If Tech Earnings Can't Lift Stocks, Is the Economy to Blame?
If Tech Earnings Can't Lift Stocks, Is the Economy to Blame?
By:Ilya Spivak
Upbeat news from SpaceX and SMCI barely moved Wall Street, while bonds, gold, and currencies kept signaling growth worries. Can tech carry the market past the economy again?
- Upbeat SpaceX earnings and Super Micro revenue gave stocks an early lift that quickly stalled
- Third-quarter earnings are pacing almost exactly as expected, leaving little to fuel speculation
- The US dollar slid further as the French-German bond spread topped its 2011 crisis peak
Encouraging tech news gave stocks an early boost, but it did not last. SpaceX earnings came in better than expected, and Super Micro Computer (SMCI) posted upbeat preliminary revenue figures. The S&P 500 gapped higher but went nowhere, staying below the range it broke when last week’s selloff gathered pace. The tech-heavy Nasdaq 100 was capped again near the 30,000 level it has been retesting for days.
Earnings are delivering, but only what’s priced in
FactSet’s tally of the third-quarter earnings season through October 16 helps explain the stall. Most companies that have reported beat earnings-per-share (EPS) forecasts by up to 20%, yet their shares were flat to 0.5% lower on average in the four days around their results. Companies posting positive surprises have, on average, seen negative returns, compared with a five-year average gain of almost 1%.
Blended third-quarter earnings growth is pacing at 29%, a touch below the 29.2% expected a month ago. That is strong, but it is essentially what markets had already priced in, leaving little fresh fuel for speculation.
Are other markets pricing a slowdown that stocks are ignoring?
Crude oil paused after seven straight gains but held its break above the mid-September high, keeping its October rally intact. In the war trade that took hold after the US-Iran conflict began in late February, that would have meant higher inflation expectations, rising yields, a firmer US dollar, and weaker gold. Instead, Treasury bonds have rallied through October, pulling yields lower. Gold is refusing to decline, silver is trying to find a bottom, and Bitcoin has pushed back into the upper end of its recent range.
The currency market may offer the clearest sign. The yield spread between French and German 10-year government bonds has widened to nearly 160 basis points (bps), surpassing the roughly 156bps peak of the 2011 Eurozone debt crisis. Yet the euro is holding its range against the greenback. It is lagging other currencies only because they are outright rallying. The British pound is extending higher, the Canadian dollar is building on gains, and the Australian dollar is breaking above its range tops.
Taken together, markets appear to be betting that a gathering growth risk will outweigh the inflation impulse from oil. The Atlanta Fed’s GDPNow model supports that view, with its third-quarter estimate down from as high as 6% to 3.5%. Official GDP figures arrive October 29, just after the Fed’s policy meeting next week.
Rate hike bets may not fully reflect that. A hike next week is firmly off the table, and a 25bps increase in December is priced at over 97%, matching the Fed’s September projections. For 2027, markets fully price hikes by March and June, while officials see none, leaving a 50bps gap.
Flash purchasing managers index (PMI) data from S&P Global for October may test that gap. Australia and Japan report first, followed by the Eurozone, the UK, and the US. The US surveys are expected to show a slight slowdown in manufacturing and services after a run of very strong readings.
If the PMIs come in soft, the markets’ bet on rate hikes in 2027 may start to look out of step with the economy. That could lift currencies against the US dollar and extend the bond rally, as well as helping gold and silver. Stocks are unlikely to welcome that kind of policy reprieve, however. Rate hikes falling away on growth worries are not a good story for corporate earnings.
Ilya Spivak, tastylive Head of Global Macro, has over 15 years of experience in trading strategy. He specializes in identifying thematic moves in currencies, commodities, interest rates and equities. He hosts Macro Money and co-hosts Overtime, Monday-Thursday. @Ilyaspivak
For live daily programming, market news and commentary, visit tastylive.com or @tastyliveshow on YouTube
Trade with a better broker, open a tastytrade account today. tastylive, Inc. and tastytrade, Inc. are separate but affiliated companies.
