Markets barely moved Tuesday, but the action underneath tells a better story than the indexes.
Tech led again — QQQ up 0.7% while the Dow lagged at 0.3%. Small caps had a decent day, which caught my eye. When IWM outpaces DIA, it usually means risk appetite is improving, not retreating. That's the opposite of what you'd expect after Palo Alto's guidance cut hit the tape.
Here's what I'm watching: breadth is getting better even as individual names disappoint on earnings. That's either a sign the market is looking past near-term noise, or it's ignoring real problems. I lean toward the former, but the next few weeks will decide it.
Top Stories
Palo Alto's Guidance Cut Says More About M&A Than Demand
Palo Alto Networks dropped 6% in pre-market after cutting full-year EPS guidance to $3.65–$3.70. The headline sounds bad. The details don't.
The cut is entirely from integration costs tied to two acquisitions — CyberArk and Chronosphere. Revenue growth is still strong, and the core business isn't the problem. Wall Street hates M&A friction, but this is temporary drag, not structural weakness.
What I'd watch: if PANW stabilizes today instead of bleeding all session, it tells you the market gets it. Cybersecurity demand isn't slowing — Palo Alto just paid the price for buying growth instead of building it. That's a very different risk than a demand problem.
Fluor Missed by a Penny — But Check the Margin
Fluor reported $0.33 EPS versus the $0.34 consensus. A penny miss usually doesn't matter.
But here's what does: net margin came in at 21.71%. That's exceptional for a construction and engineering company, where 5-10% is normal. ROE of 8.32% is solid but not spectacular, so the margin is doing the heavy lifting.
The miss probably came from timing, not from margin compression or revenue weakness. Revenue hit $4.18 billion for the quarter — I'd want to see how that compares to the same period last year, but the margin tells me Fluor's pricing power is intact. If you're long industrials, this isn't the name keeping me up at night.
First-Time Home Buyers Are Back — In the U.K., At Least
Skipton Group handed mortgages to 26,000 first-time buyers last year and pushed past 1.3 million members. That's a U.K. story, but it's worth watching here.
First-time buyer activity is one of the best leading indicators for housing health. When that cohort comes back, it props up the entire market — they buy starter homes, which frees up move-up buyers, which supports the top end.
We're not seeing the same surge in the U.S. yet. Rates are still too high, and inventory is still too tight. But if the Fed cuts twice this year like the market expects, we could see a similar dynamic by late 2026. I'm watching mortgage application data for early signs.
Also Worth Knowing
- Quantum — Tape storage revenue doubled year-over-year — first quarterly revenue growth in ten quarters. Tape isn't dead, and hyperscalers are buying it for cold storage again.
- Condor Capital — Raised its IWF position by 3.8% in Q3, now holding 70,479 shares. Growth ETFs are still getting institutional inflows despite the rotation talk.
- BOK Financial — Boosted JEPI holdings by 35.5% last quarter. Income ETFs are having a moment — investors want yield without going all-in on bonds.
- First National Bank of Omaha — Took a new $6.6 million stake in AbbVie and a $4 million position in Chubb. Defensive plays — healthcare and insurance — are getting bought by regional banks.
- Russia-Canada Tensions — Moscow warned Canada that seizing diplomatic property could trigger an asymmetrical response. Geopolitical risk is simmering even if markets aren't pricing it in.
What to Watch
No major earnings today, which means the market will trade on macro and momentum.
I'm watching whether tech can hold its lead. If QQQ keeps outpacing SPY, it signals confidence. If breadth rolls over and small caps fade, that's a warning that Tuesday's strength was a head fake.
Also keeping an eye on Palo Alto's intraday action. If it finds support and closes near flat, that's actually bullish — it means investors separated the noise from the signal. If it drops 8-10%, the market is punishing M&A risk more than I thought.
The Bottom Line
Markets are digesting earnings misses without panicking. That's a sign of strength, not complacency — but only if breadth holds up.