• Stocks: It was a mixed bag on Wall Street, after an early AI rebound fizzled by midday and chip stocks reversed lower ahead of another big week of tech earnings. Shares of Apple fell before its earnings after the bell.
• Bonds: Longer-term Treasury yields sank toward two-month lows as cheaper oil eased inflation worries and tech weakness raised fresh growth concerns after stronger-than-expected manufacturing data.
• Commodities: Oil prices slid sharply as hopes for progress in US-Iran talks reduced fears of prolonged Middle East supply disruptions.

Investing

Illustration: Shannon May, Photo: Adobe Stock

We usually leave the politics to the people in DC, but tomorrow’s midterms are too big for markets to ignore.

With affordability as the major theme this election, Democrats are poised to flip the House, while the Senate sits as a toss-up, with some outlets predicting a slight edge for the Dems. Either way, President Trump still holds the veto pen even if Democrats take one or both chambers, and we’re likely looking at divided government no matter what.

And Wall Street can live with that. Investors like gridlock because big changes to things like taxes or regulations are much harder to pass. According to Morgan Stanley, under Republican presidents, the S&P 500 has averaged a 23% gain in the year after midterms when Congress was split, and it gained 16% when Democrats controlled both chambers. So, divided government is not great for bureaucratic efficiency, but historically is great for returns.

The sectors on the ballot

Defense: Business is booming on paper. RTX and Northrop Grumman have record backlogs, meaning lots of orders they haven’t filled yet, and the White House wants $1.5 trillion for national defense in fiscal 2027. But Congress still has to fund these contracts, and a Democratic House could scrutinize spending more closely. Still, Bernstein expects defense investment spending to grow more than 10% next year.

Healthcare: The S&P 500 healthcare sector is already up more than 19% this year. Democrats could support more healthcare spending while pushing harder on drug prices, Medicare Advantage, and consumer costs. Some companies could benefit, while others could take a hit.

Big Tech: A Democratic majority would bring subpoena power and more leverage to investigate AI, antitrust, and other tech issues. Hearings themselves matter less to long-term investors than whether they eventually raise compliance costs, slow product rollouts, or make acquisitions harder.

Oil: Energy stocks have been among this year’s strongest performers, helped by the Iran war and refining margins. Democrats could challenge some Trump-era emissions and vehicle rules, though Trump could veto legislation. For Exxon and Chevron, what happens in the Middle East probably matters more than what happens on Capitol Hill.

The rules and regs

Data centers: Your electricity bill is now a swing voter. With 63% of registered voters opposing a data center within 10 miles of home, AI’s buildout has become a campaign issue instead of a tech story. Democratic gains could push more grid costs onto tech companies just as Microsoft, Amazon, Alphabet, and Meta are expected to spend over $1 trillion on projects next year. Higher costs, delays, or cancellations could then ripple through chip and power-equipment stocks.

Crypto: The election matters less for bitcoin’s price than for whether the industry gets durable rules. The Senate failed to advance the Clarity Act in September, and a Democratic Senate could make market-structure legislation harder to revive next year.

The election night map may be red and blue, but long-term investors should watch something less colorful: who ultimately bears the cost. —HC

      

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Stocks

🟢 What’s up

• SpaceX jumped 1.22% on reports that it explored a purchase of Boost Mobile for access to its network as Starlink looks to challenge the big three wireless carriers on their own turf.
• Tempus AI surged 8.67% on better-than-expected earnings and an upped guidance.
• Rivian rose 8.47% as UBS upgraded the EV maker to Buy, citing improving economics for its R2 model and a path toward positive auto gross margins.
• IDEXX Laboratories soared 21.85% after topping quarterly earnings expectations and raising its full-year outlook.
• Capri Holdings climbed 7.33% after the Michael Kors parent topped quarterly profit and revenue estimates.

🔴 What’s down

• Oracle slid 8.85% after detailing plans to raise $20 billion through debt and stock sales to help finance its massive AI infrastructure buildout.
• Micron slipped 5.78% as a weak earnings report and cautious outlook from Japanese rival Kioxia weighed on memory-chip stocks.
• Estée Lauder dropped 4.08% despite reporting higher-than-expected earnings and higher guidance as premium skincare and fragrance demand held up.
• Intel sank 8.8%, extending its rout after Friday’s historic plunge on weak guidance, cash burn, and chip-supply constraints.
• Coinbase lost 3.95% after Morgan Stanley downgraded the crypto exchange and cut its price target.
• Tower Semiconductor sank 6.7% as its quarterly earnings fell short of Wall Street expectations.

