Stock Market Update

Equity futures point to a slighlty lower opening this morning, as investors assess the recent rise in Treasury yields and continued pressure on semiconductor stocks.

On the interest rate front, Fed Governor Christopher Waller said the increase in Treasury yields reflects stronger growth expectations rather than concerns about inflation, according to Reuters. Yields are easing this morning as trading resumes following yesterday's Columbus Day bond market closure, with a decline in crude oil prices providing some relief.

Overseas, European markets are mostly higher, supported by lower oil prices and bond yields. Asian technology markets, however, faced renewed selling pressure amid concerns about elevated AI valuations, substantial capital spending commitments, and growing competition in memory chips.

According to Bloomberg, China's CXMT has claimed a breakthrough in memory technology that could put it ahead of established manufacturers Samsung and SK Hynix, adding to concerns about competition in the industry. Meanwhile, global semiconductor stocks are also facing pressure following Financial Times reporting that Broadcom (AVGO) CEO Hock Tan compared aspects of the AI trade to gambling, adding to questions surrounding the sustainability of AI-related investment and valuations.

Meanwhile, Q3 earnings season is ramping up today, with several major banking and health care companies reporting results. The reports will provide an early look at corporate earnings trends as investors assess the outlook for the broader economy.

The NFIB Small Business Optimism Index slipped in September and was just below consensus. Existing home sales are due at 10:00 a.m. ET, while several Dow components are in focus following their quarterly reports.

On the U.S. data front:

• September NFIB Small Business Optimism 97.9 vs. 98.0 Briefing.com consensus; prior 98.7

Today's remaining economic calendar:

• 10:00 AM ET: September Existing Home Sales; Briefing.com consensus 3.96M; prior 3.98M
• 2:00 PM ET: September Treasury Budget; prior -$166.8B

In corporate news:

• Goldman Sachs (GS 926.00 +32.05, +3.6%) beat EPS expectations by $4.15 and beat revenue expectations.
• UnitedHealth (UNH 386.97, +8.45, +2.23%) is indicated higher after topping quarterly earnings and revenue expectations and raising its fiscal 2026 earnings outlook above consensus.
• Johnson & Johnson (JNJ 256.75, -6.98, -2.65%) beat the quarterly earnings estimate, reported revenue in line with expectations, and raised its outlook.
• JPMorgan Chase (JPM 337.00, +2.70, +0.81%) is indicated higher despite missing quarterly earnings and revenue estimates. Net interest income excluding Markets increased 6%.
• BP (BP 47.57, +0.84, +1.80%) is indicated higher following its earnings and guidance update.

Reviewing overnight developments:

According to Nikkei, Asian markets finished mostly lower as concerns about AI valuations, rising borrowing costs, and heavy capital spending weighed on major technology markets.

In news:

• South Korean semiconductor shares came under pressure after China's CXMT reported progress on a new memory-cell design, adding to competitive concerns for the industry.
• Minutes from the Reserve Bank of Australia's September meeting showed a unanimous 25-basis-point rate increase to 4.60%, with policymakers citing upside inflation risks and the potential need for further tightening.

In economic data:

• Japan's September PPI -0.3% m/m (expected 0.5%; prior -0.3%) and 6.8% yr/yr (expected 7.6%; prior 7.6%); Bank Lending 5.3% yr/yr (expected 5.5%; prior 5.3%)
• Australia's September NAB Business Confidence -13 (prior -9) and NAB Business Survey -1 (prior -1); Minutes from the RBA's September meeting showed the Board unanimously raised the cash rate by 25 bps to 4.60%, citing mounting upside risks to inflation and indicating further tightening could be required.

Equity Markets:

• Japan's Nikkei: -1.8%
• Hong Kong's Hang Seng: +0.3%
• China's Shanghai Composite: +0.1%
• India's Sensex: +1.5%
• South Korea's Kospi: -5.5%
• Australia's All Ordinaries: -0.2%

European markets are mostly higher, with lower oil prices and bond yields providing support while renewed concerns about AI valuations weigh on technology shares.

In news:

• Semiconductor shares are under pressure amid questions about AI investment returns and increased competition from China's memory-chip industry.
• Banking and health care shares are among the stronger groups in the region.

In economic data:

• Germany's September CPI 0.6% m/m (expected 0.6%; prior 0.2%) and 3.3% yr/yr (expected 3.3%; prior 2.9%); HICP 0.6% m/m (expected 0.6%; prior 0.2%) and 3.3% yr/yr (expected 3.3%; prior 2.9%)
• U.K.'s September BRC Retail Sales Monitor 1.0% yr/yr (expected 0.8%; prior 0.5%)

Equity Markets:

• STOXX Europe 600 : +0.4%
• Germany's DAX : +0.3%
• U.K.'s FTSE 100 : +0.6%
• France's CAC 40 : +0.1%
• Italy's FTSE MIB : +0.3%
• Spain's IBEX 35 : flat