December S&P 500 E-Mini futures (ESZ26) are down -1.03%, and December Nasdaq 100 E-Mini futures (NQZ26) are down -1.78% this morning as the first round of Big Tech earnings reignited concerns about the sustainability of the AI trade, sparking a selloff in chipmakers and other AI-related stocks.
Meta Platforms (META) raised the lower end of its full-year capital expenditure guidance while leaving the upper end unchanged and offered no specific details on its 2027 spending plans beyond saying it would continue “investing aggressively.” Quilter Cheviot’s Ben Barringer said the absence of a substantial increase means “there’s not much there for the AI CapEx trade.” Meanwhile, Tesla (TSLA) cut its full-year capital spending forecast. Taken together, these developments reignited concerns about AI investments, sending chipmakers and AI infrastructure stocks sharply lower in pre-market trading. Marvell Technology (MRVL), Intel (INTC), and Advanced Micro Devices (AMD) each fell -4% or more.
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Adding to the downbeat mood, WTI crude climbed more than +2% on Thursday after deadly attacks in Saudi Arabia raised concerns that escalating Middle East tensions could disrupt oil supplies. A drone attack on Saudi Aramco’s Shaybah field left two people dead but did not disrupt operations, while a separate strike on King Fahd International Airport in Dammam killed one person. The attacks heightened fears that the U.S. and Israel could resume direct military action against Iran. The New York Times reported that the U.S. and Israeli militaries have drawn up detailed plans for renewed strikes on Iran after the U.S. midterm elections.
Investors are now awaiting a new wave of corporate earnings reports.
In yesterday’s trading session, Wall Street’s three main equity benchmarks ended in the green, buoyed by strong results from SpaceX and Super Micro. SpaceX (SPCX) climbed over +7% and was the top percentage gainer in the Nasdaq 100 after the rocket and AI company reported upbeat Q3 results, while CEO Elon Musk outlined an ambitious 2027 ARR forecast and endorsed the prospect of a merger with Tesla. Also, Super Micro Computer (SMCI) surged more than +9% and was among the top percentage gainers in the S&P 500 after the AI server maker reported preliminary Q1 revenue and gross margins above its previous guidance. In addition, chip and AI infrastructure stocks advanced as strong results from SpaceX and Super Micro boosted sentiment toward the AI trade, with Western Digital (WDC) and Advanced Micro Devices (AMD) gaining more than +3%. On the bearish side, Netflix (NFLX) slid over -5% after the streaming giant issued below-consensus Q4 guidance.
Third-quarter corporate earnings season is in full swing, with investors awaiting results from major companies today, including Western Digital (WDC), Procter & Gamble (PG), Union Pacific (UNP), Lockheed Martin (LMT), and Bloom Energy (BE). According to Bloomberg Intelligence, S&P 500 companies are expected to post an average +25% jump in third-quarter earnings from a year earlier.
On the economic front, investors will be watching U.S. initial jobless claims data, set to be released in a couple of hours. Economists expect applications for U.S. unemployment benefits to come in at 200K in the week ended Oct. 17, compared with 199K in the prior week.
The Conference Board Leading Economic Index for the U.S. will also be released today. Economists expect the September figure to fall -0.1% m/m, matching the drop recorded in August.
U.S. rate futures are currently pricing in an 87.3% probability of no rate change and a 12.7% probability of a 25-basis-point rate hike at the upcoming monetary policy meeting.
In the bond market, the yield on the benchmark 10-year U.S. Treasury note is at 5.08%, down -1.05%.
The Euro Stoxx 50 Index is down -1.77% this morning, pressured by declines in heavyweight banking, technology, and luxury stocks on a busy day for earnings. Rising oil prices amid escalating tensions in the Middle East further dampened sentiment. Bank stocks led the declines on Thursday as turbulence in the Eurozone bond market weighed on the sector. Tech stocks also sank as mixed earnings results from major U.S. tech companies failed to sustain the rebound in the AI trade. In addition, luxury stocks slumped, weighed down by a slide of more than -7% in Birkin bag maker Hermes (RMS.FP) after it posted weaker-than-expected Q3 revenue. Data released on Thursday showed that France’s manufacturing business climate index climbed in October to its highest level since July 2022. Meanwhile, French government bond yields jumped on Thursday amid growing investor concerns over France’s weakening fiscal position and mounting debt load, while German bunds gained on safe-haven demand. In other corporate news, Nestle (NESN.Z.IX) rose over +1% after the Swiss packaged-food group reported better-than-expected Q3 organic sales growth.
France’s Business Survey was released today.
The French October Business Survey came in at 105, stronger than expectations of 101.
Asian stock markets today closed in the red. China’s Shanghai Composite Index ($CHSC) closed down -1.48%, and Japan’s Nikkei 225 Stock Index ($NKY) closed down -2.65%.
