U.S. Futures & World Markets

Stocks are trying to catch a bid this morning after last week's fade and Friday's outright tank job. We have plenty on the calendar to keep investors busy this week, with more earnings, monthly employment data, tomorrow's midterm elections, and Apple numbers.

The first chart below shows exactly what the market has been struggling to digest. From Bespoke Investment Research: while the S&P 500 didn't get hit too hard last month, mega-caps, AI, growth, and momentum stocks took it on the chin. The equal-weight S&P 500 had its best month versus the cap-weighted version since April 2009. At the sector level, four sectors were up more than 9% in October — Consumer Staples, Energy, Health Care, and Utilities — while Technology and Communication Services both fell more than 8%. When markets get nervous, Apple typically outperforms, and we're seeing that play out again.

Eric Peters of One River Asset Management wrote about the elections in Brazil, and the quote that caught my attention: freely traded markets are humanity's original form of artificial intelligence. They forecast the future far better than the Federal Reserve's army of 1,000 PhDs.

On the Brazilian election, which the prediction markets got wrong — something worth keeping in mind as American voters head to the polls tomorrow: large gaps require investors to have seriously misjudged the probability of an event. Last Sunday, Polymarket and Kalshi both had Bolsonaro at 80% despite how narrow the pre-election polls were. Given how accurate prediction markets have become over the past few election cycles, investors have come to see 80% odds as effectively 100%, and size their bets accordingly. But 80% is wrong one time in five.

S&P Futures vs. Fair Value: +31.00  |  10-Year Yield: 4.91%

CORE Headlines

Charts & Data

The S&P 500 Equal-Weight Index outperformed the S&P 500 by +5.7 percentage points in October, its largest monthly outperformance since April 2009 and its 2nd-largest since the 1990s. The Equal-Weight Index surged +4.8% in October while the S&P 500 fell -0.9%. Year-to-date, Equal-Weight is +13.9% vs. +10.7% for the S&P 500. The S&P 500 ex-AI Index is +14.2% YTD and reached a new all-time high on Friday. The Kobeissi Letter.

Apple is now the only Mag 7 stock outperforming the S&P 500 this year. It generates more free cash flow than any other Mag 7 company while largely avoiding the AI spending binge that is draining its hyperscaler peers. Charlie Bilello.

Over the past month, the 10-year has become much more correlated to the Nasdaq than oil. This is a more risky regime — if the Fed decides it must slow AI to calm inflation, there is no easy "supply side" end to the tightening cycle. 3Fourteen Research via @warrenpies.

Costs to protect the debt of numerous US technology heavyweights against default hit fresh record highs Friday. Caleb Mutua, Bloomberg via Daily Chartbook.

Broad equity positioning has fallen sharply from its mid-September peak. Institutional investors, including hedge funds, have materially reduced exposure — the market may have more room for institutional buying than the price recovery alone suggests. Nikolaos Panigirtzoglou, JPMorgan via Zero Hedge.

The risk for stocks is tech contagion. NDX vol is spiking much more relative to SPX, as equity rotation out of tech and into other sectors has supported the S&P. @spotgamma via Daily Chartbook.

Implied volatility for the S&P 500 ex-Information Technology relative to the S&P 500 has been rising, which may signal the market sees the risks of AI spreading beyond the tech sector. Anu Ganti, S&P Global via Daily Chartbook.

The S&P 500 Value Index is outperforming the Growth Index by 9.72 percentage points this month — the largest outperformance in a month going back to 1993. @_joshschafer via Daily Chartbook.

Semiconductors (SOX) closed below the 200-DMA for the first time since June 2025, ending the 5th-longest streak on record. Daily Chartbook Studies.

White = Semis after the 2000 peak. Orange = Semis today. @marlin_capital via Daily Chartbook.

With 5 names reported in Q3 (AAPL and NVDA remain), the Mag 7 is trailing the Other 493 in YoY earnings growth for the first time since Q4 2022. John Butters, FactSet via Daily Chartbook.

The S&P is 19-0 since 1950 in the six-month period from November of the midterm election year through April of the pre-election year, for an average six-month gain of 14.79% with a worst case of +3.52% in 2002-03. Earnings can certainly trump seasonals, but a short at the end of October is a bold play. @waynewhaley1136 via Daily Chartbook.

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This content does not constitute legal, tax, accounting, or other professional expert advice. Everything published is believed to be reliable, but its accuracy or completeness is not assured. Past performance does not indicate future results. The opinions expressed herein are subject to change without notice and are solely those of the author as of the date indicated.