The first day of October, also the first day of the fourth quarter, featured a face plant for stocks as increased tensions in the Middle East as well as the start of the expected port strike on the East and West coasts were too much for the charging bull to overcome. The two areas that (of course) benefited were crude oil prices/energy stocks and defense/aerospace stocks. WTI ended the session with a 3.4% pop and closing at $70.47/barrel, although that was well off the intraday high up near $72/barrel. Industries that import goods from overseas (retailers, toys, clothing, etc.) fell only 1% on hopes that the port strike won't last long, but we all remember what happened to prices during and after the COVID-19 pandemic. Information Technology was weak on Tuesday, led by renewable energy equipment (especially by weakness in solar), semiconductors, and computer hardware, all losing between 3% and 3.5%. These industries also import a lot of products and are very susceptible to supply disruptions. The S&P 500 (SPX), S&P 100 (OEX), Nasdaq, Nasdaq 100 (QQQ), and S&P 400 (MDY) gave up 0.9% to 1.5%, but all held near-term support. The SPX, OEX, and MDY closed on their 10-day exponential moving averages (EMA), while the Nasdaq and the QQQ bounced off their 21-day EMAs. So there is no short-term technical damage yet. We would be a bit concerned if the SPX dropped below its breakout area between 5,650 and 5,670, as that would create a false breakout. But for now, that wouldn't be an absolute game changer for stocks as there is so much potential support below current prices. We also have seen very strong breadth, which is not typical of a major top. (Mark Arbeter, CMT)

Berkshire Hathaway is a holding company with a wide array of subsidiaries engaged in diverse activities. The firm's core business segment is insurance, run primarily through Geico, Berkshire Hathaway Reinsurance Group, and Berkshire Hathaway Primary Group. Berkshire has used the excess cash thrown off from these and its other operations over the years to acquire Burlington Northern Santa Fe (railroad), Berkshire Hathaway Energy (utilities and energy distributors), and the companies that make up its manufacturing, service, and retailing operations (which include five of Berkshire's largest noninsurance pretax earnings generators: Precision Castparts, Lubrizol, Clayton Homes, Marmon, and IMC/ISCAR). The conglomerate is unique in that it is run on a completely decentralized basis.

Tuesday was reminiscent of the mega-cap market from parts of 2023 and 2024, when just a handful of monster stocks dragged the major indices higher, while most other stocks waded in choppy water. While the biggest sector winner was Real Estate (XLRE), with a 1.8% gain, Information Technology (IT) was second, rising 1.5%, and Consumer Discretionary was third, adding 1.2%. Within IT, software rose 1.9% on the back of Oracle's 11% surge following better-than-expected quarterly results. Semiconductors also got a little mojo back, rising a bit more than 3% as Broadcom popped 5.3% and Advanced Micro added 3.4%. Autos led in discretionary as Tesla ripped 4.6% higher while the next 10 autos by market cap all fell. On the flipside, Financial gave up 1%, led by a 5.2% drubbing in the largest bank, JP Morgan. Energy was the weakest sector, as crude oil fell another 3.5% to $66.30/barrel and to the lowest close for WTI since late 2021. Exxon led Energy to the downside, falling 3.6%. While the S&P 500 gained 0.5%, the Nasdaq rose 0.8%, the Nasdaq 100 was up 0.9%, the small- and mid-caps did little, and NYSE breadth was flat. Bonds continue to rally as the 10-year yield fell to 3.65%, the lowest level since June 2023; the five-year dropped to 3.43%, its lowest point since May 2023; while the two-year is down to 3.59%, the lowest since March 2023. While it's happening slowly, the yield is normalizing -- in other words, it is "un-inverting" for the first time in over two years. The two-, five-, and 10-year yield charts all look like they are tracing out multi-year topping formations, but we don't want rates to fall too far. (Mark Arbeter, CMT)

Berkshire Hathaway is a holding company with a wide array of subsidiaries engaged in diverse activities. The firm's core business segment is insurance, run primarily through Geico, Berkshire Hathaway Reinsurance Group, and Berkshire Hathaway Primary Group. Berkshire has used the excess cash thrown off from these and its other operations over the years to acquire Burlington Northern Santa Fe (railroad), Berkshire Hathaway Energy (utilities and energy distributors), and the companies that make up its manufacturing, service, and retailing operations (which include five of Berkshire's largest noninsurance pretax earnings generators: Precision Castparts, Lubrizol, Clayton Homes, Marmon, and IMC/ISCAR). The conglomerate is unique in that it is run on a completely decentralized basis.