December Nasdaq 100 E-Mini futures (NQZ26) are up +0.03% this morning, steadying after a sharp drop in the previous session as the selloff in AI-related stocks faded.
Chip and AI infrastructure stocks edged higher in pre-market trading, staging a modest rebound from yesterday’s rout. Sandisk (SNDK) was up over +2%, while Micron Technology (MU) and Arm Holdings (ARM) each rose more than +1%.
Join 200K+ Subscribers: Find out why the midday Barchart Brief newsletter is a must-read for thousands daily.
However, a further rise in oil prices kept investors cautious. WTI crude rose over +1% on Friday as traders weighed the risks of renewed hostilities between the U.S. and Iran and additional attacks on Saudi energy infrastructure against a recovery in Middle East oil supplies.
Investors now turn their attention to U.S. business activity data due later today.
In yesterday’s trading session, Wall Street’s major indices closed mostly lower, weighed down by a selloff in tech stocks and escalating Middle East tensions. Meta Platforms (META) slumped about -7% after the company disclosed billions of dollars in additional future spending commitments, a day after reporting record Q3 revenue that topped expectations. Also, Tesla (TSLA) slid more than -3% after the EV maker cut its full-year capital spending forecast. In addition, chip and AI infrastructure stocks tanked amid renewed concerns about the sustainability of AI spending, with KLA Corp. (KLAC) sinking over -9% and Marvell Technology (MRVL) tumbling more than -8%. On the bullish side, Roper Technologies (ROP) jumped over +9% and was the top percentage gainer in the Nasdaq 100 after the technology holdings company posted better-than-expected Q3 adjusted EPS and raised its full-year adjusted EPS guidance.
Economic data released on Thursday were better than expected. The number of Americans filing initial jobless claims fell by 6K last week to 194K, the lowest level since July. Economists had expected a reading of 200K. Separately, the Conference Board Leading Economic Index for the U.S. was unchanged m/m in September, stronger than expectations of -0.1% m/m.
Today, investors will focus on the preliminary U.S. purchasing managers’ surveys for October, set to be released in a couple of hours. The surveys will provide insight into how the economy has performed this month. Economists expect the October S&P Global manufacturing PMI to be 55.4 and the S&P Global services PMI to be 57.9, compared with the previous month’s figures of 55.9 and 58.8, respectively.
The University of Michigan’s U.S. consumer sentiment index will also be released today. Economists project that the final October figure will remain unrevised at 46.3.
On the earnings front, credit-card giant American Express Company (AXP) and oilfield services provider SLB N.V. (SLB) are the major companies scheduled to report their quarterly results today.
U.S. rate futures are currently pricing in a 90.6% chance of no rate change and a 9.4% chance of a 25-basis-point rate hike at next week’s monetary policy meeting.
In the bond market, the yield on the benchmark 10-year U.S. Treasury note is at 4.97%, up +0.30%.
The Euro Stoxx 50 Index is down -0.64% this morning as downbeat earnings compounded concerns over elevated oil prices. Luxury stocks slumped on Friday, weighed down by a drop of more than -11% in Kering (KER.FP) after Q3 sales at its flagship Gucci brand declined. Automobile stocks also slid, with Volvo Car (VOLCB.S.DX) cratering over -27% after swinging to a loss in Q3 and announcing plans to cut 2,500 jobs. Limiting losses, energy and construction stocks advanced. The benchmark index was on track for a steep weekly loss. Also weighing on sentiment was weaker-than-expected PMI data from the region. The survey showed that Eurozone private-sector growth eased to its slowest pace in four months in October, pressured by an energy-driven increase in costs and a renewed contraction in France amid political and financial strains. Separately, a European Central Bank survey showed that inflation expectations among Eurozone households edged higher in September, reinforcing expectations that the central bank will continue raising interest rates. In other corporate news, Holcim (HOLN.Z.IX) climbed over +6% after the Swiss cement producer boosted its annual earnings guidance.
U.K. Retail Sales, U.K. Core Retail Sales, Eurozone’s Composite PMI (preliminary), Eurozone’s Manufacturing PMI (preliminary), and Eurozone’s Services PMI (preliminary) data were released today.
U.K. September Retail Sales fell -0.4% m/m and rose +0.8% y/y, weaker than expectations of -0.1% m/m and +1.0% y/y.
U.K. September Core Retail Sales fell -0.7% m/m and rose +0.8% y/y, weaker than expectations of -0.1% m/m and +1.5% y/y.
Eurozone’s October Composite PMI stood at 51.9, weaker than expectations of 52.7.
Eurozone’s October Manufacturing PMI came in at 52.4, weaker than expectations of 52.7.
