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Stocks fell sharply today as rates pushed back toward their highs. There was a 5-year Treasury auction today that did not go well, and that just pushed rates even higher after 1 p.m. Tomorrow, there will be a 7-year auction at 1 p.m., and it too could be a market-moving event and needs to be paid attention to.

Tomorrow, we will also get that highly anticipated 3Q GDP, and the estimate is for 4.5%. The Atlanta Fed GDPNow and Bloomberg Economics suggest a number greater than 5%. Even if the number comes in around 4.5%, it is almost hard to believe, given the 2.1% print in 2Q. That would be a big acceleration in the economy. That will be a closely watched number as it will greatly impact rates.

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Tomorrow could be an active day for the rate complex between the GDP numbers in the morning and the 7-year Treasury auction. There will also be an ECB rate announcement tomorrow as well in the morning.

S&P 500 (SPX)

Meanwhile, the S&P 500 closed today at 4,186, meaning the entire summer rally is gone. We are returning to levels on May 31, when the S&P 500 closed at 4,179. To make matters worse, we tested that 200-day moving average the last few days, and today, we moved firmly below it after it worked as resistance.

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The decline in the S&P 500 doesn’t look complete yet, and I wouldn’t be surprised to see 4,115 in the days ahead based on the wave counts.

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Meta (META)

I don’t think Meta will save the day; the share fell today by 4% from $312.55 to $299.53. The company beat on the top and the bottom but then issued guidance of $36.5 billion to $40 billion, or $38.25 billion at the mid-point, which was light of estimates for $38.76 billion. So, it missed on guidance by a bit. Despite the beat and inline guide, the stock is up less than 2% as of 5:30 ET and is trading around $305, so it is still below where it closed yesterday. Not very encouraging.

But the bigger problem for Meta is that there is a lot of call gamma sitting up $315, and put gamma, for that matter, which expires on Friday. So unless Meta can get above $315, all of that call gamma will start to lose a lot of value as implied volatility begins to melt, which means market makers will likely be sellers of Meta tomorrow.

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Bloomberg

So if the stocks trade down tomorrow, despite the “fantastic, groundbreaking results, lead by generative AI,” as noted on TV multiple times, you know why.

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