NEW EPISODE: What if the biggest risk to the S&P 500 isn’t a recession, rates, or geopolitics — but the way we invest? Amber Kanwar sits down with Michael Green, Portfolio Manager & Chief Strategist, Simplify Asset Management , to unpack a provocative — and deeply unsettling — idea: under certain conditions, the S&P 500 could theoretically go to zero. Not because every company fails, but because market structure breaks. Tune in here.
I’m late. I vowed to set the alarm for 6am every morning and get cracking first thing. Time of death on that vow was Tuesday morning. I’d like to say I’ll do better next week but we are on the road for the show on the West Coast so it will probably get worse.
Here are five things to know:
I have nothing on that for you: You’d never know we just had a Fed rate decision and mega-cap tech earnings looking at the futures. They are flat as a board right now. Under the hood there is plenty of action with Microsoft and Meta (more on that below) playing tug of war in the pre-market and gold continuing its rip roaring advance while oil hits a fresh four-month high. Copper is surging this morning up nearly 10% on no particular catalyst other than continued demand from the AI infrastructure build. The Bank of Canada kept rates on hold as expected. The Federal Reserve also kept rates on hold with two dissenters voting in favour of another 25 basis point cut. In the press conference Fed Chair Jerome Powell was asked several times to comment on political events like the Supreme Court hearing into the firing of Lisa Cook or comments made by politicians about Powell’s performance. “He repeatedly responded to these questions by saying, ‘I have nothing on that for you.’ He said that seven times,” notes Ed Yardeni of Yardeni Research, “Four times, he said, ‘I don’t have anything on that for you.’ Gunna try that out on the kids. Today earnings pull focus once again with 36 S&P 500 reporting today including Apple after the bell. It’s a little less busy on the TSX today with only three companies reporting including Rogers (more below).
Marching to the beat: Meta is pumping nearly 9% in the pre-market after sales and profit beat expectations and its forecast for the upcoming quarter was also better. Sales grew nearly 24% and Meta’s forecast suggests growth next quarter will be even higher between 26-33%. This growth is helping investors get over concerns about AI spending. If Meta reaches the high end of their spending forecast it will be an 87% jump from 2025. Evercore’s Mark Mahaney called the spending “aggressive” but said the better forecast “carried the after-market.” He calls the stock a buy here. “Over the last two years, Meta has decisively proven that it can effectively deploy AI to materially improve its customer experience – both users and advertisers,” he wrote. I own Meta. IBM is also a winner this morning popping 8% after an earnings beat. Sales grew more than 12% in the quarter which is the fastest pace of topline growth since 2011! Big Blue is getting its mojo back with software sales helping to offset continued softness in their consulting business. Caterpillar is up 1.3% in the pre-market after earnings beat powered by AI data centre demand. I guess the heavy equipment maker is an AI stock now? Certainly trades like one with the stock up 65% over the past year. Caterpillar is known for making equipment for construction and mining sectors, and while those businesses are still growing by double digits, power and energy is growing faster. Sales in the power business surged 44% thanks to demand from data centres.
Have you trying rebooting? Microsoft is plunging 7% in the pre-market after sales growth in its cloud unit failed to live up to expectations while AI spending remained elevated. To be clear, its cloud unit Azure grew 39% from last year, but the forecasted growth is calling for “just” 37-38% growth. Any disappointment around its growth has to do with elevated expectations and supply constraints says RBC’s Rishi Jaluria in a note to clients. “Azure remains capacity constrained, limiting the ability to consistently outperform guidance despite strong underlying demand,” wrote Jaluria. Having said that, it is hard to ignore the reliance on OpenAI for a lot of its backlog growth. The total value of its contracted revenue doubled from last year, but when you exclude OpenAI related contracts there is only 45% growth. Jaluria says that still suggests core demand remains healthy. “MSFT’s AI footprint and cloud growth remain underappreciated, in our view, and we would be buyers on the pullback,” he wrote.
Meet the misses: Celestica initially sold off after-hours when it reported but now is only down about 1.5%. Sales and profit beat expectations and the forecast was also significantly higher. Investors may be flinching at spending plans which will top $1 billion this year. Although the company was clear they can fund this organically through operating cash flow. So they didn’t really miss, numbers are way ahead of consensus, but the stock is under pressure because of spending plans. Watch shares of CP Rail at the open after a mixed quarter. On one hand they missed profit expectations. However, a key measure of efficiency (operating ratio) improved and its forecast for profit in 2026 implies a reacceleration from 2025. This forecast seems optimistic wrote Cherilyn Radbourne at TD Cowen. “The KCS merger has enabled CPKC to deliver higher EPS growth vs. peers and valuation is now more reasonable but investor fund-flows are focused on U.S. rail M&A and estimate revisions remain slightly negative,” she wrote.
Go sports! Rogers beat profit and sales expectations in the quarter this morning thanks to its sports and media business. The Blue Jays run at the World Series and the larger stake in MLSE were key drivers. In the core telecom business we continued to see softness. The number of postpaid wireless customers it added was significantly below expectations and down 61% from last year. “We expect a positive reaction this morning on (1) recent underperformance; (2) the Blue Jays’ positive impact, although potentially challenging to replicate, is better than expected; and (3) lower-than-expected capex in 2026 leads to a small FCF guidance beat,” wrote Desjardins’ Jerome Dubreuil.
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