Eurozone’s October Services PMI arrived at 51.7, weaker than expectations of 52.6.
Asian stock markets today closed mixed. China’s Shanghai Composite Index ($CHSC) closed up +0.89%, and Japan’s Nikkei 225 Stock Index ($NKY) closed down -0.34%.
China’s Shanghai Composite Index closed higher today as trading activity picked up in a group of exchange-traded funds favored by the country’s national team of state-backed investors. The benchmark reversed steep early losses in the afternoon session after turnover surged in several ETFs associated with state-backed buying. Turnover in a basket of nine ETFs totaled 84 billion yuan ($12.6 billion) on Friday, the highest level since July 20, according to data compiled by Bloomberg. The E Fund ChiNext ETF led the activity, attracting 19.7 billion yuan in inflows, the most in two years. Still, Aberdeen’s Xin-Yao Ng said that state buying “will only be a temporary solution,” adding that “at its core, China needs domestic consumption and investments to improve.” Meanwhile, technology stocks rallied on Friday. Despite the day’s gains, the benchmark posted a modest weekly loss. Elsewhere, China’s Politburo urged stronger leadership teams and improved unity and effectiveness on Friday, according to Xinhua. Investors are now shifting their attention to China’s fifth plenum, set to take place from October 26 to 29.
Japan’s Nikkei 225 Stock Index pared most of its earlier losses and closed slightly lower today as the global AI selloff faded. The Nikkei initially plunged more than -2% as chip-related stocks tracked an overnight selloff among their U.S. peers. However, the benchmark later rebounded from its session lows as chip shares recouped earlier losses to end little changed. The recovery came as Nasdaq 100 futures reversed earlier losses to trade slightly higher during Asian hours, offering investors some relief. Still, weakness in banking and conglomerate stocks kept the Nikkei in negative territory on Friday. The benchmark posted a steep weekly loss. Meanwhile, Japanese government bonds extended their rally on Friday as the global tech selloff drove investors toward traditional safe-haven assets. The rally came even as data showed that Japan’s core consumer inflation exceeded the Bank of Japan’s 2% target in September for the first time this year, bolstering the case for another interest rate hike by year-end. Separately, a survey showed that Japan’s manufacturing sector grew at its slowest pace in seven months in October as growth in output and new orders moderated. Elsewhere, the BOJ said on Friday that Japan’s financial system remains stable overall, although risks stemming from developments in the Middle East and the financing of AI-related investments warrant close monitoring. The Nikkei Volatility Index, which takes into account the implied volatility of Nikkei 225 options, closed up +6.34% at 38.25.
The Japanese September National Core CPI rose +2.1% y/y, in line with expectations.
The Japanese October S&P Global Manufacturing PMI (preliminary) stood at 53.3, weaker than expectations of 54.5.
Pre-Market U.S. Stock Movers
Chip and AI infrastructure stocks edged higher in pre-market trading, rebounding slightly from yesterday’s rout. Sandisk (SNDK) was up over +2%, while Micron Technology (MU) and Arm Holdings (ARM) each rose more than +1%.
SK Hynix ADRs (SKHY) gained over +4% in pre-market trading after the company abandoned plans for a major U.S. public offering of its flash-memory unit, Solidigm.
SpaceX (SPCX) rose more than +2% in pre-market trading after Bloomberg reported that the company was in talks to secure at least 80,000 cell towers across the U.S.
Telecom stocks slid in pre-market trading as Bloomberg’s report on SpaceX’s talks heightened concerns about emerging competition. AT&T (T), T-Mobile US (TMUS), and Verizon (VZ) each fell -3% or more.
You can see more pre-market stock movers here
Today’s U.S. Earnings Spotlight: Friday - October 23rd
American Express Company (AXP), SLB N.V. (SLB), First Citizens BancShares (FCNCA), Booz Allen Hamilton Holding (BAH), Balchem (BCPC), Rithm Capital (RITM), Flagstar Bank, National Association (FLG), Gentex (GNTX), First Hawaiian (FHB), The Gorman-Rupp Company (GRC), Preferred Bank (PFBC), River City Bank (RCBC), World Acceptance (WRLD), First Bank (FRBA), GrafTech International (EAF).
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.
More news from Barchart
Nasdaq Futures Muted as AI Rout Eases; U.S. PMI Data in Focus U.S. Futures Plunge as Chip Stocks Sink After Tech Earnings, Oil Rises Nasdaq Futures Climb as SpaceX and Super Micro Provide a Boost; Meta and Tesla Earnings on Tap Nasdaq Futures Slip as AI Stocks Resume Slide, Oil Jumps; SpaceX Earnings on Tap