China’s Shanghai Composite Index closed lower today, hitting its lowest level in more than a year as a selloff in technology stocks and waning hopes for additional economic stimulus weighed on sentiment. Tech shares tumbled on Thursday as growing concerns about the profitability of the nation’s AI companies sparked another wave of selling. Investor confidence was also undermined by diminishing hopes for substantial stimulus from Beijing following China’s relatively strong Q3 GDP data. While policymakers have taken steps to ease selling pressure and stabilize the equity market, analysts warned that those measures alone may not be enough to reverse the downturn. The selloff in mainland Chinese stocks has wiped out $2.4 trillion in market capitalization since a recent peak, according to Bloomberg-compiled data. “Investor sentiment remains very poor for China’s onshore and offshore markets, and without new policy or tech catalysts, this kind of volatile, directionless environment may persist into early 2027,” said Homin Lee at Lombard Odier. Meanwhile, Chinese President Xi Jinping called for meaningful improvements in economic quality and reasonable quantitative growth in a speech on Thursday, according to Xinhua. “We must resolutely promote high-quality development and continuously meet the people’s ever-growing needs for a better life,” Xi said. Elsewhere, Bloomberg News reported on Thursday that Chinese AI startup DeepSeek raised roughly 100 billion yuan ($14.98 billion) in its latest funding round. In corporate news, Alibaba Group sank over -6% in Hong Kong after Chinese authorities summoned e-commerce companies and urged stricter product-quality standards.
Japan’s Nikkei 225 Stock Index closed sharply lower today as U.S. megacap earnings failed to sustain the rebound in the AI trade. Rising oil prices amid escalating Middle East tensions also weighed on sentiment. Chip-related stocks cratered on Thursday, erasing the previous session’s gains as investors grew increasingly concerned about the outlook for AI spending. The selloff followed Tesla’s decision to lower its full-year capex forecast. “[The market] frets when companies ramp spending, and it frets when they pull it back, as we’ve just seen with Tesla. In this environment, it’s almost impossible to get the balance right,” said Tim Waterer at KCM Trade. The Nikkei closed below the 63,000 mark for the first time since Sept. 14. Meanwhile, Japanese government bonds climbed on Thursday, pushing yields to multi-week lows as the equity selloff prompted investors to seek refuge in safe-haven assets. In other news, Japan’s largest labor union federation, Rengo, said it will seek wage increases of at least 5% during the annual spring wage negotiations between the country’s unions and employers, known as shunto. Elsewhere, foreign investors sold a net 66.5 billion yen worth of Japanese stocks in the week ended Oct. 17, reversing course after substantial net purchases of 3.55 trillion yen the previous week, according to Ministry of Finance data. Market participants are now turning their attention to Japan’s September national core CPI, preliminary October PMIs, and the Bank of Japan’s Financial System Report, all due on Friday. The Nikkei Volatility Index, which takes into account the implied volatility of Nikkei 225 options, closed up +16.60% at 35.97.
Pre-Market U.S. Stock Movers
Tesla (TSLA) sank nearly -5% in pre-market trading after the EV maker cut its full-year capital spending forecast.
Chip and AI infrastructure stocks slid in pre-market trading after earnings from Tesla and Meta Platforms did little to alleviate investor worries about the sustainability of AI spending. Marvell Technology (MRVL), Intel (INTC), and Advanced Micro Devices (AMD) each fell -4% or more.
Lam Research (LRCX) slumped about -8% in pre-market trading after the semiconductor capital equipment company issued soft FQ2 guidance.
You can see more pre-market stock movers here
Today’s U.S. Earnings Spotlight: Thursday - October 22nd
The Procter & Gamble Company (PG), Union Pacific (UNP), Western Digital (WDC), Blackstone (BX), Lockheed Martin (LMT), Valero Energy (VLO), Newmont (NEM), Comcast (CMCSA), Norfolk Southern (NSC), Bloom Energy (BE), Honeywell International (HON), Nasdaq (NDAQ), Comfort Systems USA (FIX), Roper Technologies (ROP), CBRE Group (CBRE), Huntington Bancshares (HBAN), PG&E Corporation (PCG), VeriSign (VRSN), Dover (DOV), Quest Diagnostics (DGX), Omnicom Group (OMC), Dow Inc. (DOW), PulteGroup (PHM), SS&C Technologies Holdings (SSNC), Snap-on (SNA), Carpenter Technology (CRS), Tractor Supply Company (TSCO), Allegion (ALLE), Deckers Outdoor (DECK), TTM Technologies (TTMI), Popular (BPOP), Old Republic International (ORI), FirstCash Holdings (FCFS), Ryder System (R), Rexford Industrial Realty (REXR), Kinsale Capital Group (KNSL), American Airlines Group (AAL), Columbia Banking System (COLB), AppFolio (APPF), MSC Industrial Direct Co. (MSM), Valley National Bancorp (VLY), RingCentral (RNG), MaxLinear (MXL), Pool Corporation (POOL), Glacier Bancorp (GBCI), Associated Banc-Corp (ASB), Selective Insurance Group (SIGI), Ameris Bancorp (ABCB), Boyd Gaming (BYD), Eastern Bankshares (EBC), Enova International (ENVA), SLM Corporation (SLM), First BanCorp. (FBP), Bread Financial Holdings (BFH), Kilroy Realty (KRC), WSFS Financial (WSFS), Badger Meter (BMI), The Vita Coco Company (COCO), Lazard (LAZ), Robert Half (RHI), First Interstate BancSystem (FIBK), Curbline Properties (CURB), Knowles (KN), Ardagh Metal Packaging (AMBP), Customers Bancorp (CUBI), Visteon (VC), Hilltop Holdings (HTH), 1st Source (SRCE), The Boston Beer Company (SAM), S&T Bancorp (STBA), Byline Bancorp (BY), Gentherm (THRM), ConnectOne Bancorp (CNOB), Amalgamated Financial (AMAL), Universal Insurance Holdings (UVE), Amerant Bancorp (AMTB), Heritage Financial (HFWA), Lindsay (LNN).
On the date of publication, Oleksandr Pylypenko did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
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