Good morning,

The S&P 500 flirted with the red yesterday before AI hype swooped in to keep the rally alive... capped by OpenAI’s half-trillion-dollar price tag that made it the world’s most valuable startup.

And in the biggest news of this morning, BlackRock’s Global Infrastructure Partners is in advanced talks to acquire Aligned Data Centers at a $40 billion valuation.

Meanwhile, the shutdown is adding thousands of federal layoffs to already weak hiring plans that look worse than anything we’ve seen since 2009.

On the corporate side, FICO blew up the credit-score duopoly with a move that sent its stock soaring 18% and sent Equifax and TransUnion spiraling. 

Disney somehow managed to get hammered from both sides of the political aisle, while USA Rare Earth got a Trump bump with its White House ties.

EVs weren’t spared either. Tesla and Rivian both sold off despite beating delivery estimates, as investors fretted over fading rebates and “choppy” fundamentals across the sector.

Bitcoin didn’t want to be left out either, vaulting back above $121,000 with bettors suddenly 80% convinced it’ll break $125K.

Quote of the day 

Five things to know before opening bell

🔥 FICO shakes up credit scores

Fair Isaac just blew up the credit-score game. The company confirmed it will now offer FICO scores directly to intermediaries that supply lenders, cutting out the big three bureaus (Equifax, TransUnion, Experian). The shakeup sent FICO stock surging nearly 18% while EFX and TRU plunged 8% and 11%. Experian also slid.

💵 Dollar claws back ground

The dollar snapped a four-day losing streak as emerging-market currencies lost steam. At one point, the dollar index climbed above 98 before easing back to flat by the close. Meanwhile, the MSCI EM Currency Index slipped about 0.1%.

🎭 Disney can’t win

Disney’s caught in the rarest of PR traps. ABC first faced backlash after Jimmy Kimmel’s comments on Charlie Kirk’s death … then again when his show was canceled … and once more when it was reinstated. Jefferies says sentiment toward Disney is now at two-year lows among both Democrats and Republicans. 

⛏️ Rare earth rally

USA Rare Earth popped 23% after CEO Barbara Humpton confirmed “close communication” with theWhite House. It’s the latest in a string of government-backed mineral plays. The administration recently disclosed a 5% stake in Lithium Americas, while the Pentagon holds 15% of MP Materials. Investors are betting the US rare-earth push won’t be a winner-takes-all game.

₿ Bitcoin’s back in the chase

Add crypto to this week's record-chasing club. Bitcoin rebounded hard from last week’s selloff, jumping past $121,000 and tacking on 3% for the day. That puts it up 29% on the year and squarely in “Uptober” mode. Odds of BTC topping $125K surged to 81% on Myriad Markets, up from just 28% two days ago.

⚠️ Federal layoffs rattle jobs market

Private-sector layoffs have been piling up (from tech giants to Starbucks and ExxonMobil) and now the federal workforce is joining the worry list...

🏛️ What the White House said

The administration has made it clear it plans to use the government shutdown to selectively trim funding for certain agencies. 

Here are new details:

• Trump called his meeting with OMB director Russ Vought an “unprecedented opportunity” to plan widespread cuts and layoffs

• Vought confirmed about $18 billion in NYC funds were “put on hold to ensure funding is not flowing based on unconstitutional DEI principles”

• Press secretary Karoline Leavitt warned that total federal job cuts are “likely going to be in the thousands.”

• Trump added that his meeting with Vought would “determine which of the many Democrat Agencies, most of which are a political SCAM, he recommends to be cut, and whether or not those cuts will be temporary or permanent”

No matter how you slice it, thousands of federal layoffs are hitting at a fragile moment for the economy. 

📉 Hiring plans near 2009 lows

With layoffs climbing, finding new work is getting tougher. Here are some highlights from a private-sector report released yesterday:

• Employers have planned to hire fewer than 205,000 new workers this year, less than half the 483,590 hires at the same point in 2024

• That barely beats the 169,385 recorded in the aftermath of the 2009 Great Recession.

Challenger, Gray & Christmas Senior VP Andy Challenger warned that “it’s very likely job cut plans are going to surpass a million for the first time since 2020.” 

"Previous periods with this many job cuts occurred either during recessions or, as in 2005 and 2006, during the first wave of automations that cost jobs in manufacturing and technology.”

📌 Bottom line: It’s the labor market’s moment of truth, and the next few months will show whether this slowdown materializes into a full-blown jobs recession or not.

🤖 AI hype keeps on giving

Shares of the biggest companies spent much of yesterday in the red before the S&P 500 eked out a tiny gain above Thursday’s close. 

Analysts pin some of the S&P 500’s late-week slowdown (despite the Nasdaq and Dow slightly outperforming) on the government shutdown.

The DC situation “seems to be playing out as expected with both sides preferring to talk at each other through microphones rather than negotiate a real budget that funds the government long term,” said Zacks senior client portfolio manager Brian Mulberry.

Most analysts aren’t panicking, though. 

Fundstrat’s Tom Lee called the shutdown (as well as the missing economic data) a “sidebar issue” for year-end forecasts.

“If stocks are down, we would be dip buyers. This is something to be mindful of, as we may hear of dire warnings of calamity because of the shutdown.” 

Meanwhile, Lee is sticking with his call for the S&P 500 to hit 7,000 by year’s end.

Mulberry is on the same page, saying, “Markets will tolerate this for a few days, but if the administration successfully trims departments it may be a long-term positive with short-term disruption.”

🤖 AI to the rescue (again)

Just as big caps were about to pull back, the AI trade swooped in to prop up stocks, particularly the S&P 500 and Nasdaq... with OpenAI's half-trillion-dollar valuation stealing the show.

Big Tech remains an unmistakable force on Wall Street that some analysts call the only real driver of stocks.

“Magnificent Seven” now provide “a daily referendum on whether AI is considered hype or reality,” adding they “are priced as if AI is not just a growth driver but the growth driver,” said WisdomTree’s Christopher Gannatti.

🚗 Ives says buy the dip in EVs

There’s no such thing as a good earnings report this quarter for EV makers. An earnings miss = weak prospects, and a beat means demand was pulled forward by rebates. 

Because of this indiscriminate pessimism, some analysts think now might be the time to buy the dip.”

On paper, Tesla’s Q3 looked solid:

• 497,000 deliveries, beating the 440,000 consensus from Visible Alpha

• 40% Q3 stock gain, outpacing the rest of the Magnificent Seven

But Thursday’s trading told a different story. TSLA finished down more than 5%, dragging other EV stocks along. Analysts say the Q3 sales spike was inflated by a pre-rebate rush rather than organic growth.

Rivian also slipped after cutting its full-year delivery forecast.

The company now expects 41,500–43,500 vehicles, down from the prior range of 40,000–46,000, despite beating Q3 expectations (13,201 vs. 12,690).

🚀 A possible path forward

The sector’s lifeline, which Musk is dying to get across to analysts, could be Big Tech and AI integration. With its robotics push, Tesla is well positioned to lead the mashup. 

Wedbush’s Dan Ives raised TSLA’s price target, citing an “accelerated AI autonomous path.” Canaccord Genuity also cited Q3 deliveries and a more affordable EV model in its revised $490 target.

Meanwhile, Barclays flagged “choppy” fundamentals, keeping TSLA at a bearish $275 equal-weight rating. So far, the consensus target remain below yesterday’s $436 close.