As the Fed Chair approaches his final days on the job, many have wondered about his legacy, which he can still shape. Fed Jay Powell came to the podium yesterday ready to dash dreams and prove he’s no pushover. I worry that this need to demonstrate independence is making Powell blind and could lead to more policy mistakes before he sets off into the sunset. While he didn’t rule out a December rate cut, he insists it's not a foregone conclusion.

Was It Something I Said?

Powell made a bunch of curious comments:

• “The labor market is stable.”
• "You don’t see much leverage in the financial system.”
• “Core PCE ex-tariffs.”
• “Non-tariff inflation not far from our 2.0% goal.”

The probability of a rate cut in December plunged from over 90% to 62%, and bond yields spiked.

The S&P 500 (SPX) finished unchanged, but only three sectors ended higher, and the biggest “winners” were all companies with emerging artificial Intelligence (AI) narratives.

Market breadth is absolutely terrible—it's Technology (XLK) or bust.

Industrials (XLI) are once again getting AI-love.

Mega-Cap Earnings Parade

Meta Platforms (META), Alphabet (GOOG/L), and Microsoft (MSFT) beat the Street on top and bottom lines and everywhere in between, but only GOOGL moved higher (META missed on EPS due to a one-time non-cash tax charge).

Meta took a $180B market cap hit on a $2.0 billion increase in cost.

This market continues to feel like it's priced for near-term perfection. This means a lot of names ride out the bumps in the road.

Today’s Session

Major indices are mostly moving lower at the open as investors digest the latest slew of earnings and Powell’s comments from yesterday’s FOMC meeting.

The market tends to see consolidation following this many consecutive gaps higher. However, temporary consolidation is often a prelude to the next leg higher.