Markets fall led by selling in tech stocks

Dow sank 378, decliners over advancers 2-1 & NAZ pulled back 512.  The MLP index was off 2 to 281 & the REIT index fell 6+ to the 423s.  Junk bond funds barely budged & Treasuries finished down only slightly, which limited the earlier rise in yields.  Oil rose 1+ to go over 70 & gold plunge 44 to 2756 ( more on both below).

Dow Jones Industrials 

Microsoft's (MSFt), a Dow stock, better-than-expected earnings report wasn't enough to prevent the stock's steepest selloff in 2 years, as investors instead focused on the company's forecast for the current period.  For the period ending in Dec, Microsoft called for revenue in the range of $68.1-69.1B, implying 10.6% growth at the middle of the range.  The forecast called for $69.83B in revenue.  Revenue in its cloud infrastructure business, Azure, increased 33%.  CFO Amy Hood said that growth, in constant currency, will come in at 31-32% in the fiscal 2nd qtr.  Fiscal first-quarter revenue increased 16% from a year earlier to $65.6B, exceeding the estimate of $64.5B.  EPS of $3.30 topped the $3.10 estimate.  Outside suppliers are late in delivering data center infrastructure to MSFT, meaning the company won't be able to meet demand in the fiscal 2nd qtr.  “I feel pretty good that going into the second half of even this fiscal year, that some of that supply-demand will match up,” CEO Satya Nadella said.  MSFT's AI investments continue to be a major focus for investors, as the company builds out its infrastructure & ramps up chip spending to handle heftier workloads.  MSFT has invested close to $14B in OpenAI, which was valued at $157B in a financing round earlier this month.  Hood said on the call she expects the company to take a $1.5B hit to income in the current period, mainly because of an expected loss from its investment in the AI startup.  Meanwhile, spending on property & equipment grew 50% year over year to $14.9B.  The forecast called for $14.6B. Net income rose 11% to $24.7B from $22.3B in the year-ago qtr.  The stock tumbled 22+ (5%).

Microsoft’s stock heads for worst day in two years after disappointing forecast

Mortgage rates continued their upward climb this week, leaving demand essentially flat in the stagnant housing market.  Freddie Mac's latest Primary Mortgage Market Survey, released Thursday, showed that the average rate on the benchmark 30-year fixed mortgage surged to 6.72% from last week's reading of 6.54%. The average rate on a 30-year loan was 7.76% a year ago.  Freddie Mac's latest Primary Mortgage Market Survey, released Thursday, showed that the average rate on the benchmark 30-year fixed mortgage surged to 6.72% from last week's reading of 6.54%. The average rate on a 30-year loan was 7.76% a year ago.

Mortgage rates rise for fifth straight week

Merck (MRK) reported 3rd-qtr revenue & adjusted earnings that topped expectations as the company saw strong sales from its top-selling cancer drug Keytruda, recently launched treatments & its animal health business.  But its vaccine that prevents cancer from HPV, the most common sexually transmitted infection in the US, posted another qtr of lighter-than-expected sales.  Revenue from the shot, Gardasil, fell 11% compared with the year-earlier period.  The pharmaceutical giant narrowed its full-year sales forecast to $63.6-64.1B, from a previous guidance of $63.4-64.4B.  MRK also lowered its adjusted EPS guidance to $7.72 - $7.77, from a previous forecast of $7.94 - $8.04.  That updated outlook reflects a 1-time charge of 24¢ per share related to business development deals with Curon Biopharmaceutical & Daiichi Sankyo.  EPS was $1.24 for the3rd qtr.  That compares with EPS of $1.86 during the year-earlier period.  Excluding acquisition & restructuring costs, EPS was $1.57 for the 3-month period.  The company booked $16.6B in revenue for the 3rd qtr, up 4% from the same period a year ago.  The results come as MRK shows substantial progress in preparing for Keytruda's patent expiration in 2028.  The loss of exclusive rights to the medicine will likely cause sales to fall, forcing the company to draw revenue from elsewhere.  MRK has a handful of new deals under its belt & key drug launches that will help it offset those losses.  That includes Winrevair, a medication approved in the US in Mar to treat a progressive & life-threatening lung condition.   The stock fell 1.95.

Merck tops earnings estimates on strong demand for Keytruda, new drugs

Even though prices lost over $50 an ounce, but they still gained for the month.  Gold prices took an eye-catching hit in posting their largest 1-day decline since Jul - highlighting a complicated landscape for the precious metal that's littered with "push-and-pull" factors just ahead of a US election that may lead it to a major "pivot point."  The drop in gold prices comes as a sharp reminder of the delicate balance gold has to navigate.  With Treasury yields climbing, the appeal of safe-haven yields is putting significant pressure on gold, especially with recognition that risk assets like stocks take a hit.  It's facing typical push-pull factors given investors need liquidity, so even gold "isn't safe enough when the market's in risk-off mode.  It's also not yielding enough when bonds are on the rise. Gold for Dec fell $51 (1.8%) to settle at $2749 an ounce.  Based on the most active contract, it marked the biggest daily $ &  percentage declines since late Jul.  Gold futures, which had settled just a day earlier at record-high settlement & intraday levels, ended the month with a 3.4% gain.

Gold logs biggest drop since July, election may be a 'pivot point'

Oil prices extended gains after settlement, rising by more than $1 on a report that Iran is preparing to attack Israel from Iraqi territory in the coming days.  WTI crude oil futures jumped $1.81 to $70.42, after settlement & Brent futures for Jan jumped by $1.82 to $73.98.  Brent crude futures settled up 61¢ (0.8%) to $73.16 a barrel & Brent futures for Dec expired today.  The more actively traded Jan contract settled at $72.81.  WTI futures settled up 65¢, or 0.95%, at $69.26.  Israeli intelligence suggests Iran is preparing to attack Israel from Iraqi territory in the coming days, possibly before the US presidential election on Nov.  The attack is expected to be carried out from Iraq using a large number of drones & ballistic missiles.  The report said that carrying out the attack through pro-Iran militias in Iraq could be an attempt by Tehran to avoid another Israeli attack against strategic targets in Iran.  The week began with a large selloff with Brent & WTI futures falling more than 6% on Mon after Israel showed some restraint in its retaliatory attacks on Iran over the weekend.  The possibility that OPEC+ would delay a planned oil output increase also supported prices today.  A decision could come as early as next week.  OPEC+ is scheduled to meet on Dec 1 to decide its next policy steps.

Oil prices stable after boost from US fuel demand

NAS led a tumble in US stocks after Meta (META) & MSFT earnings sparked worries about rising artificial intelligence costs.  Concerns that would put pressure on profitability helped send shares in both lower.   Bond yields rose with the 10-year Treasury climbing to as high as 4.33%.  These are trying times for investors which will be highlighted by next week's Fed meeting.  Investor nerves are very high & even safe haven gold was sold heavily today after yesterday's record.  Dow had a wild month although it settled with a relatively mild 567 loss in Oct.