Happy Friday afternoon to everyone on The Street. Here's a snapshot of where markets ended the trading session, plus tomorrow's trade idea delivered to you today.

• 🟩 | US stocks fell Friday as bank earnings boosted markets. The S&P 500 and Dow hit new highs Friday, with the S&P 500 ultimately climbing 0.6%, the Dow gaining 1%, and the Nasdaq rising 0.3%.

• 📈 | One Notable Gainer: Wells Fargo's stock rose 5.6% after reporting third-quarter adjusted earnings of $1.52 per share, surpassing the expected $1.28.

• 📉 | One Notable Decliner: Tesla shares fell over 8.8% after an underwhelming robotaxi event that disappointed investors and lacked details on competing with ride-sharing companies, according to Morgan Stanley analysts.

• 🛢️ | Tomorrow's Trade: Defense Deals or Oil Steals? Scroll down for more.

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MARKET MOVERS

JPMorgan, Affirm, Bank of America

JPM (+4.4%) JPMorgan touts 'soft landing' possibility after better-than-feared earnings (YF)

AFRM (+12.1%) Affirm Stock Upgraded, Shift4 Started At Buy As Fintechs Claw Back (IBD)

BAC (+5%) Buffett Dumps More Bank of America Stock, No Longer Has To Report Moves Promptly (Investopedia)

SYM (+8.8%) Symbotic shares hold with Market Perform rating (Investing.com)

FAST (+9.8%) Fastenal Shares Jump After Revenue Rose Despite Hurricane Helene Disruption (Investopedia)

OVERHEARD ON THE STREET

Reuters: The NLRB accuses Apple of violating workers' rights by limiting Slack and social media use to stifle collective advocacy for better conditions.

The Verge: Stellantis CEO Carlos Tavares will retire in 2026 amid leadership changes as the company struggles with its US auto business.

Reuters: The FAA's oversight of Boeing is ineffective, failing to identify key discrepancies and noncompliance in manufacturing facilities, according to watchdog.

WSJ: Autumn harvests are underway and America's farmers are reaping record crops. The highest yields ever are expected to result in record U.S. harvests of corn and soybeans, the U.S. Department of Agriculture said Friday in its monthly crop report. The report pushed down futures prices for both crops, which are trading around their lowest levels since 2020.

Axios: TD Bank pleaded guilty to money laundering, agreeing to pay over $3 billion in penalties for failing to maintain an AML program.

TOMORROW’S TRADE IDEA, TODAY

Are Defense Stocks Still the Way To Play Geopolitical Conflicts?

Defense Developments

As the conflict in the Middle East escalates, so do defense stock prices. Lockheed Martin (LMT) and Northrop Grumman (NOC) have outperformed the overall market recently, while their European counterparts — such as BAE Systems (BAESY) — have risen even more.

This is nothing new. Defense stocks have long been considered a way to play geopolitical uncertainty. The same trend emerged in the wake of the Gulf War and September 11th.

The more important question for investors today is, how much higher can they go?

Is the Trend Sustainable?

On paper, this might seem like the ideal time to pile into the defense sector. In addition to persistent conflicts in the Middle East and Europe, the defense sector tends to do well when the Federal Reserve is cutting rates, as it is now. 

But the geopolitical landscape doesn’t look the same as it did a couple of decades ago. Those same stocks saw a spike following Russia’s invasion of Ukraine — and fell back down to earth soon after.

For these stock gains to be sustained over a long period of time, the U.S. will have to increase its defense budget significantly, per a Wall Street Journal report. So far, that has not happened. And with Congress capping budget increases, this is unlikely to change anytime soon, regardless of which party wins in November.

Another Way To Play

Investing in defense companies is the first thought of many investors when conflicts arise, but another industry could potentially see significant — and sustainable — gains, especially given the nature of these current conflicts. 

Tensions in the Middle East have massive ramifications for the oil market. Iran produces more than 3 million barrels per day, and that supply chain is being threatened, driving oil prices higher. U.S. oil companies have already benefited from this, but further escalation, such as the potential blockage of key global oil hubs like the Strait of Hormuz, could drive them even higher, Blue Line Futures analyst Bill Baruch says.

This may be especially true for those companies with limited exposure in the Middle East, according to Rystad Energy’s Claudio Galimbertihat. ExxonMobil (XOM) shares, for instance, climbed to an all-time high last week. The economist singled out Chevron (CVX) and Shell (SHEL) as well.

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ON OUR RADAR

CNN: The rise of accessible GLP-1 weight-loss drugs, like Ozempic and Wegovy, complicates the bridal gown industry amid existing price distortions.

CNBC: Working moms, making up 46% of employment, lose $20,000 annually in wages due to caretaking duties, impacting workforce participation.

Fast Company: Experts say the current average 30-year mortgage rate of 6.62% remains above the ‘magic’ number needed to boost housing resale activity.

AP: AI's significance is underscored by Geoffrey Hinton's Nobel Prize in physics and Google employees' chemistry prize, highlighting its commercial and scientific impact.

Axios: Hurricanes and the Boeing strike will distort economic data, complicating assessments of the job market and overall economic health.

YESTERDAY’S POLL RESULTS

Are you bullish or bearish on The New York Times over the next 12 months?

🟨⬜️⬜️⬜️⬜️⬜️ 🐂 Bullish

🟩🟩🟩🟩🟩🟩 🐻 Bearish