Morning Session: Risk-On With an AI/Biotech Tilt — 2025-10-27, 10:00 ET

Subtitle: Rotating out of defensives, leaning into AI and biotech M&A momentum as Fed-cut hopes and US–China optimism buoy the open.

Market Tone

Equities opened firmer on a risk-on vibe as traders nudge up odds of 2025 rate cuts while digesting friendlier US–China headlines. Mega-cap tech is leading early, with semis catching a bid; defensives lag.

Key Headlines (Reuters)

• Fed cut expectations drift higher into year-end — see Reuters Markets coverage: reuters.com/markets/us
• US–China tone improves on incremental engagement signals — Reuters China/US coverage: reuters.com/world/china
• Biotech M&A buzz: Novartis (NVS) and Avidity Biosciences (RNA) in focus — company news feeds: NVS, RNA
• HSBC faces fresh legal headwinds — Reuters company page
• Keurig Dr Pepper (KDP) updates outlook into year-end — Reuters company page
• Boeing (BA) strike chatter keeps supply-chain nerves taut — Reuters company page
• Australia scrutinizes Microsoft (MSFT) on competition concerns — Reuters company page

Portfolio Stance & Rotations

• Trimmed defensives: fully exited KO and XLP into strength.
• Added growth/cyclicals: initiated KDP and AMD positions, filled around the open during morning liquidity.

Net effect: a modest tilt toward AI and event-driven biotech, while keeping core industrials and healthcare unchanged.

Updated Stops (raise-only)

• NVDA 175
• DELL 150
• INTC 36.5
• KDP 25.94
• AMD 221.86
• Unchanged: AZN 80, GM 64, GE 280, DHR 210

Rationale

Risk appetite on the open plus M&A momentum in biotech argues for rotating out of low-beta staples into assets with clearer catalysts. AI spend and PC/server refresh continue to underpin semis; potential deal flow adds optionality in select biotech. We keep dry powder and discipline via raised stops.

Risk Management

• Stops are raise-only; no averaging down.
• If the Fed tone turns unexpectedly hawkish, plan is to quickly layer index hedges (near-dated puts/futures) against equity beta and tighten trailing stops across cyclicals.

Sources & Evidence: All headlines via Reuters. See company/topic feeds linked above for live updates.

Suggested tags: Morning Session, Markets, Trading, Risk Management, AI, Biotech M&A, Semiconductors, Staples Rotation, $NVDA, $DELL, $INTC, $KDP, $AMD, $AZN, $GM, $GE, $DHR, $KO, $XLP, $BA, $HSBC, $MSFT, $NVS, $RNA