Earnings season kicks off after a blowout jobs report upended investors' hopes of another interest-rate cut

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Good morning. Memorials are being held across Israel today to mark the one year anniversary of the October 7 terror attacks.

In today's newsletter, earnings season is upon us. Here's what to look out for.

What's on deck:

• Markets: The 49 fintech startups worth keeping an eye on, according to VCs.
• Tech: Amazon's Prime Day kicks off tomorrow, and there are some deals on surprising items.
• Business: Activist investor Starboard has informed Pfizer it has taken a significant stake.

But first, let's double-click on that for a second.

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The big story

EBITDA for everybody

It's beginning to look a lot like earnings season.

The numbers are being crunched and talking points prepared as companies get ready to report their financials and discuss expectations for the final stretch of 2024.

Business Insider's Matthew Fox has a rundown of the biggest themes investors are watching this earnings season.

This crop of earnings is particularly important. It follows the first interest-rate cut in more than four years as the economy is on the cusp of nailing its soft landing. Meanwhile, the S&P 500 gained 5% in the third quarter while trading near record highs.

That translates into big expectations from investors, with Wall Street analysts looking for the S&P 500 to see year-over-year earnings growth of 4.6%.

Luckily for us, we'll get a sense of where things are headed early on. Big banks begin reporting at the end of the week, with JPMorgan and Wells Fargo kicking things off. The sector can act as a proxy for the wider market, with its insight into the health of consumers and corporations.

But the true test will come in a few weeks when Big Tech reports, offering another update on how its massive bets on AI are paying off (or not at all).

We've already got one indication companies are in good shape: Friday's blockbuster jobs report.

The US economy added 254,000 jobs in September (the consensus forecast was 147,000), and unemployment dropped to 4.1% (estimates were it would stay at 4.2%).

Considering the jobs market is the top priority of the Fed now that inflation is under control, that's good news … sort of.

If you were banking on another jumbo rate cut next month, those hopes have been dashed. (One firm thinks there's still a chance, pointing to a low response rate on the survey that could lead to a revision down.)

Philipp Carlsson-Szlezak, Boston Consulting Group's global chief economist, told me he expects the Fed to stick with the standard 25-basis-point cuts.

But another blowout report — 250,000 jobs added and at least 4% wage growth — could lead the Fed to reconsider its easing policy.

"Just wait and see how this is going. This is so strong. There's no need to cut. We need to restrain the economy a little. Let's just pull back on the pace," he said.

News brief

Top headlines

• Elon Musk speaks at Donald Trump's rally in Pennsylvania.
• 'Trump is going to win': Latino voters explain why they're moving to the right.
• Kamala Harris' tax plan for small businesses sounds like it will cost a lot of money. It won't.
• Jamie Dimon: No, I haven't endorsed Donald Trump.

3 things in markets

1. A major curveball in retirement preparedness. Divorce can derail the best-laid retirement plans, particularly for baby boomers (especially older women). An analysis by BI shows divorcees often have lower incomes and savings than married people.
2. The future of fintech. More than two dozen VCs nominated 49 fintechs they believe are on the rise. The startups, which haven't raised beyond a Series C, are focused on everything from AI (of course) to disrupting the insurance and healthcare industries.
3. More bad news for Trump Media. The No. 2 executive at former President Donald Trump's social media company resigned last week, with one report alleging his exit is tied to a whistleblower complaint. That follows a major shareholder selling their stake. But don't expect shares to crater.

3 things in tech

1. Amazon Prime Day may look a little different this year. In addition to the usual Prime Day gadgets, like TVs and Airpods, Amazon is dishing out deals on tents, pocket knives, and chainsaws. It's a way for Amazon to market those items, typically sold at steep end-of-season discounts, as early holiday deals.
2. Microsoft told customers it lost log data for key security products. According to an update viewed by BI, a software bug caused inconsistent collection of log data for several important cloud services. Affected products included Microsoft Entra and Sentinel, though there's no evidence of cyberattacks stemming from the incident.
3. Hard times a-falling on the influencer middle class. Marketers are turning away from the small-time creators and micro influencers in favor of big stars and celebrities, a new survey found. It's a tough draw for those with less than 500,000 followers; the survey found more and more deals are going to those with audiences of millions.

3 things in business

1. It's not just you. Dogs are everywhere. Fewer adults may be having children, but that's not the case for pet ownership. Americans are spending more time and money on their "fur babies" — and public spaces are becoming more welcome to dogs. It might be the new normal.
2. Starboard Value has its next target: pharma giant Pfizer. The activist investor has informed Pfizer that it has taken a significant stake in the drugmaker, people familiar with the matter told BI. It comes after Pfizer's stock dropped significantly since it reached record highs in 2021 during the rollout of its COVID-19 vaccine.
3. The great stuff transfer. Baby boomers are starting to pass their wealth to younger generations, but it doesn't end there. They're also handing down their decades-old collection of prized possessions and leaving Gen Xers, millennials, and Gen Zers to deal with the mess.

In other news

• Tim Tully taught himself to code at age 6 and still codes daily. Here's how computer science took him from startups to AI investing at Menlo Ventures.
• There are 3 signs that generative AI might be reaching peak market froth — and it's not just OpenAI.
• China's stimulus won't fix its economy, but Beijing isn't done yet.
• Why so many entry-level jobs aren't entry-level.

What's happening today

• Kamala Harris' "60 Minutes" interview airs on CBS at 8 p.m. EDT.
• ASEAN summit continues in Vientiane, Laos.

The Insider Today team: Dan DeFrancesco, deputy editor and anchor, in New York. Jordan Parker Erb, editor, in New York. Hallam Bullock, senior editor, in London. Grace Lett, editor, in Chicago. Amanda Yen, fellow, in New York. Milan Sehmbi, fellow, in London.