The Cash Audit Takes Amazon Too: AWS Grows 39%, Cash Flow Burns $42 Billion, and Intel Sinks 25% on a PC Slump

1. Macro Pulse

Thursday’s close: the index fell, most stocks rose. The S&P 500 fell 0.30% to 7,720.39, ending a three-day winning streak; the Dow fell 0.25% to 52,342.56 and the Nasdaq Composite 1.38% to 26,184.72. The Russell 2000 rose 1.01% to 2,859.22 and the equal-weight S&P 500 rose 1.20%. Advancers led decliners 403 to 99 in the index. [AP via KRMG, 10/29; CappNotes, 10/29; Trefis, 10/30]

Sectors. Health care rose 2.40% to a record, real estate 2.21%, staples 1.54% and utilities 1.53%. Communication services fell 1.87% and technology 1.18%. Alphabet fell 12.64% to $283.82, its worst day ever, and the chip index fell 1.42% to 11,518.20. [CappNotes, 10/29; StockTitan, 10/29]

Futures this morning. At about 8:00 AM the QQQ was down 2.55% and the SPY 1.06% in pre-market trade; the Dow was little changed. Futures quotes put the Nasdaq 100 down 2.2% to 2.6% and the S&P 500 down about 1%. A Russell 2000 futures quote was not in our sources. [StockTitan, 10/30; Investing.com, 10/30]

Bonds: lower yields after a strong economy. The 10-year fell 7bp Thursday to 4.98%, the 2-year 6bp to 4.61% and the 30-year 5bp to 5.32%, despite 3.4% GDP growth. This morning the 10-year is near 4.93%, the 2-year 4.60% and the 30-year 5.30%. December hike odds eased to about 75% to 78% from 84%. [CappNotes, 10/29; Investing.com, 10/30; Moneta Markets, 10/30]

[ANALYSIS] The bond is pricing the AI selloff as a growth risk, as it did on October 23. A 7bp drop on a 3.4% GDP print says the long end fears the spending cycle more than it fears the Fed.

Oil: Houthi strikes and an expiring contract. Brent settled Thursday at $114.88 and WTI at $102.00. The Houthis claimed attacks on Ras Tanura, the Rabigh refinery and an Aramco site at Abqaiq; the claims do not establish damage. A tanker was hit near Hormuz. Brent’s expiring December contract is near $116 to $117; the active January contract trades near $112 to $113. [CappNotes, 10/29; Invezz, 10/30; HDFC Sky, 10/30; TipRanks, 10/30]

Iran. CENTCOM’s commander briefed Trump Thursday on the blockade and possible renewed combat operations; US officials told allies to prepare for strikes after the November 3 midterms, per the WSJ. Iran has not responded to Vice President Vance’s outreach. Brent is set for a monthly gain of about 11% to 14%. [Angel One via WSJ, 10/30; Invezz, 10/30; HDFC Sky, 10/30]

Overseas. The Nikkei fell 2.1% to 63,290.11 after the Bank of Japan held at 1.25% in an 8-1 vote and sped up its ETF sales. The Kospi fell 3.48%, with SK Hynix down about 7%. Hong Kong rose about 1.5% on Tencent and Sinopec; Shanghai fell 1.44%. European tech fell 1.9%. [Bloomberg, 10/30; Invezz, 10/30; TipRanks, 10/30; StockTitan, 10/30]

Gold, dollar, crypto, volatility. Gold is near $3,950 to $3,965, down about 2% and below $4,000. The dollar index is near 101.73; EUR/USD 1.118 and USD/JPY about 157.5. Bitcoin is near $77,200 to $77,600, a six-week low, after Binance reported a theft of about $6.36B. The VIX is near 18.7. [Investing.com, 10/30; Yahoo Finance, 10/30; TraderFactor, 10/30; Quant Partners, 10/30]

2. Economic Calendar

[ANALYSIS] Thursday’s data were strong and the 10-year still fell 7bp. Unless the employment cost index runs hot, the bond keeps pricing growth risk from AI, not the Fed. [CappNotes, 10/29; TraderFactor, 10/30; Quant Partners, 10/30]

3. Earnings Spotlight

4. Pre-Market Movers: Upside

5. Pre-Market Movers: Downside

6. Sector Rotation Radar

[ANALYSIS] Through Thursday the S&P 500 was up 1.3% for the week and the Russell 2000 up 3%. The equal-weight index rose 1.20% Thursday while the S&P fell 0.30%. The money is leaving AI, not stocks. [AP via KRMG, 10/29; CappNotes, 10/29]

7. Today’s Session Playbook

1. Data: wages, then Chicago. The employment cost index at 8:30 AM (consensus +0.8%) and the Chicago PMI at 9:45 AM. A hot wage print is the one thing that turns the bond rally around.
2. Top story: Amazon’s cash. AWS grew 39%, but trailing free cash flow is −$42.4B. Watch whether Amazon holds its pre-market low; Microsoft, the one spender that passed, is the relative test.
3. S&P 500 levels: futures imply an open near 7,640. Support is 7,676.77, then the 7,600 area; resistance is 7,720.39, Thursday’s close, then 7,743.98.
4. Event risk: Iran into the midterms. US officials told allies to prepare for strikes after November 3, and the Houthis claim new attacks on Saudi oil. Brent’s December contract expires today.
5. Under-the-radar: the equal-weight index. If the RSP holds Thursday’s 1.20% gain while the Nasdaq 100 falls 2%, the rotation is a regime; if it falls too, the day is broad de-risking.

Thursday our research set the test: Amazon had to show AWS growth with positive free cash flow, or the cash audit would cover every hyperscaler. AWS grew 39%, a beat and its fastest pace in nearly five years. Quarterly capex was $77.3B against $58.7B expected, and trailing free cash flow was an outflow of $42.4B. The bad branch fired. Even Microsoft, the spender that passed, closed down 0.16% Thursday after trading up 2% to 4% before the open. The bond also moved: the 10-year fell 7bp to 4.98% on a 3.4% GDP print, pricing the spending cycle as a growth risk, as on October 23.

Our Thursday calls: Eli Lilly, Opportunity, rose 6.63%; Chipotle, Momentum Play, 8.88%; eBay, Opportunity, almost 3%. ServiceNow, Dead Cat Watch, fell 26.95%, and Marvell, Wait for Clarity, 13.24%; both right. Alphabet, Wait for Clarity, fell 12.64%; waiting was right. Fortinet, Wait for Clarity, fell 20.09% after trading down 26%. Lumentum, Avoid Chasing, closed up only 0.61%, right. DoorDash, Wait for Open, rose 5.61%; Carvana and Mastercard, both Wait for Open, rose 15.68% and 4.16%, so waiting cost upside. Micron, Wait for Clarity, fell 4.98%. Microsoft, our Opportunity, fell 0.16%, a miss. Caterpillar, Possible Entry, closed down 9.25%, no rebound yet. The S&P 500 closed at 7,720.39, just below our 7,722.60 support. [CappNotes, 10/29; Yahoo Finance, 10/29; Trefis, 10/30]

The hypothesis now: after capex, revenue, credit, the cycle, equity and cash, the audit covers every AI spender, and the market is no longer separating them. Intel adds a non-AI leg, a PC slump through mid-2027. But the money is not leaving equities: health care set a record, staples, real estate and small caps rose, and 403 S&P stocks advanced Thursday. The test is today and next week. If the equal-weight index holds while the Nasdaq 100 falls, and the 10-year stays under 5% with Brent above $112, the rotation is a regime. If the employment cost index runs hot and yields return above 5%, the defensive bid loses its anchor. Investors, and we, should watch breadth, not the Nasdaq.