Options involve risk and are not suitable for all investors. Please read Characteristics and Risks of Standardized Options before deciding to invest in options.
tastylive content is created, produced, and provided solely by tastylive, Inc. (“tastylive”) and is for informational and educational purposes only. It is not, nor is it intended to be, trading or investment advice or a recommendation that any security, futures contract, digital asset, other product, transaction, or investment strategy is suitable for any person. Trading securities, futures products, and digital assets involve risk and may result in a loss greater than the original amount invested. tastylive, through its content, financial programming or otherwise, does not provide investment or financial advice or make investment recommendations. Investment information provided may not be appropriate for all investors and is provided without respect to individual investor financial sophistication, financial situation, investing time horizon or risk tolerance. tastylive is not in the business of transacting securities trades, nor does it direct client commodity accounts or give commodity trading advice tailored to any particular client’s situation or investment objectives. Supporting documentation for any claims (including claims made on behalf of options programs), comparisons, statistics, or other technical data, if applicable, will be supplied upon request. tastylive is not a licensed financial adviser, registered investment adviser, or a registered broker-dealer. Options, futures, and futures options are not suitable for all investors. Prior to trading securities, options, futures, or futures options, please read the applicable risk disclosures, including, but not limited to, the Characteristics and Risks of Standardized Options Disclosure and the Futures and Exchange-Traded Options Risk Disclosure found on tastytrade.com/disclosures.
tastytrade, Inc. ("tastytrade”) is a registered broker-dealer and member of FINRA, NFA, and SIPC. tastytrade was previously known as tastyworks, Inc. (“tastyworks”). tastytrade offers self-directed brokerage accounts to its customers. tastytrade does not give financial or trading advice, nor does it make investment recommendations. You alone are responsible for making your investment and trading decisions and for evaluating the merits and risks associated with the use of tastytrade’s systems, services or products. tastytrade is a wholly-owned subsidiary of tastylive, Inc.
tastytrade has entered into a Marketing Agreement with tastylive (“Marketing Agent”) whereby tastytrade pays compensation to Marketing Agent to recommend tastytrade’s brokerage services. The existence of this Marketing Agreement should not be deemed as an endorsement or recommendation of Marketing Agent by tastytrade. tastytrade and Marketing Agent are separate entities with their own products and services. tastylive is the parent company of tastytrade.
tastyfx, LLC (“tastyfx”) is a Commodity Futures Trading Commission (“CFTC”) registered Retail Foreign Exchange Dealer (RFED) and Introducing Broker (IB) and Forex Dealer Member (FDM) of the National Futures Association (“NFA”) (NFA ID 0509630). Leveraged trading in foreign currency or off-exchange products on margin carries significant risk and may not be suitable for all investors. We advise you to carefully consider whether trading is appropriate for you based on your personal circumstances as you may lose more than you invest.
tastycrypto is provided solely by tasty Software Solutions, LLC. tasty Software Solutions, LLC is a separate but affiliate company of tastylive, Inc. Neither tastylive nor any of its affiliates are responsible for the products or services provided by tasty Software Solutions, LLC. Cryptocurrency trading is not suitable for all investors due to the number of risks involved. The value of any cryptocurrency, including digital assets pegged to fiat currency, commodities, or any other asset, may go to zero.
© copyright 2013 - 2026 tastylive, Inc. All Rights Reserved. Applicable portions of the Terms of Use on tastylive.com apply. Reproduction, adaptation, distribution, public display, exhibition for profit, or storage in any electronic storage media in whole or in part is prohibited under penalty of law, provided that you may download tastylive’s podcasts as necessary to view for personal use. tastylive was previously known as tastytrade, Inc. tastylive is a trademark/servicemark owned by tastylive, Inc.
Your privacy choices