Stock Market Update

[BRIEFING.COM] The S&P 500 (+0.2%), Nasdaq Composite (+0.5%), and DJIA (-0.5%) started November on a mixed note as mega-cap tech provided relatively thin leadership against softness in the broader market. 

Amazon (AMZN 254.00, +9.78, +4.00%) provided the early buzz for the mega-caps before the open after announcing a $38 billion AWS compute deal with OpenAI. The stock was coming off of a winning session on Friday that saw the stock rise nearly 10% after its earnings report, with a 20% acceleration in AWS sales a highlight of the stellar report. 

Under this new $38 billion agreement, which will have continued growth over the next seven years, OpenAI is accessing AWS compute comprising hundreds of thousands of state-of-the-art NVIDIA (NVDA 206.88, +4.39, +2.17%) GPUs, with the ability to expand to tens of millions of CPUs to rapidly scale agentic workloads. 

NVIDIA also pushed higher, aided by a report that the U.S. will allow Microsoft (MSFT 517.03, -0.78, -0.15%) to ship its chips to the UAE.

Amazon's and NVIDIA's gains sent the consumer discretionary (+1.7%) and information technology (+0.4%) sectors higher, spending the bulk of the session as the only two S&P 500 sectors in positive territory. 

A solid gain from Tesla (TSLA 468.37, +11.81, +2.59%) supported the consumer discretionary sector's leadership and contributed to the outperformance of the mega-caps in today's trade. The Vanguard Mega Cap Growth ETF finished 0.6% higher, and the market-weighted S&P 500 (+0.2%) outperformed the S&P 500 Equal Weighted Index (-0.3%). 

The utilities (+0.1%) and health care (+0.1) sectors also scratched out gains, popping above their baselines late in the session. Within the health care sector, IDEXX Labs (IDXX 722.94, +93.43, +14.84%) was the best-performing S&P 500 name after a beat-and-raise earnings report. 

Meanwhile, the seven other S&P 500 sectors traded lower, though most of the laggards saw considerable improvement from session lows. While several sectors held losses wider than 1.0%, the materials sector (-0.6%) was the only sector to close with a loss wider than 0.5%. 

The consumer staples sector (-0.5%) was also near the bottom of the standings both today and for the quarter.

Kimberly-Clark (KMB 102.27, -17.44, -14.57%) announced a cash and stock deal to acquire Kenvue (KVUE 16.16, +1.79, +12.46%) valued at $48.7 billion. The transaction offered Kenvue a welcome exit from its challenging standalone stretch and spared activists from deeper losses.

For Kimberly-Clark, the acquisition brought scale, diversification, and exposure to higher-margin consumer health categories, though the hefty price tag and added leverage helped explain the steep selloff in the stock.

While a handful of corporate headlines drove considerable price action today, macro developments were relatively quiet. 

Fed Governor Lisa Cook (voting FOMC member) echoed uncertainty around the Fed's next move, saying policy "is not on a predetermined path," while San Francisco Fed President Mary Daly (nonvoting FOMC member) said that the Fed should be open-minded about cutting rates in December. Expectations for a 25-basis-point rate cut at the December FOMC meeting held steady at 65.3%, according to the CME FedWatch tool. 

On the trade front, the White House published the details of the trade agreement between the U.S. and China, which did not deliver any surprises. The overall tariff rate on Chinese imports was lowered 10%, and the 100% additional tariff increase will be postponed for a year. 

Overall today's action highlighted the dominance of the mega-cap names over the broader market, with Amazon furthering its push into record territory. Investors will now turn to Palantir Technologies' (PLTR 207.18, +6.71, +3.35%) earnings report after the close for additional fuel for the AI trade. 

U.S. Treasuries started November on a flat note, spending the day in a sideways range near their opening levels. The 2-year note yield settled down one basis point to 3.60% and the 10-year note yield settled up one basis point to 4.11%. 

• Nasdaq Composite: +23.4% YTD
• S&P 500: +16.5% YTD
• DJIA: +11.3% YTD
• Russell 2000: +11.1% YTD
• S&P Mid Cap 400: +3.9% YTD

Reviewing today's economic data:

• The October ISM Manufacturing Index checked in at 48.7% for October (Briefing.com consensus: 49.4%), down from 49.1% in September. The dividing line between expansion and contraction is 50.0%, so the October figure, which is the eighth straight month below 50.0%, suggests manufacturing activity contracted at a faster pace than the prior month.
  • The key takeaway from the report is that the manufacturing sector saw its eighth consecutive month of contraction, with uncertainty about tariffs and the global economy tempering demand.
• The S&P Global U.S. Manufacturing PMI hit 52.5 in the final reading for October, up from 52.2 in the preliminary reading and 52.0 in September.