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“We live in a world defined by the rapid pace of technological change.” – Jerome Powell

Below is a snippet of commentary from today’s Morning Lineup. Start a two-week trial to Bespoke Premium to view the full report.  

US futures point to a positive open driven mostly by tech stocks, and more specifically, AI-related stocks. The S&P 500 is indicated to open fractionally higher, while the Nasdaq is on pace to gain 0.3%. Treasury yields are modestly higher, while WTI crude oil adds another 3.5% to $103.4 per barrel. Yields and crude oil can’t keep rising like this without having at least some impact on equities.

In Asia, it was mostly a positive session, although Japan was closed. Chinese and South Korean stocks both rallied about 0.75%, although Australian stocks declined 0.2%. European stocks are lower across the board, with the STOXX 600 down 0.4% as UK stocks lead the way lower, down 0.8%.

It’s a relatively busy day for data, with Building Permits and Housing Starts at 8:30, along with Wholesale Inventories and Durable Goods. Then, at 2 PM, we’ll get the last FOMC statement under the Powell Fed, followed by his last press conference at 2:30.  All of these events will play second fiddle, though, to earnings reports from the hyperscalers after the close.

There’s a Fed meeting today, but markets expect little to come out of it. This will be Fed Chair Powell’s last meeting leading the Fed, so there’s little reason to expect comments that have any potential to rock the boat. Rather, Powell will likely want to hand off a clean slate to the incoming likely Chair, Kevin Warsh.  The main headline coming out of the press conference this afternoon will likely be news over whether Powell plans to stay on the committee once he steps down as chair.

Instead of the Fed, investors will be more focused on the upcoming batch of earnings reports after the close from hyperscalers Amazon.com (AMZN), Alphabet (GOOGL), Meta (META), and Microsoft (MSFT). Not only are these among the largest companies in the world, but they’re also spending more on AI than just about any other company in the world. It’s also an incredible juxtaposition to see all four of these companies that plan to collectively spend more than $650 billion on capex this year reporting today. Then tomorrow, Apple (AAPL), the third-largest company in the world, but whose cap ex is peanuts compared to its other mega-cap peers, reports tomorrow.  They’re all enormous companies, but they couldn’t be more different in terms of their AI investments.

Below, we wanted to provide a snapshot of the recent earnings reports since the launch of ChatGPT for each of the four hyperscalers and how their stocks reacted to each report.

Starting with AMZN, the bar is somewhat high given its run lately, but the stock is coming off a quarter where it missed EPS forecasts for the first time in three years. Following its last five earnings reports, the stock has declined on its earnings reaction day.

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