPUs. He also said the neoclouds sit in a weak spot and could be the ones most at risk of seeing demand fall off a cliff as the market adjusts. Nebius (NBIS) traded lower but caught a bid this morning and tried to go flat; CoreWeave (CRWV) also moved lower.
Financing activity keeps happening across the AI space. A split is forming: the hyperscaler leaders want to build their own in-house data centers rather than lease compute from the neoclouds, at least for now. The open question for a year has been pricing power. As data centers ramp and capacity fills, what pricing advantage will neoclouds hold, and will that hurt their cash flow long term? The view here matches Musk's - it is only a matter of time before they see pressure.
Tesla upgraded
Barclays upgraded Tesla (TSLA) to overweight from equal weight, raising its price target to $450 from $370. The reasons: a potential SpaceX merger driving vertical integration and synergies for both companies under Musk's leadership; a stronger core business, shown in last week's earnings where gross margins may be bottoming and improving; relative strength in other parts of the business plus rightsizing; and signs that robotaxi is hitting an inflection point in the market.
The buyout news is likely the bigger factor. TSLA caught a bid early. Technically, the stock is trying to break above its 200-day moving average near $386, which has acted as resistance over the past two and a half weeks. Powering above it would likely bring more investor interest near term. In an earlier note, Barclays said a merger or acquisition announcement between the two companies could come before December - about five weeks out.
Verizon earnings
Verizon (VZ) has done better than its peers this year, partly due to where it sits in its cycle. T-Mobile (TMUS) is more of a growth company; Verizon is a more established business.
Adjusted EPS beat at $1.31 versus about $1.27 expected, an 8.3% year-over-year rise. Revenue missed at $34.3 billion against $34.74 billion expected. Under the hood the signs are positive: 406,000 postpaid net phone adds, the best Q3 in over five years and up more than 820% year over year; 137,000 postpaid net accounts, the best in over a decade. Onboarding activity continues. The weakness is in phone sales themselves, which are decelerating. Adjusted EBITDA came in near $13.8 billion, up 8% year over year.
The main risk for Verizon and T-Mobile is competition from SpaceX's mobility business. Over time that will press on the industry as Musk expands his portfolio. For now Verizon holds up. The stock was advancing earlier this morning but may have reversed.
What sets the tone today
News headlines will drive the day. Meta (META) filed its C-share event. The stock first dipped, then advanced, since other companies like AMD (AMD) could be investors on the stock dividend - fueling positive momentum this morning. Big tech is the headline mover. Geopolitical risk also matters; promising signs of de-escalation would be a net positive.
Fox Business reports Anthropic's formal S1 could land within 60 to 90 minutes. Markets will read it for risks and clearer fundamental metrics, which could spark moves.
S&P 500 levels
A wide range again: upside 7,700, downside 7,560. Volatility sits near 19.5, implying about a 1.2% move either way. No top-tier economic data this morning, so news headlines rule. Watch for a bounce in names testing key support like Meta (META) and Alphabet/Google (GOOGL), which reports this week.
