Buyers came back for AI today. Anthropic filed its public S-1 this morning, and traders stepped in to bid up chip and optics names across the board. As of 3:10 PM ET the S&P 500 is up 0.68% at 7,676, the Nasdaq is up 0.89% at 26,185, the Russell 2000 is up 0.43% at 2,788 and the Dow is up 0.18% at 52,308. The 10Y yield is 4.98%, VIX is down 5.1% to 18.45, WTI is down 0.95% to $102.29 and gold is up 0.4% to $4,024.
THE PULSE
Sellers have been in control recently, especially with risk on equities. On Friday the Dow fell 1.2% to 52,215, the S&P lost 0.5% to 7,624 and the Nasdaq slipped 0.2% to 25,955. The S&P and Nasdaq posted their second straight red week. Traders sold staples (XLP -1.9%) and bought energy (XLE +2.6%) as crude ran.
Anthropic’s S-1 is the reason tech buyers stepped back in. The company will trade under ANT. It booked $16.3B of revenue in the first half of 2026, against $4.6B for all of 2025, and spent $9B on AI infrastructure over the same six months. About a fifth of revenue came from two customers. Anthropic posted an $80.7B net loss through June, and non-cash accounting charges made up the majoriy of it. NVDA 0.00%↑ , AVGO 0.00%↑ and MU 0.00%↑ rallied on the filing up around 2% on the day. StoneX started LITE 0.00%↑ at Buy with a $1,200 target, and LITE is up 9.6% to $828.88, COHR 0.00%↑ is up 6.8% to $223.50 and AAOI 0.00%↑ is up 9.7% to $74.04. AAOI is on our watchlist, and is sitting at a very strong support level that we covered in our news show last night. New Street upgraded Intel on a server CPU shortage it expects to last for years, and INTC 0.00%↑ is up 5.3% to $91.59 three days before earnings.
Musk’s companies made news too. Barclays upgraded Tesla to Overweight and raised its target to $450 from $370, betting a SpaceX takeout premium is coming. TSLA 0.00%↑ is up 6% to $394.47, on pace for its best day since early July. Last week Musk told SpaceX investors that both boards formed special committees to study a merger. SPCX 0.00%↑ is up 0.6% at $148.37.
META 0.00%↑ wants up to $95B for its AI build-out, starting with $35B in common and preferred stock, and Nvidia, AMD and Broadcom may buy up to $5B of it. Microsoft offered voluntary buyouts to about 60,000 employees, and MSFT 0.00%↑ is up 1.4% to $531.57. Goldman’s Ben Snider says retail traders account for 9% of U.S. equity volume, down from 15% late last year and near the lowest level since 2020. He blames weak consumer sentiment and high energy prices.
Outside the U.S., Lula won Brazil’s runoff in an upset over Flávio Bolsonaro, and investors dumped Brazilian stocks. EWZ traded down 26% before the open and sits down 20.7% at $33.80 this afternoon, on pace for its worst day since 2000.
Dealers started the day short gamma on both SPY and QQQ. The Trader Matrix morning brief had SPY 0.00%↑ near 760 against a flip near 765 and QQQ 0.00%↑ near 704 against a flip near 707. Buyers pushed both higher. At 3:26 PM ET, SPY sits at $765.41, on top of its flip and its 765 call wall, after a $767.73 high. QQQ trades at $713.13, through its 710 call wall, after topping out at $715.25. Above the flip, dealers sell rips and buy dips, so you get tighter ranges if SPY closes over 765. If SPY slips back under, dealers chase the move again and the 755 put wall comes back into play. The structural flips sit near 772 for SPY and 728 for QQQ, so dealers stay short gamma on the longer-dated book. With the Fed and MSFT and GOOGL 0.00%↑ stacked on Wednesday, that short-gamma position lets those catalysts push price further than usual.
