• Stocks: Indexes declined during the day, particularly the tech-heavy Nasdaq, after a disappointing revenue disclosure from OpenAI spurred a wider AI stock sell-off. The S&P 500 also closed down, while the Dow remained relatively flat.
• Bonds: Treasury yields were largely unmoved following Fed leaders’ comments that more hikes are needed to tackle inflation, as a healthy 30-year bond auction bolstered prices.
• Commodities: Oil prices pushed up sharply following increased tanker attacks from Iran, but remained below recent highs thanks to Trump’s promise not to attack Iran before midterm elections.

Consumer goods

Morning Brew Inc., Photos: PepsiCo

Here’s an October horror story for you: Your beloved bag of Flamin’ Hot Cheetos might be losing its place in the snack aisle to something with a little more fiber.

PepsiCo beat top and bottom lines in its third-quarter report today, with revenue climbing 5.6% year-over-year and global snack volumes growing 4%—their fastest pace since 2021. But closer to home, North American Frito-Lay food volumes remained flat as inflation squeezed consumers.

The twist: PepsiCo’s seven “permissible” snack brands geared towards healthier options, like SunChips, PopCorners, and Smartfood, all posted strong sales and volume growth. The portfolio now generates roughly $3 billion in annual revenue, up from closer to $2 billion in mid-2025, with SunChips alone approaching $800 million in annual retail sales.

Investors welcomed the results, sending shares up 3.81%.

The protein prescription

The changing snack aisle reflects a broader shift in consumer preferences amid the GLP-1 boom. According to Gallup, 15% of US adults have used GLP-1s for weight loss, up from 3% in 2024. A study published in the Journal of Marketing Research found that households reduced grocery spending by an average of 5.3% within six months of a member starting GLP-1 drugs, with savory-snack spending falling about 10%. 

But GLP-1s don’t have consumers cutting back on everything: Active users plan to spend 11% more on healthy options like high-protein foods each month, a BCG survey finds.

To capture that shifting demand, PepsiCo is rolling out new offerings like Doritos Protein and SunChips Fiber, taking on innovation one nutritional buzzword at a time. Meanwhile, supermarket chain GIANT has launched guided shopping tours to help GLP-1 users find protein-rich and high-fiber foods, while Kraft Heinz is investing $700 million this year to entice shoppers with new products like protein-packed mac and cheese.

A tough pill to swallow

But healthier snacks doesn’t necessarily mean healthier profits. PepsiCo is already struggling to balance sales growth with profitability, having slashed some prices by as much as 15% earlier this year to revive demand. Its North American food division’s core operating margin fell 2.8% in the third quarter, and the company lowered its annual earnings growth forecast as domestic recovery continued to disappoint.

Now, with costs still climbing, PepsiCo is preparing to raise some prices again, risking another blow to demand. That makes its healthier-snack business an increasingly important source of growth—but launching new products also comes at a cost. For investors, the question is whether those offerings can generate enough profit to offset weakening demand for traditional snacks, especially as GLP-1 users eat less overall.

For now, PepsiCo’s better-for-you portfolio still represents a relatively small slice of its business. But if its rapid growth continues, don’t be surprised if your next rock-bottom moment involves sobbing into a bag of protein-packed rice crackers.—SY

      

Sponsored By J.P.Morgan

From the very beginning, Joanna Strober, founder and CEO of Midi Health, felt the J.P. Morgan team understood what she was trying to accomplish with her women’s health company.

As the company looked to scale, J.P. Morgan provided unparalleled access for Midi Health with investors and strategic partners, helping accelerate the company’s growth through key introductions.

As the Bank of the Innovation Economy, J.P. Morgan is here to support founders at every stage of their journey. More than 11,000 companies trust J.P. Morgan for personalized guidance, sector-specific expertise, and the support they need to scale with confidence and maximize their impact.

Learn more about how J.P. Morgan helps founders.

Stocks

🟢 What’s up

• Chipotle climbed 6.11% on reports that Starbucks (down 0.40%) has explored a potential takeover of the fast-casual restaurant chain.
• Palantir gained 2.40% following a Goldman Sachs upgrade to Buy that pointed to growing demand for AI systems that let governments and businesses keep control of their data.
• Haemonetics surged 17.38% on plans to expand the rollout of its plasma collection devices.
• Skydance rallied 4.50% on its first day of trading after the completion of its merger with Warner Bros. Discovery.
• GlobalFoundries climbed 2.75% on a $2 billion manufacturing deal with TSMC to produce components used in advanced AI chips.

🔴 What’s down

• Nvidia, Oracle, and CoreWeave fell 2.94%, 5.58%, and 7.77%, respectively, after OpenAI disclosed roughly $50 billion in annualized revenue, well below the $68 billion previously reported.
• Goldman Sachs fell 1.85% ahead of its third-quarter earnings report as rising bond yields continued to weigh on shares.
• TSMC slipped 3.01% despite reporting a 51% jump in quarterly revenue, fueled by booming AI chip demand.
• SpaceX dropped 4.19% amid uncertainty surrounding the expansion of its Starlink satellite internet service in India.
• Levi Strauss sank 2.36% despite beating quarterly earnings expectations and raising its full-year outlook, as investors questioned how much profit growth came from tariff refunds.
• Argenx fell 11.83% after unexpectedly scrapping a late-stage trial of its autoimmune disorder drug Vyvgart.

Trend of the day

ETFs don their rally caps

Morning Brew Inc., Photo: Adobe Stock

Check in on your local bookie: He’s about to get some new competition.

Issuers are lining up to launch ETFs that track individual pro baseball and hockey teams. Futures contracts in each fund will follow single-season performance metrics for every roster in the NHL, along with a number of teams in the MLB.

