Stock Market Update

Equity futures point to a modestly higher open to start the week following a mixed finish for the major averages last week, which featured considerable selling pressure across the AI trade and pronounced shifts in market leadership.

Some relief is coming from the energy market this morning, with WTI crude futures down $2.17 (-2.1%) to $101.15 per barrel after settling sharply higher on Friday. The pullback is helping support equity futures by easing some of the concerns surrounding elevated energy costs and their implications for inflation. Investors face another busy week of third-quarter earnings, with Microsoft (MSFT), Alphabet (GOOG), and Amazon (AMZN) all scheduled to report. Their results will be particularly important for assessing AI spending commitments and the returns being generated from those investments following last week's volatility.

On the policy front, the FOMC will announce its latest interest rate decision on Wednesday. The CME FedWatch Tool currently assigns a 90.6% probability that the Fed will leave rates unchanged, putting the focus on policymakers' commentary regarding the outlook for inflation and future policy decisions.

In corporate news:

• Neoclouds are moving lower this morning after SpaceX (SPCX 148.29, +0.80, +0.6%) CEO Elon Musk warned that debt markets have largely cut off financing to companies without substantial revenue outside AI data centers, raising concerns about widespread failures and consolidation across the industry.
• Netflix (NFLX 65.54, -0.31, -0.5%) users are spending less time on the platform, according to Bloomberg. 
• Verizon (VZ 44.72, +0.06, +0.13%) beat the third-quarter earnings consensus, missed the revenue estimate, and raised its fiscal 2026 earnings guidance above consensus.

Reviewing overnight developments:

Nikkei reported that Asian markets finished mixed as concerns about returns on AI investment weighed on technology-heavy markets ahead of major earnings and central bank decisions.

In news:

• Technology and semiconductor shares faced pressure in Japan, China, and South Korea, while elevated crude prices supported energy shares in Hong Kong.
• Investors are awaiting policy decisions from the Federal Reserve, Bank of Japan, and European Central Bank this week.

In economic data:

• Japan's August Coincident Indicator -1.8% m/m (expected -1.9%; prior +1.7%), Leading Index +0.4% m/m (expected +0.4%; prior +1.5%), and Leading Index 118.0 (expected 118.0; prior 117.7)
• Singapore's September Industrial Production +3.4% yr/yr (prior +15.4%) and -3.9% m/m (prior -1.0%)

Equity Markets:

• Japan's Nikkei: -0.8%
• Hong Kong's Hang Seng: +0.5%
• China's Shanghai Composite: +0.2%
• India's Sensex: +0.5%
• South Korea's Kospi: -1.5%
• Australia's All Ordinaries: +0.2%

European markets trade mostly higher as lower oil prices and easing bond yields provide some relief ahead of central bank decisions and a busy earnings week.

In news:

• Moody's affirmed France's Aa3 sovereign rating while maintaining a negative outlook due to fiscal and political pressures.
• Investors are looking ahead to this week's Federal Reserve and European Central Bank decisions.

In economic data:

• Germany's October Ifo Business Climate Index 90.2 (expected 90.0; prior 89.9), Business Expectations 91.6 (expected 90.0; prior 90.4), and Current Assessment 88.8 (expected 89.9; prior 89.5)
• Spain's September PPI +18.3% yr/yr (prior +13.2%)
• U.K.'s October CBI Distributive Trades Survey -10 (expected -47; prior -55)

Equity Markets:

• STOXX Europe 600 : +0.4%
• Germany's DAX : +0.9%
• U.K.'s FTSE 100 : +0.5%
• France's CAC 40 : +0.7%
• Italy's FTSE MIB : +0.8%
• Spain's IBEX 35 : -0.2%