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The S&P 500 finished the day flat ahead of a following uneventful Fed meeting that revealed little new beyond the view that the economy remains in reasonable shape. It also appears that, at least while Jay Powell remains Chair, there are unlikely to be many — if any — rate cuts under his tenure at this stage, at least based on the tone of the press conference.

The earnings results after the close seem to be a mixed bag, with Microsoft (MSFT) falling by around 6.5% and Meta (META) rising by around 7.5%. From an options perspective, the setup for these stocks was bearish, as both had elevated IVs and significant call delta positioning at higher levels. After results and IV declines, those higher calls can lose premium, resulting in hedges being unwound, etc.

For Meta, the level that had to be cleared was $700, and at least for now the stock managed to clear that level. Revenue guidance was much stronger than expected, and on the surface, so the market is giving them a pass even though CAPEX came in higher than expected. It will be interesting to see whether the stock can stay over $700 once the market opens tomorrow.
 

For Microsoft, that level was $500, and it could not clear it despite delivering better-than-expected results; however, Azure growth disappointed.
 

For Tesla (TSLA), the stock appeared more mixed going into results, but it was clear that $450 was the level that had to be cleared. As of now, it is testing that level and failing.
 

Anyway, what happens after hours can vary, and I always think it is best to see how things play out during regular trading. How the CDS trade tomorrow will also be very telling, perhaps even more revealing, of the true nature of the reports.

In the meantime, it would seem that where rates go in the near term will have much more to do with oil than anything else. Oil did break out and moved past its 200-day moving average. I think that, over the near term, this sets up a potential rally to $65.
 

Whether one looks at the 2-year or 10-year rate, the relationship with oil since the end of 2022 has been incredibly strong. So, if oil continues to rise, I would think rates push higher, too. Perhaps oil has been the final missing piece to the higher rate story.
 

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