Deal of the day

Marvell’s megadeal gets a muted reaction

Illustration: Shannon May, Photos: Adobe Stock

Marvell Technology just announced the largest M&A deal of the year on an equity basis…so why is Wall Street not cheering? The chipmaker said today that it’s buying Lumentum, which makes lasers and optical tech that help AI data centers move large amounts of data. The all-stock deal gives Lumentum an enterprise value of $115 billion and is expected to close in the first half of 2028. Marvell says the deal expands its addressable market to $550 billion, and one expert said it could position the company to compete with Broadcom. But the announcement also comes right as investors question how long the AI infrastructure spending boom can last.

Both stocks took a hit after the announcement, with Marvell down 12.82% and Lumentum down 18.66%. One reason? People are concerned about how Marvell is paying for it (not to mention, it’s giving experts flashbacks to this deal from the dot-com bubble). Marvell’s shares have almost doubled this year, and when companies pay with expensive stock instead of cash, it’s easier to overpay. If Marvell is overpaying, its shareholders are giving up about one third of the combined company for a deal that may not be worth it. Meanwhile, Lumentum’s shareholders could also be sweating. They’re getting paid in Marvell stock, and since a lot could happen between now and 2028, there’s plenty of time for the AI trade to cool off and leave them with the short end of the stick.—AC

Earnings

Illustration: Morning Brew Inc., Photo: Adobe Stock

Consumers may feel more financially stretched than ever, but they’re still making room for vacations—and Marriott is happily cashing in.

The hotel giant comfortably beat Wall Street’s expectations on both top and bottom lines, reporting quarterly revenue of $7 billion, up 8% from a year ago. Adjusted earnings rose 22% to $3.02 per share, while net income climbed 9% to $794 million.

The hotel giant also reported a 6.5% increase in worldwide revenue per available room (RevPAR), a key industry metric that reflects both room rates and occupancy. Stronger demand prompted Marriott to raise its full-year RevPAR growth forecast to 4.5% to 5%, up from its previous outlook of 3% to 3.5%. Shares jumped 4.26% today.

Luxury leads the way

Marriott CEO Anthony Capuano said travelers are continuing to prioritize experiences, even amid geopolitical uncertainty. And that appetite is showing up on both ends of the hotel’s price spectrum:

• The luxury travelers: RevPAR at Marriott’s company-operated luxury properties in the US and Canada surged 12.4%, led by brands like Ritz-Carlton, JW Marriott, and W Hotels. Ritz-Carlton alone recorded 14.6% growth, with average nightly room rates approaching $568.
• The modest spenders: Marriott’s premium properties, including Sheraton and Westin, posted 9.1% RevPAR growth. Even its more affordable select-service hotels, such as Courtyard and Residence Inn, grew 8.6%.

On the earnings call, Bernstein analyst Richard Clarke noted that luxury hotels were pulling further ahead of their cheaper counterparts. Marriott executives, however, pointed to three consecutive quarters of strong growth at its more affordable properties, a sign that the travel boom isn’t limited to those with the deepest pockets.

Proceed with reservations

This year’s growth also came with a little help from the World Cup, which added roughly 1.2 percentage points to US and Canadian RevPAR growth last quarter. Without that boost, Marriott expects worldwide RevPAR growth to slow to 3.5% to 4.5% in 2027, though executives said easier comparisons in Europe, the Middle East, and Africa could help offset some of that loss.

Marriott also has another growth opportunity in the works: more rooms. Its development pipeline hit a record 634,000 rooms last quarter, which could keep its franchise and management fee business growing even if existing hotels slow down.

It’s quite the balancing act for investors, who must decide whether Marriott’s ambitious expansion will deliver suite dreams, or a rude awakening.—SY

      

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News

• Here’s your Midterm-eve election night guide with the races you need to pay attention to. Plus, get up to speed on the record number of state income tax measures on the ballot this year.
• Anthropic revised its S-1 to report third-quarter financials. Here’s why it’s losing money again.
• Is this the world’s most important chart about AI? The “smartest people” in tech sure think so.
• Goldman Sachs released a new forecast for oil prices in 2027, and some say it’s a flashing red light.
• You might be able to tell how wealthy a family is from this surprising new status symbol.

Calendar

The JOLTS report drops, giving us a read on the labor market at large. We’ll hear from AI infrastructure with AMD, Arista Networks, and Eaton earnings, while Shopify and Booking Holdings offer a consumer check-in. Amgen, Pfizer, Marathon Petroleum, Apollo, and Ferrari also report.

recs

📅 April may be months away, but you can do these five things now to cut your taxes later.

🩺 We regret to inform you that you may be underutilizing your HSA. Here’s how to “HSA-maxx.”

🇺🇸 New Census data reveals the top states with the highest median household income. (Spoiler: NY and CA do not top the list.) How does your state stack up?

🆘 Are you inadvertently making these common emergency fund mistakes?

💰 Social Security’s retirement fund could run dry by late 2032, and benefits are set to get cut by this much if Congress doesn’t step in.

🏘️ Credit check: This major financial hurdle for homebuyers may last well into 2027.

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