Welcome to Staten News, where bad news was supposed to be good news and the bond market never got the memo.
Payrolls came in at 29,000 on Friday. Wall Street was looking for something closer to 80,000. Stocks loved it.
The S&P 500 rose 0.7% on the day and the Nasdaq jumped 1.2% to a record close, because a cooling labor market is exactly what you want when the Fed has been hiking. Unemployment ticked up to 4.2%. Traders read that as permission for the Fed to stop. The 10-year Treasury yield read it differently and kept pushing toward 5.3%.
That split is the whole story right now. Equities are pricing relief. Bonds are pricing inflation that refuses to leave, with Brent crude still sitting above $102 a barrel.
For the full week, the Nasdaq finished up 0.5%, the S&P 500 slipped 0.3%, and the Dow dropped 1.3%. Under the hood it was messier than any of those numbers.
📈 The Winner: Carnival (CCL) +15.8%
Carnival closed the prior Friday at $22.25 and finished this one at $25.76. Most of that came in one shot, a 13.4% jump on Tuesday after the cruise line posted the best quarter in its history.
Revenue hit a record $8.44 billion. Net income came in around $1.92 billion. Adjusted EPS of $1.43 cleared guidance of $1.35. Customer deposits set a third-quarter record at $7.6 billion, and management said 2027 is already booked at record occupancy and pricing.
Here’s the part that matters. Higher fuel cost Carnival roughly $150 million in the quarter, and it beat anyway. With oil above $100, the market expected fuel to eat the cruise lines alive. Instead the company held costs everywhere else and kept raising prices on people who will apparently cut a lot of things before they cut a vacation.
That’s not a recovery trade anymore. That’s pricing power.
📉 The Loser: Fair Isaac (FICO) -23%
FICO closed the prior Friday at $863.09. It ended this week at $661.25.
On Tuesday, FHFA Director Bill Pulte announced that Fannie Mae and Freddie Mac would merge their mortgage pricing grids into one that puts VantageScore right next to Classic FICO. The stock fell more than 20% that day, its worst session since 1989. It bounced 11% Thursday on short covering, then gave back about 8% Friday on reports that lenders may only need to pull files from two credit bureaus instead of three.
Bank of America cut its price target in half, from $1,400 to $700, and downgraded the stock to Neutral. FICO now trades below even that.
Translation: FICO spent years raising what lenders pay per score because lenders had nowhere else to go. Now they do. A monopoly premium doesn’t fade slowly when the monopoly ends. It gets repriced in a week.
🔮 Predicted Gainer: Delta Air Lines (DAL)
Delta reports September-quarter results Friday, October 9, with the call at 10 a.m. ET. Wall Street expects $1.96 per share on $17.7 billion in revenue.
The bear case is fuel, and it’s a real one. But Carnival just showed what happens when a travel company with strong demand runs into $100 oil: it eats the cost and posts a record anyway. Delta sells to the same kind of customer, the one who keeps booking trips even when the jobs report goes soft.
Positioning backs it up. All 23 brokerages covering Delta rate it a buy or strong buy, and the 50-day call/put ratio sits in the 99th percentile. The stock is still below its June record, so there’s room left if guidance holds.
Guaranteed? Not even close. Delta has closed lower the day after earnings in 7 of its last 12 reports. But Carnival handed Delta the best possible warm-up act.
🔮 Predicted Loser: Constellation Brands (STZ)
The Modelo and Corona maker reports fiscal second-quarter results Tuesday, October 6, with the call Wednesday morning.
Last quarter, revenue came in at $2.43 billion, down 3.3% from a year ago. Beer has been the problem for more than a year. Hispanic consumers account for roughly half of Constellation’s beer sales, and that customer has been making fewer trips and spending less on each one.
The Street now expects revenue to grow about 2% year over year. That’s a recovery priced in before the recovery shows up. A 29,000-job month doesn’t help a company whose core buyer tends to feel the slowdown first.
If beer depletions come in soft, the stock pays for it.
📅 The Week Ahead
Tuesday, Oct 6: Constellation Brands earnings
Wednesday, Oct 7: FOMC minutes from the September meeting (2 p.m. ET); Applied Digital earnings after the close
Friday, Oct 9: Delta Air Lines earnings, call at 10 a.m. ET
Wednesday, Oct 14: September CPI
Wednesday’s minutes are the real event. The stock market already decided the Fed is done hiking after Friday’s jobs number. The minutes will show whether the committee was leaning that way before the data even landed. If they read hawkish, the 10-year pushes through 5.3% and the rally loses its excuse.
This is the week stocks and bonds find out which one read Friday correctly.
This is not financial advice. Always do your own research.
— The Bandicoots 📊🔥