It’s a Fed day with FOMC Meeting Minutes release @ 2:00pm ET.  Given the jumbo rate hike and Chair Jerome Powell’s press conference after the policy meeting, it is doubtful that much new information will be gleamed from the minutes, but it is always difficult to predict a reaction.

Technology stocks and a strong oil price pullback on reduced Middle East tensions and lack of another Chinese stimulus package, powered the S&P 500 higher yesterday.  Nvidia (NVDA) move up 4% Tuesday, climbing for a fifth straight day.  NVDA is now above August highs and within reach of its 140.76 all-time high made back in June.

The Department of Justice (DOJ) told a federal judge Amit Mehta Tuesday that they are considering a recommendation to force Alphabet (GOOG, GOOGL) to sell off parts of Google’s operations to reduce their online search market monopoly.  In a 32-page filing, the DOJ said they are “considering behavioral and structural remedies that would prevent Google from using products such as Chrome, Play, and Android to advantage Google search and Google search-related products and features — including emerging search access points and features, such as artificial intelligence — over rivals or new entrants.”

The DOJ filing says that Google gained scale and data benefits from illegal distribution agreements with other tech companies to make Google search engine the default on smartphones and web browsers.  The DOJ may also seek a requirement to allow Google partners to opt out of Google’s artificial intelligence products and requirements to provide more information and customer control of text ad placement.  Alphabet said the DOJ’s filing is “radical” and will have “significant unintended consequences for consumers, businesses, and American competitiveness.”

Nvidia’s (NVDA) and Apple’s (APPL) primary chipmaker Taiwan Semiconductor Manufacturing Co. (TSMC) posted a better-than-expected 39% rise in quarterly revenue which indicates that AI hardware spending is not yet tapering off.  TMSC’s sales have more than doubled since the launch of ChatGPT which sparked a race to acquire Nvidia server hardware.

Boeing’s (BA) negotiations with the International Association of Machinists and Aerospace Workers took a turn for the worse with Boeing withdrawing their contract offer, leaving no path forward to stop the debilitating 33,000-member union strike.  Both sides blame each other for the breakdown.  Boeing was offering a 30% wage hike and a boost to retirement benefits.

A corporate memo stated, “unfortunately, the union didn’t seriously consider our proposals… Instead, the union made non-negotiable demands far in excess of what can be accepted if we are to remain competitive as a business.”  The September 13 strike is costing Boeing $100 million a day and is quickly reducing Boeing’s ability to be a financially viable company without obtaining additional financing.

No corporate earnings of interest today.

In addition to the FOMC Minutes @ 2:00pm ET, the economic calendar includes Wholesale Inventories @ 10:00am ET and Crude Oil Inventories @ 10:30am ET.  Fed speakers include Bostic @ 8:00am ET, Logan @ 9:15am ET, Goolsbee @ 10:30am ET, and Jefferson @ 12:30pm ET.

Volatility remains moderate and steady with an ES average daily range of 63 points.

Whale bias is bearish into the US session open on decent large trader overnight volume.

A tech selloff, geopolitical angst, and increased bets on a smaller Fed rate cut sent US equities down, Treasuries up, and oil down yesterday.  As Oct 7 marked one year since the Hamas massacre of Israelian concert goers, the Middle East crisis continues to grow with rockets fired at Tel Aviv by Hamas and other Iran-backed groups.  Speculation is Israel may retaliate by attacking Iran’s oil infrastructure.

The 10-year yield pushed through 4%.  New York Fed president John Williams told the Financial Times in an interview that the Fed is “well positioned” to pull off a soft landing of the US economy.  Friday’s strong jobs report killed the prospect of a 50-basis point rate cut and has increased chatter of the Fed leaving rates unchanged in November.

According to the World Bank, China’s 3 decades of growth which has buoyed Asian Pacific economies will slow to 4.4% in 2025, down from 4.8% in 2024.  The bank said that the recent fiscal stimulus is short-term support, but deeper structural reforms will be needed for long-term growth.  Chinese officials had a 2024 growth target of 5% which is likely out of reach.

Alphabet (GOOG, GOOGL) will learn today what the Department of Justice (DOJ) thinks should be done to dismantle Google’s “illegal monopoly” on the search engine market.  District of Columbia District Court Judge Amit Mehta will decide what should happen in a separate “remedies” phase of the Google monopoly trial which likely will start next year.

Remedies could include breaking up Google, forcing Google to make search data available to competitors, and/or ending agreements for Google search engines being the default for mobile devices and browsers.  Alphabet said they will appeal which could delay Judge Mehta’s orders until after the challenges.

Nvidia’s (NVDA) sever production partner Hon Hai Precision Industry Co. of Taiwan is building a new production facility in Mexico to better meet the “crazy” demand for Nvidia Grace Blackwell chips.  The facility is planned to produce 20,000 Nvidia AI servers in 2025.

Hon Hai’s Chairman Young Liu told Bloomberg Television that “There was a lot of talk that the need for compute may be saturated pretty soon. But it looks like the demand is still growing. So that’s beyond our expectations.”

No corporate earnings of interest today.

The economic calendar is light with Trade Balance @ 8:30am ET.  Fed speakers include Bostic @ 12:45pm ET and Collins @ 4:00pm ET.

Volatility remains moderate and steady.

Whale bias is leaning bullish into the US session open on relatively light overnight large trader volume.