Not 1987: Dip buyers return as black Monday anniversary passes quietly

Yesterday was October 19th. Thirty-nine years since Black Monday. The day the Dow lost 22%… 508 points… in a SINGLE session.

Now put that in today’s terms. Back then the Dow was at 2,246.74. Yesterday it closed at 51,966.03. That same 22% move today? 11,432.53 points. In one day. Let that sink in.

And all weekend long, the doomsayers were out in force. Would yesterday be a repeat? Markets have been having a tough time of late. Chips down eight days in a row. The Nasdaq’s worst week since June. Concerns swirling around Core Weave and the AI trade… all of it only raising the temperature in the room. So, the chatter got louder… and louder… is this 1987 all over again?

Let’s be clear. NO. Not even close.

The mood of late is NOTHING like the mood in October 1987. Nothing. I know… because I was there. I was 26 years old, a brand-new member of the New York Stock Exchange… and I remember that day like it was yesterday. Markets had been under real pressure in the weeks leading up to that day, in fact, they had been under pressure since the summer, only getting more anxious as we moved into October …. the Wednesday, Thursday and Friday prior – 14^th, 15^th and 16^th had seen the markets sell off on bigger volumes each day and CLOSE on the lows of the day each day… Never a good sign.

I remember waking up that Monday morning, taking a shower, getting dressed, driving to the Tarrytown train station, buying my cup of coffee and the WSJ…jumping on the train and reading about what happened on Friday (not what was happening on Monday in Aisa or in Europe) – recall there was NO internet, no X, no reddit, nothing…. When I got to work, I was completely unaware of the devastation that was happening around the world…that was until I got a phone call at 7 am…from a customer that worked at FBC and had access to a …. Bloomberg machine and the other FBC offices around the world… – who then told me about the blood bath that was about to hit our shores…. While I listened, I was not fully prepared for what it meant…but as the opening approached it became clearer and it was UGLY…Stocks were delayed in opening, brokers only had sell orders….and big ones… No one was a buyer…. the specialist was the buyer of last resort and it wasn’t pretty…. stocks sold off and never bounced.

There was REAL fear that day. Real fear. What we’ve seen lately? Not even close.

And what did the market do on the anniversary? It went up…. Dip buyers showed up in the chips… the same names that had been taken out back and punched in the face over the past couple of weeks found buyers.

Now yes, Last week the Nasdaq dropped 4.5%… its worst week since June… and the S&P gave up almost 2%. But the Dow finished the week HIGHER, up 0.7%. Staples, health care and energy led while tech got hammered. That was not a repeat of 1987 at all…. No. That’s rotation, not liquidation. Period.

At the end of the day, the Dow lost 36 pts, the S&P added 32 pts, the Nasdaq rallied by 290 pts or 1.1%, the Russell up 7 pts, the Transports gave back 178 pts, the Equal Weight S&P lost 30 pts while the Mag 7 surged – rising 545 pts or 1.5%.

Most of the action happened across the tech space – recall the Nasdaq composite and many of the members were in ‘oversold’ territory according to their RSI’s. So a bounce was not unexpected…..Semi’s up 1.8%, Cyber up 1.1%, Disruptive Tech up 1.2%, Software up 1.6%, Memory names that have taken it on the chin rose 4.5%....in the end – investors, traders and algo’s went for the stuff that is on sale…some sectors and names well into bear market territory – meaning down more than 20%.....in what has been a rolling pullback.

I say that because if you just look at the indexes – you don’t see the damage that has been done to subsectors and individual names….the S&P only down 1.4% off it’s high, the Nasdaq down 5.7% off its high only 2 weeks ago…both well within what is considered ‘normal’.

And THAT is why you have to look beneath the surface. The headline indexes can make the damage look modest while individual stocks and entire pockets of the market have already suffered substantial declines. That creates opportunities—but being down 20% doesn’t automatically make something a ‘buy’. You still have to do your due diligence, you have to know what you own, what you’re paying and whether the earnings support the story.

Helping the mood was news that Nscale was in talks to sell computing power to Anthropic in a deal potentially worth $45 billion. That is a big number…and another indication that demand for computing capacity remains substantial, giving new life to the AI story.

Nscale is a London-based AI infrastructure neocloud and data center developer. It builds, manages, and scales the physical and digital foundations required to train and run artificial intelligence systems. they offer high-performance cloud services, optimized for compute intensive AI workloads…. They are NOT a public company yet, but they have filed for a US IPO to be listed on the NYSE under the symbol NSCL.

And while stock buyers were feeling better, bonds offered less comfort. Treasury prices fell, the TLT lost 0.75%, while the TLH gave up 0.6% pushing the 10-year yield up nearly 4 basis points to 5.135% and the 30 yr up 6 bps to 5.46%. A reminder that a bounce in tech does nothing to change the fact that long-term borrowing costs remain elevated—and those yields continue to offer investors a real alternative while keeping pressure on what they’re willing to pay for stocks.

And oil did not help either…WTI ended the day up 2.2% at $103.66 – this morning it is up another $2 or 2.1% at $105.87. Surging as renewed threats to Saudi energy infrastructure and continued attacks on Gulf shipping keep buyers paying up. This is the geopolitical risk premium getting bigger—traders pricing in the possibility that more barrels get disrupted. And that is not helping.

And gold? It remains stuck in the $4000/$4250 range…. while the VIX is holding steady just above the trendline – suggesting elevated concerns but NOT outright panic.

On earnings—Cleveland-Cliffs gave investors something to discuss away from AI. The steelmaker reported adjusted earnings of 28 cents/share (a slight beat) and adjusted EBITDA of $612 million on approximately $5.6 billion in sales. The stock was up 16.4%.

