Earnings season is barely under way, and it is already sorting the new from the stuck.
PepsiCo (PEP) beat on sales Thursday, then cut its profit outlook. Moderna (MRNA) rejoins the Nasdaq-100 this morning after a cancer vaccine pushed its stock up more than sixfold this year.
Then, after Thursday's close, SpaceX (SPCX) agreed to buy a block of airwaves. The big phone carriers lost billions before sunrise.
All of it is happening with long-term yields near their highest since 2002. The market is paying up for what's new. Its patience with what's stuck is wearing thin.
Let's get to work.
Moderna's index return is the easy part. ESMO is the hard part.
Moderna (MRNA) is a Nasdaq-100 stock again as of this morning. It replaces Warner Bros. Discovery, which is leaving after its merger with Paramount Skydance closed Tuesday.
The forced buying is already done. Funds tracking the index, which Nasdaq puts at more than $800 billion, had to own the shares by Thursday's close. Moderna was dropped from the index in late 2024. It returns worth nearly $80 billion.
The comeback rests on one trial. In August, Moderna and Merck (MRK) said INTerpath-001 met its main goal. Their personalized mRNA vaccine plus Keytruda beat Keytruda alone at keeping melanoma from returning.
The stock nearly tripled in one session on that news. It gave back almost a quarter the next day, then hit new highs once the data won a slot at ESMO. It closed Thursday at $197, up more than 550% this year.
The market signal?
Index demand was a one-time event, and it is over. Moderna sits about 7% below its 52-week high of $212.22, set Tuesday. Full trial data debut at ESMO on Oct. 24. Each dose is built for a single patient, so investors will want detail on durability and on how fast this can scale. Anything murkier meets a stock priced for very little disappointment.
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The bond market tested 2002 twice this week. Buyers showed up both times.
The 10-year Treasury yield touched about 5.36% on Wednesday, its highest since 2002. The 30-year hit 5.73% the same day, also a 2002 high.
Then came the supply tests. Wednesday's $39 billion 10-year sale drew heavy demand. Thursday's $22 billion 30-year sale cleared at 5.618%, the highest for that auction since August 2000. Long yields still finished the afternoon lower. The 10-year closed at 5.23%.
The Fed's September minutes kept the pressure on. Officials voted 12 to 0 to hike to 3.75% to 4%, and most expected another increase by year-end. A few listed "increased expectations for AI-related borrowing" among possible reasons for higher long yields. Futures put October hike odds near 20% and December odds near 85%.
Stocks split Thursday. The S&P 500 fell 0.47% to 7,765 and the Nasdaq dropped 1.25% to 27,193. The Dow edged up 0.1% to 51,232. Chip stocks fell about 3.4%, and Oracle (ORCL) lost nearly 6%, both sliding further after a report questioned OpenAI's revenue run rate. Energy rose about 3%.
The market signal?
One reading is that Thursday was an AI trade, not a broad selloff. Chips and AI-linked names took the hit even as long yields fell, while the equal-weighted S&P 500 edged higher. With the 10-year still above 5%, every growth multiple is marked against a steep discount rate. Next week's CPI is the next test of that line.
PepsiCo's CEO just put a timeline on the squeezed consumer
"We don't expect the consumer to suddenly become… in a much better place in the next 12, 18 months."
That was CEO Ramon Laguarta on Thursday's call. When a roughly $175 billion staples company plans around a stretched shopper for another year and a half, retailers and restaurants should listen.
The quarter looked fine. PepsiCo reported revenue of $25.27 billion, up 5.6%, against an estimate of $24.96 billion. Core EPS of $2.34 topped the $2.29 estimate. Organic revenue grew 3.1%, the fastest pace since late 2023.
The strength sits abroad. Global beverage volume rose 3% and food volume 1%, or 4% excluding a South African grains business. Neither North American unit grew organic revenue. Tariff refunds added 4 points to 3% core operating profit growth. Without them, profit would have slipped.
So PepsiCo cut. It now sees core EPS growth of 2.5% to 3.5% this year, down from the low end of 5% to 7%. Input costs are rising as hedges roll off. U.S. snack volumes are growing again. Soft drinks are not. "We are not competing well in soft drinks," Laguarta said.
The market signal?
Investors bought the reset anyway, and the stock rose 3.7% Thursday. The rally says the bar is now low enough to clear. The CEO says the consumer won't help clear it soon. That turns the fourth quarter into a test of cost cuts and soda execution, with North American beverage volume the number to watch.
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SpaceX agreed to buy airwaves for a reported $8 billion.
The carriers lost $38 billion before the open.
After Thursday's close, SpaceX (SPCX) agreed to buy nationwide 800 MHz spectrum from Grain Management, a private firm. The deal needs FCC approval. No price was disclosed. People familiar with it put the cost near $8 billion in cash.
The reaction dwarfed the check. At about 5:20 a.m. Eastern, AT&T (T) was down 7.4%, Verizon (VZ) 6.8% and T-Mobile (TMUS) 6.9%. That's about $38.5 billion in lost value, close to five times the reported price. SpaceX was up 3.9% at $166.85.
Here's what the candles miss. T-Mobile sold these same airwaves to Grain in August for $2.9 billion in cash plus other licenses. SpaceX says the low-band spectrum lets Starlink Mobile reach through walls. A day earlier, the FCC cleared a 15,000-satellite constellation for the service.
Verizon isn't buying it. Without a network, "it's just empty airwaves," a spokesman said. With no rollout plan disclosed yet, that view has some weight.
SpaceX is also chasing AI compute. It is in early talks to raise about $40 billion for Nvidia (NVDA) chips, with Apollo (APO) expected to lead. The talks could end without a deal.
The market signal?
The carriers are being repriced for a rival that hasn't built its network yet. An FCC sign-off and a real rollout plan would make the selloff look early, not wrong. Without them, some of this morning's damage may fade. The carriers' third-quarter reports later this month are their first chance to size the threat.
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- Four days that could reset the fourth-quarter story
- Today at 10:00 a.m. ET: the preliminary October University of Michigan sentiment survey. September's final read sat near record lows. Higher inflation expectations would feed the December hike case.
- Monday is Columbus Day. Stocks trade, but the bond market is closed.
- Tuesday, Oct. 13: JPMorgan Chase (JPM), Goldman Sachs (GS), Wells Fargo (WFC) and Citigroup (C) all report. Analysts expect JPMorgan to earn about $5.90 a share on roughly $51 billion in revenue. Trading desks will show the volatility. Card and loan books will show the consumer.
- Wednesday, Oct. 14: September CPI, the last major inflation report before the Fed's Oct. 28 meeting.
- The market signal across all three?
- The sentiment survey, the banks and CPI will show whether the economy looks more like PepsiCo's North America or a busy trading floor. Strong bank profits next to hot inflation would be a mixed gift: good for earnings, bad for hike odds. A soft consumer with cooler CPI would ease pressure on yields. Either way, the split between new and stuck gets a macro test.
That's it for today's Slate. This week, the market paid up for a cancer vaccine and a satellite phone network. It marked down the old phone giants and gave a soda giant's guidance cut a pass, for now. Next week, the banks and CPI decide how much patience is left for the stuck. Have a great weekend, Slaters.
Today's reply prompt: What's the one stock you're watching most closely heading into earnings season?
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