SpaceX and Tesla Eye a Mega-Merger 🚀

Welcome back to the Day Trading newsletter 📈

Wall Street rallied Wednesday as tech stocks led the way, but SpaceX stole the show with its first quarterly profit as a public company and word that Elon Musk is studying a merger with Tesla.

Let’s get into it 👇️ 

🔼 Wall Street closed higher Wednesday as tech stocks led a broad rally. The Dow gained 0.69% to 52,856.09, while the S&P 500 rose about 0.6% and the Nasdaq climbed about 1%. Nvidia and AMD both advanced, and SpaceX's earnings jump added fuel to the AI trade.

💰️ Super Micro raised its first-quarter revenue forecast to $18.5 billion to $19.5 billion, up from $14.5 billion to $15.5 billion. The AI server maker also lifted its gross margin outlook to 12% to 12.5%, citing stronger demand for its AI platforms. Shares rose nearly 10% Wednesday. Full results are due Nov. 3. (Benzinga)

📞 AT&T shares fell about 6% Wednesday even though the company beat third-quarter estimates. Investors are worried about SpaceX's push into wireless service. AT&T added 379,000 postpaid phone customers, and CEO John Stankey argued that building a nationwide mobile network takes years and heavy investment, so rivals can't replicate it quickly.

📺️ Netflix shares fell more than 5% Wednesday after the company gave a weaker-than-expected outlook. Third-quarter earnings of 87 cents a share topped estimates and revenue of $12.87 billion matched them. But Netflix guided fourth-quarter revenue to about $13.4 billion, below the roughly $13.5 billion analysts expected, and lowered its ad sales forecast.

🛢️ Oil topped $110 a barrel after a Houthi drone strike near Saudi Arabia's Shaybah oilfield killed two people. Debris from an intercepted drone fell near a processing plant at the field, which produces about one million barrels a day, though operations were unaffected. The attack adds to a geopolitical risk premium as other export routes remain strained.

📈 Meta reported record third-quarter revenue of $64.6 billion, up 26%, and announced a two-for-one stock split. Shares rose about 3% after hours. The company raised its 2026 expense forecast, citing a $9.9 billion legal charge, and projects $135 billion to $145 billion in capital spending this year.

📊 Nearly every economist expects the Fed to hold rates at its Oct. 27-28 meeting and raise them in December. In a Reuters poll taken Oct. 16-20, 94 of 100 economists predicted no change from the current 3.75% to 4.00% range, and all 100 expected a hike in December. That keeps borrowing costs high for longer.

🏦 A top U.S. banking regulator finalized rules for stablecoin issuers on Wednesday. The Office of the Comptroller of the Currency's rule covers reserves, redemptions and risk management under the GENIUS Act and takes effect in January. Circle rose about 6% and Coinbase about 5%. Stablecoins are crypto tokens pegged to the dollar.

SpaceX shares jumped 7.79% to close at $159.31 Wednesday after the company reported third-quarter revenue and profit that beat Wall Street estimates.

Revenue hit $14.6 billion, up 161% from a year earlier, and net income was $4.4 billion, the company's first profit since going public in June.

The star was its AI division, now called Super Intelligence, which brought in about $7.6 billion, more than Starlink and the rocket business combined.

On the earnings call, Musk said there is "a lot of merit" to combining SpaceX with Tesla. Each company has formed a special committee (typically independent directors who review a deal when a shared leader has a conflict) to study it.

Musk, who runs both, said he is staying out of those talks, and no terms have been agreed.

SpaceX is quickly becoming an AI company that also launches rockets.

AI made up roughly 15% of its sales a year ago and a little over half now, but it is expensive: SpaceX spent about $19.6 billion on capital expenditures in the quarter, mostly on AI computing. That helps explain the Tesla logic.

Musk has argued the two companies could cooperate on superintelligence software, and Tesla shares rose about 3.4% Wednesday on the news. The catch is the conflict of interest.

Because Musk sits on both sides, the independent committees and the price Tesla shareholders would get will draw intense scrutiny.

The stock reaction also shows investors are rewarding the AI story: SpaceX now trades well above its $135 IPO price.

What to watch:

• Any word from the two committees on terms or timing, since none has been set.

• Also watch Thursday, when up to about 1.3 billion SpaceX shares unlock (a lock-up expiration, meaning early investors and insiders can finally sell), the largest batch since the IPO. A big wave of selling could test Wednesday's rally.

 RATE TODAY’S EDITION

⚠️ Disclaimer: Not financial advice. Do your research before making any trades.