Today, the earnings conversation gets much broader.

Before the bell—we hear from 3M, Hasbro, RTX, Northrop Grumman, Halliburton, GE Aerospace, General Motors, KeyCorp and Ally. After the bell—Netflix, Capital One, United Airlines and SpaceX. That gives us a look across industrials, toys and entertainment, defense, energy services, aerospace, autos, banking, consumer credit, streaming, airlines and space infrastructure.

I’ll be paying particular attention to RTX, Northrop, 3M, GM, Halliburton and SpaceX…because each gives us a different way to test demand, spending and profitability.

At RTX—we get commercial aerospace and defense in the same report. Watch demand for Pratt & Whitney engines and Collins Aerospace equipment, along with the aftermarket business that services aircraft already flying. On defense, watch missile and air-defense orders, production capacity and margins. Strong demand is encouraging. The question is how efficiently RTX can turn that demand into deliveries and cash. YTD – the stock is up 4.75%. This morning the stock is up 2.1%.

At Northrop Grumman—the focus shifts to major defense programs, including the B-21 bomber, nuclear modernization and space systems. These are long-duration commitments, but contract economics matter. Watch program milestones, cost estimates and any additional charges. A large backlog gives you visibility…it does not automatically give you an attractive margin. I want to hear whether execution is improving and whether the cash-flow outlook supports confidence in those programs. YTD the stock is down 10.5%. This morning the stock is down 0.1%.

Then there is 3M…a read on industrial demand. Watch organic sales volumes, pricing, operating margins and free cash flow. Are customers buying more—or is pricing doing most of the work? Cost reductions can support earnings, but eventually you want healthier demand contributing as well. YTD the stock is up 1.9%. This morning the stock is up 2.4%.

GM brings us straight to the household budget. Vehicle affordability is the issue…prices, financing rates and monthly payments all matter. Watch North American profitability, dealer inventories and incentives. If GM needs bigger discounts to move vehicles, what does that do to margins? Trucks and SUVs are central to the earnings story, while EV demand, pricing and investment requirements deserve scrutiny. Then listen to GM Financials’ credit commentary. Are customers keeping up with their payments? Ally’s auto-lending results will give us another perspective on that same borrower. YTD the stock is up 1.7%.

GM beat but offers cautious guidance…the stock is trading down 5.7%.

Halliburton is where we test whether higher oil prices are actually producing more spending. Oil above $100 may improve the economics of drilling…but producers can choose to pay down debt or return cash to shareholders instead of adding rigs. Watch North American completion activity, service pricing and equipment utilization, alongside international growth and margins. Management’s comments on customer budgets should help us judge how durable this energy move could be for the service companies. YTD the stock is up 16.7%. This morning the stock is up 3.3%.

And after the bell—SpaceX puts another major infrastructure investment story under the microscope. Watch Starlink’s customer growth and revenue per customer, launch demand and cadence, and the spending needed to expand the network and develop Starship. Subscriber growth gets attention…but investors also need to understand terminal costs, network capacity and ongoing satellite replacement. Launch contracts matter, along with the ability to execute them reliably. I want to see how much cash the operating businesses generate and how much is being reinvested. YTD the stock is down 9%. This morning the stock is down 1.9%.

The other reports round out the picture. Hasbro gives us a window into holiday discretionary spending; GE Aerospace, commercial aviation and aircraft servicing; KeyCorp, banking and business credit; and Ally and Capital One, auto loans, credit cards and consumer payment trends. Netflix offers a read on streaming, advertising and pricing power, while United brings bookings, fares and the impact of higher fuel costs into focus.

Then Wednesday brings Meta and Tesla, keeping spending plans, margins and growth expectations under the microscope.

Put it all together—and this earnings calendar gives us a chance to test the market’s assumptions across a wide range of businesses.

Eco data today is about the Philly Fed Non-Manufacturing (Services) Activity report along with Housing Starts and Building Permits and Pending Home Sales. Later in the week – we get the October Preliminary S&P Global Manufacturing and Services PMI’s – both expected to remain in the expansion zone.

European markets are all lower again – markets across the zone down about 0.5% - 0.8%.

US futures are mixed…… Dow futures are UP 130 pts, the S&P is -3, the Nasdaq is down 125 while the Russell is up 2.

The S&P closed at 7,690, up 32 pts. below trendline resistance at 7705. This morning, S&P futures are suggesting weakness…..but this could go either way…. much will depend on what the eco data says and what we hear from those companies reporting before the bell.

If you own high-quality stocks and maintain a diversified portfolio and have your near-term cash needs covered, you are positioned to ride the wave….. Review your portfolio and keep your time horizon in focus. A drawdown in the market does not, by itself, require a change in your long-term plan unless of course the overall thesis and tone changes. For now, it has not.

Pastina al pomodoro

Prep time: 10m

Cook time: 15m

Total time: 25m

Serves: 4-6

Ingredients

1 lb Pastina pasta

1 diced onion

2 cloves of garlic

1 can of Passata

Olive oil

s&p

Fresh basil

Fresh grated parmegiana cheese

Preparation

Step 1

Begin by adding the diced onion and garlic to a pot and sautéing for 10 mins on med hi heat.  Stir – do not let burn.

Step 2

Now add the passata and one can of water.  Season with s&p.  Bring to boil.

Step 3

Add the pastina and allow it to cook – it will suck up most of the liquid. – Check for doneness.  Do not let it dry out…. add a touch more water if you need to.  You want it to be creamy, not soupy.

Step 4

When ready – remove from the heat and add 2 handfuls of grated cheese and some torn fresh basil leaves, tease with a splash of olive oil…. Stir to mix.

Step 5

Serve in warmed bowls – always have extra cheese on the table.