December S&P 500 E-Mini futures (ESZ26) are up +0.52%, and December Nasdaq 100 E-Mini futures (NQZ26) are up +1.11% this morning as investors cautiously snapped up beaten-down chipmakers and other AI-related stocks, setting a positive tone for a busy week of corporate earnings.
Chip and AI infrastructure stocks climbed in pre-market trading, rebounding from last week’s rout. Intel (INTC) was up over +4%, Marvell Technology (MRVL) was up more than +3%, and Micron Technology (MU) was up over +2%.
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The price of WTI crude edged lower on Monday as traders weighed Washington’s decision to lift newly imposed sanctions on Russia against lingering Middle East supply risks. U.S. President Donald Trump signed an executive order on Friday waiving sanctions and tariffs imposed under a new law targeting Russia, potentially paving the way for more Russian diesel exports to reach international markets. Still, ongoing tanker attacks in the Strait of Hormuz and elevated shipping costs limited oil’s losses.
Treasuries were mixed, with shorter-dated bonds edging lower and longer-dated bonds posting modest gains.
In Friday’s trading session, Wall Street’s major equity averages closed sharply lower, weighed down by a surge in oil prices and concerns about the viability of the AI trade. Chip and AI infrastructure stocks sank, with Seagate Technology Holdings (STX) slumping over -7% and Arm Holdings (ARM) dropping more than -6%. Also, most members of the Magnificent Seven slid, with Meta Platforms (META) falling over -3% and Alphabet (GOOGL) slipping more than -2% to lead losers in the Dow. In addition, CoreWeave (CRWV) tumbled more than -11% amid lingering concerns about the cloud-computing company’s ability to repay its debt. On the bullish side, energy stocks advanced as oil prices surged, with Diamondback Energy (FANG) climbing over +4% to lead gainers in the Nasdaq 100 and APA Corp. (APA) rising more than +4%.
Economic data released on Friday were mixed for equities. U.S. industrial production rose +0.7% m/m in September, stronger than expectations of +0.4% m/m, and manufacturing production rose +0.3% m/m, in line with expectations. At the same time, the U.S. import price index climbed +1.1% m/m in September, exceeding expectations of +0.9% m/m and marking its second straight monthly increase.
“Too many traders piled into the AI trade, with the bullseye now squarely on worries surrounding funding issues. CoreWeave’s issues put even more pressure on Big Tech and AI companies to deliver strong earnings results in the coming weeks,” said Dan Eye at Focus Partners Wealth.
Third-quarter corporate earnings season gathers momentum this week, with Big Tech in the spotlight. Investors will closely watch earnings from Magnificent Seven stalwarts Meta Platforms (META) and Tesla (TSLA). Meta’s results will draw particular attention, as the company will be the first hyperscaler to report following the rout in chip stocks and growing concerns that rising credit costs could derail the AI boom. Beyond the Mag Seven heavyweights, major companies including SpaceX (SPCX), Lam Research (LRCX), Texas Instruments (TXN), International Business Machines (IBM), Western Digital (WDC), Netflix (NFLX), GE Aerospace (GE), RTX Corp. (RTX), Lockheed Martin (LMT), Philip Morris International (PM), Procter & Gamble (PG), and American Express Company (AXP) are set to report quarterly results this week. According to Bloomberg Intelligence, S&P 500 companies are expected to post an average +25% jump in third-quarter earnings from a year earlier.
The busy earnings calendar is balanced out by a relatively light economic data slate. Preliminary U.S. October purchasing managers’ surveys for manufacturing and services will be the main highlight this week, offering insight into how the economy has fared this month. Other noteworthy data releases include building permits (preliminary), housing starts, pending home sales, initial jobless claims, the Conference Board Leading Economic Index, and the University of Michigan’s consumer sentiment index.
U.S. central bankers are in a media blackout period before the October 27-28 policy meeting. During that period, policymakers do not speak publicly about the economic outlook or monetary policy.
U.S. rate futures are currently pricing in an 85.1% chance of no rate change and a 14.9% chance of a 25-basis-point rate hike at the October FOMC meeting.
Elsewhere, Nvidia (NVDA) will host its GTC Berlin AI conference this week, with CEO Jensen Huang set to deliver a speech.
The U.S. economic data slate is largely empty on Monday.
In the bond market, the yield on the benchmark 10-year U.S. Treasury note is at 5.08%, down -0.18%.
The Euro Stoxx 50 Index is down -0.96% this morning, kicking off the new week on a downbeat note after a weekend of violent protests in France. The unrest extended to major cities in Belgium, Italy, and Portugal, sapping investors’ risk appetite. Bank stocks led the declines on Monday. Travel and defense stocks also slumped. French government bond yields surged on Monday, widening the spread with German yields as the protests fueled concerns about political instability ahead of next year’s French presidential election, adding to existing worries about debt. This week, investors will closely watch the preliminary Eurozone PMIs for October. “Given the upturn in sentiment over the past few months, we expect a slight pullback [in the PMIs]. Taken on its own, this could push the recent bond-positive trends a bit further,” according to LBBW analysts. Germany’s ZEW economic sentiment index for October and the European Central Bank’s consumer expectations survey will also draw attention. In addition, several ECB officials are scheduled to speak this week, including President Christine Lagarde and Chief Economist Philip Lane. In corporate news, Mowi ASA (MOWI.O.DX) climbed more than +4% after the salmon producer reported record harvest volumes for the third quarter.