The funds are still in the proposal stage, and the SEC can decline their bids. But regardless of its decision, sports team ETFs are a curveball for regulators. “Novel products raise novel questions,” said chair Paul Atkins in May, shortly before the SEC requested public comments on “innovative” ETFs.

Injury risk

Or maybe this bender isn’t so surprising. It’s been a boom year for ETFs, with the Financial Times reporting that the number of funds has risen from 2,241 in 2020 to 5,488 through September. That includes the rise of more themed ETFs, or funds that target specific industries or trends.

Now, amid a crowded ETF market, some asset managers are designing off-the-wall thematic funds to grab investors’ attention, and no idea is too out of left field—including combining sports betting, prediction markets, and investing all in one neat, ETF-shaped package.

That might sound like the ultimate investment, but market-watchers warn that these new ETFs are just bets suited up as investments. “The line between gambling and investing has not simply been blurred, it has been erased,” Robert Johnson, a professor of finance at Creighton University, told CNBC.

Translation: Best to throw your Hail Mary money at a parlay, not your portfolio.—GR

Macro

Morning Brew Inc

It’s been more than a year since the tariff war somehow managed to rope in a bunch of penguins, inspire the TACO trade, and send markets scrambling to price every policy twist.

So why should investors care about a study telling us now what tariffs did then? Because just like your package during the holidays, the bill can arrive late.

A new report from the New York Fed is finally putting a number on the price consumers paid: Tariffs pushed consumer-goods prices 2.9% higher by February than they otherwise would have been. Without the duties, prices would have actually fallen slightly.

The impact didn’t stop at the border. Roughly 26% of a tariff increase eventually makes its way into consumer-goods prices, with roughly one-third of the hit showing up in US-made goods. Domestic manufacturers paid more for imported materials, while some also gained room to raise prices when foreign competitors got more expensive. As it turns out, “Made in America” doesn’t necessarily mean tariff-proof.

Itemizing the receipt

While import prices react quickly, the effect on US-made goods can take nine to 12 months to work through supply chains—which is why the numbers matter now.

Once higher costs arrive, businesses have only a few options: raise prices and risk losing customers, absorb the hit and sacrifice margins, or cut costs somewhere else.

Ralph Lauren offered a glimpse into that trade-off earlier this year, warning that tariffs would shave its quarterly margins as higher import costs pushed through its supply chain. By the time it reported in May, tariffs were still weighing on profitability, even as revenue and earnings beat expectations. The company has responded by shifting sourcing and selectively raising prices.

Estée Lauder has faced an even more explicit hit, estimating that tariffs would cost roughly $100 million in annual profit back in Q2. Today, it’s still trying to protect margins with higher prices and more spending behind premium products.

Yet both companies have also posted solid results in recent quarters. While tariffs don’t usually ruin a quarter immediately, they do raise hurdles the rest of the business has to clear.

Late bills still need to be paid

The effects can last beyond a single earnings season. Companies are changing where they manufacture, source, and invest to reduce future tariff exposure, all while new tariffs are still entering the pipeline. Just see tariffs on Canadian goods, which took effect in August: The New York Fed expects their impact, plus a planned January increase in levies on Canadian autos, to inflate the cost of goods again by mid-2027.

So don’t be surprised next year if a company blames weaker margins on input costs, hikes prices on something made in America, or says customers are pushing back after another round of increases. Even if tariffs are old news, their bills are just beginning to come due.—HC

      

Sponsored By J.P.Morgan

Joanna Strober, founder and CEO of Midi Health, trusts J.P. Morgan to help guide her company’s growth. By providing access to investors, sector-specific expertise, and personalized guidance, the team at J.P. Morgan helps founders focus on their mission and scale with confidence.

News

• The NFL asked the Supreme Court to let states regulate Kalshi and other sports prediction markets as gambling.
• Fed Governor Christopher Waller says the central bank will need to implement multiple rate increases to cool inflation in a timely fashion.
• Mattel is facing activist pressure after Barbie billings fell 16% in the second quarter, even as the company’s broader sales grew.
• Jeff Bezos says Blue Origin will likely go public within several years, as the rocket company works to close a $10 billion outside funding round.
• IBM made the final cut to participate in a Defense Department program testing whether quantum computers can solve real-world problems at scale.
• Data finds that Kalshi and Polymarket traders keep piling into losing longshots about 98% of the time.

Calendar

We’ll close out this week of earnings with Delta Air Lines. Plus, the October University of Michigan sentiment survey will tell us how people are feeling after some gloomy consumer confidence numbers.

Read the room

As a tech analyst who’s spent years reading where the market’s headed next, Daniel Ives, Partner and Senior Managing Director at Yorkville Ives & Co., knows a thing or two about volatility. At The Unshaken Investor, he’ll share what’s priced in and where he sees capital moving. Grab your ticket now.

recs

📚 History may not be destiny, but it does suggest that high interest rates may be here for a good while. Here’s why.

🩹 Healthy returns: A setback to one major medical treatment has investors looking to this biotech stock instead.

🏠 That’s one closing workaround. Families can try this one sure strategy to beat today’s 7% mortgage rates.

⚡ Try this bolt from the blue: One chief market strategist expects this undervalued utility stock to charge up with the AI trade.

🧳 H-1B issues are hitting tech companies. Here’s at least one place we’re seeing it impact share prices.

^{*A message from our sponsor.}

This time last week...

💰 Readers’ most-clicked story was for those rethinking their portfolios amid Treasury trouble: These four bond strategies can get you a safe and solid 5% return.