SECTOR ROTATION
SPY lost 0.43% over the five sessions through Friday. Against that, money went into IGV (+6.42 relative to SPY), XLE (+2.03), XLV (+1.88) and XLRE (+1.40). It came out of XLC (-3.93), SMH (-1.90) and XLI (-1.44), and XLK beat SPY by 0.30. Investors bought software and sold chip hardware. Last Monday’s numbers showed them selling both, with IGV at -5.42. One week later IGV sits at +6.42. XLC holds META and GOOGL, so the worst laggard on the board carries this week’s biggest reports.
Today traders reversed part of last week’s trade. XLP is down 0.7%, XLE is up 0.5%, and buyers moved into chips and optics on the Anthropic filing. Pre-market, puts outweighed calls by $190M, but Trader Matrix flagged bullish flow in 7 of 11 sectors, led by consumer discretionary and financials. Traders kept buying calls after the open. At 10:20 AM ET, cybersecurity (CIBR) drew $58.4M at 4.5x its 30-day average, with $35.5M bullish against $1.7M bearish. At 11:20, financials (XLF) drew $147.0M at 2.2x, $69.5M bullish against $27.1M bearish. Software (IGV) followed at 12:20 with $52.9M at 2.2x, $29.7M of it bullish.
Our sectors showed up on the board. Defense (SHLD) surged twice, 1.9x at 10:20 and 2.8x at 2:20 PM ET, with $1.9M bullish against $85K bearish on the second alert. Drones drew a smaller bullish surge at 11:20, 1.6x with $184K against $87K. Photonics (EUV) hit 1.8x at 2:20 with $17.2M bullish against $3.7M bearish, on the same afternoon LITE and AAOI ran close to 10%. Solar (TAN) surged twice, peaking at 3.0x.
Put price and flow side by side. Last Monday options traders bought protection into a chip bounce. Today they’re buying calls on defense, drones and photonics while QQQ trades above its flip. I read that as conviction, and I’d want to see it hold through Wednesday before I lean on it.
MACRO AND GEOPOLITICS
Traders pulled crude off a near six-month high. Brent gained 6% last week and settled at $116.72 on Friday after Houthi forces hit a Saudi airport and oil facilities. The Houthis claimed another round of attacks on Saturday, and Saudi Arabia says it intercepted more missiles and drones on Sunday. Qatari mediators flew to Tehran on Sunday, and Saudi Arabia’s defense minister followed for talks today. December Brent trades near $115.72. Yahoo quotes the January contract as front month at $111.14, down 0.5%. WTI is at $102.29. Saudi Arabia, Turkey and Pakistan sent senior officials to Tehran for four-way talks today, and all four agreed to keep talking. The Saudi-led coalition says it shot down three drones over Riyadh and the southern regions this morning. At 1:37 PM ET, unusual_whales relayed a CNN report that U.S. forces in the Middle East can launch new, “potentially major” operations against Iran within 96 hours of an order from President Trump. CNN described readiness, and nobody has reported an order. The New York Times reports that Army Apache pilots are training in Germany to shoot down Shahed-style drones, one more sign of counter-drone demand. IEA chief Fatih Birol told an industry event in Singapore that he doesn’t expect energy markets in 2027 to return to pre-war conditions. At the pump, AAA lists regular gas at $4.28 a gallon, $1.23 higher than a year ago, and diesel at $5.34.
The Fed meets Tuesday and Wednesday. On CME FedWatch, fed funds futures traders price a 90.6% chance of a hold on October 28 and a 68% chance of a December hike. The Fed’s target range is 3.75% to 4.00%. A month ago traders favored an October hike at 64%. September CPI ran 3.7%, and former Fed Vice Chair Alan Blinder expects Chair Warsh to deliver a “hawkish pause.” The BoJ, the Bank of Canada and the ECB also meet this week.
The midterms are eight days out. In Nate Silver’s model, Democrats have a 95% chance of taking the House and a 76.4% chance of taking the Senate, and they lead the generic ballot by 9.5 points. On October 20, Polymarket traders priced a 63% chance that Democrats win both chambers. Polls close from 6 PM ET on November 3, and you’ll see most results overnight into November 4. In early October, options traders priced about a 0.8% S&P move for November 4. The Fed decides six days before the vote, so you trade two macro catalysts inside one week.
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