The European economic data slate is empty on Monday.
Asian stock markets today settled mixed. China’s Shanghai Composite Index ($CHSC) closed up +0.39%, and Japan’s Nikkei 225 Stock Index ($NKY) closed down -0.62%.
China’s Shanghai Composite Index closed higher today after data showed that the country’s economy grew more than expected in the third quarter. Traditional sectors, including banking and liquor, led the gains on Monday. At the same time, technology stocks slumped as sentiment toward the AI chip supply chain remained weak. Data from the National Bureau of Statistics released on Monday showed that China’s economic growth accelerated in the third quarter, rebounding from a three-year low as surging exports helped offset a deepening domestic slowdown. China’s GDP expanded 4.5% in the third quarter, bringing growth in the first nine months of the year to 4.6%—within the government’s annual target range of 4.5%-5%. Separate data showed that growth in industrial production and retail sales, a key gauge of domestic consumption, picked up in September, although the latter lagged well behind the former. In addition, data showed that declines in China’s home prices moderated slightly last month, likely supported by Beijing’s measures to revive the struggling property sector, including subsidies for mortgage borrowers. “The September data do suggest that the economy regained momentum at the end of the third quarter and we expect a further acceleration over the coming months as increased fiscal support kicks in,” according to Capital Economics analysts. Investor attention now turns to the People’s Bank of China, which is set to announce the country’s benchmark lending rates on Tuesday. Economists expect the one-year loan prime rate to stay unchanged at 3.00% and the five-year LPR at 3.50% after better-than-expected GDP data reduced the likelihood of near-term monetary easing.
The Chinese GDP rose +1.2% q/q and +4.5% y/y in the third quarter, stronger than expectations of +1.1% q/q and +4.4% y/y.
The Chinese September Industrial Production rose +5.5% y/y, stronger than expectations of +5.4% y/y.
The Chinese September Retail Sales rose +1.1% y/y, stronger than expectations of +0.5% y/y.
The Chinese Fixed Asset Investment fell -7.2% y/y in the January-September period, stronger than expectations of -7.3% y/y.
The Chinese September Unemployment Rate was 5.2%, stronger than expectations of no change at 5.3%.
Japan’s Nikkei 225 Stock Index closed lower today, although it pared most of its earlier losses as the rebound in U.S. stock index futures offered some relief to investors. The Nikkei initially plunged as much as 2.3% as chip-related stocks tracked Friday’s selloff in their U.S. peers. However, the benchmark recouped most of its losses in the afternoon session as chip-related shares trimmed their earlier declines following the surge in Nasdaq 100 futures. Gains in energy and industrial stocks also supported the index. Meanwhile, Japanese government bond yields fell on Monday as some investors sought refuge in safe-haven assets amid volatility surrounding the AI trade. Bonds also drew support from Prime Minister Sanae Takaichi, who said Japan would “appropriately” control the size of its debt issuance. Elsewhere, Bank of Japan Governor Kazuo Ueda said on Monday that underlying inflation is “quite close” to the central bank’s 2% target, with robust global AI demand compounding price pressures from a tight labor market, signaling scope for further interest-rate hikes. In corporate news, Suzuken Co. rose over +2% after Nomura upgraded the stock to Buy from Neutral with a price target of 3,550 yen. Investor focus this week is on Japan’s national core CPI for September, which will provide further insight into whether inflationary pressures remain sufficiently strong to support the Bank of Japan’s monetary policy normalization path. Market participants will also closely watch Japan’s preliminary October PMIs and September trade figures. In addition, the BOJ will publish its semiannual Financial System Report at the end of the week. The Nikkei Volatility Index, which takes into account the implied volatility of Nikkei 225 options, closed down -2.92% at 31.23.
Pre-Market U.S. Stock Movers
Chip and AI infrastructure stocks climbed in pre-market trading. Intel (INTC) was up over +4%, Marvell Technology (MRVL) was up more than +3%, and Micron Technology (MU) was up over +2%.
Most members of the Magnificent Seven edged higher in pre-market trading, with Nvidia (NVDA) and Amazon.com (AMZN) gaining more than +1%.
Cleveland-Cliffs (CLF) jumped over +13% in pre-market trading after the steelmaker swung to a profit in Q3 and projected adjusted EBITDA exceeding $4 billion in 2027.
Datadog (DDOG) rose over +3% in pre-market trading after Bernstein upgraded the stock to Outperform from Market Perform with a price target of $350.
Ameriprise Financial (AMP) fell more than -1% in pre-market trading after BofA double-downgraded the stock to Underperform from Buy with a price target of $445.
You can see more pre-market stock movers here
Today’s U.S. Earnings Spotlight: Monday - October 19th
Fifth Third Bancorp (FITB), Steel Dynamics (STLD), W. R. Berkley (WRB), Crown Holdings (CCK), AGNC Investment (AGNC), Wintrust Financial (WTFC), Zions Bancorporation, National Association (ZION), Western Alliance Bancorporation (WAL), BOK Financial (BOKF), Cleveland-Cliffs (CLF), F.N.B. (FNB), RLI Corp. (RLI), ServisFirst Bancshares (SFBS), Dynex Capital (DX), SmartFinancial (SMBK), Washington Trust Bancorp (WASH), Home Bancorp (HBCP), RBB Bancorp (RBB).
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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