Stock Market Update

Equity futures point to a sharply lower opening this morning as disappointing reactions to earnings from Tesla (TSLA) and Meta Platforms (META) weigh on the AI trade following yesterday's technology-led advance. Meta exceeded earnings and revenue expectations but raised its full-year expense outlook and slightly narrowed its capital expenditure guidance, keeping concerns about elevated AI spending in focus.

Adding to the negative tone, crude oil prices are moving sharply higher following a New York Times report that the U.S. and Israel are preparing potential strikes against Iran after the midterm elections, with possible targets including energy infrastructure, nuclear facilities, and missile and drone arsenals.

The renewed geopolitical uncertainty is also prompting a flight to safety in U.S. Treasuries, pushing yields lower as investors contend with another potential escalation in the Middle East.Today's remaining economic calendar:

• 8:30 AM ET: 10/17 Initial Claims; Briefing.com consensus 200K; prior 199K
• 8:30 AM ET: 10/10 Continuing Claims; prior 1710K
• 10:00 AM ET: September Leading Economic Index; Briefing.com consensus -0.2%; prior -0.1%
• 10:30 AM ET: 10/17 EIA Natural Gas Inventories; prior +67 bcf

In corporate news:

• Tesla (TSLA 370.85, -0.76, -2.9%) beat EPS expectations by $0.03 and reported revenues in-line. CEO Elon Musk wants to merge Tesla and SpaceX (SPCX) before President Trump leaves office, according to Bloomberg.
• Meta Platforms (META 679.77, -2.09, -14.48) exceeded earnings expectations by $0.86 per share and topped revenue estimates, while issuing fourth-quarter revenue guidance above consensus at the midpoint, raising its 2026 expense outlook, narrowing its capital expenditure forecast, and approving a new class of publicly traded stock.
• Lam Research Corp (LRCX 241.80, -8.22, -21.65) beat EPS expectations by $0.02, reported revenue in-line, and guided Q2 EPS in-line with revenues in-line.
• Procter & Gamble (PG 161.53, +4.53, +2.89%) topped fiscal first-quarter earnings and revenue estimates as organic sales increased 4%, and issued in-line fiscal 2027 earnings and revenue guidance.
• IBM (IBM 237.96, -13.50, -5.37%) exceeded third-quarter earnings and revenue estimates and maintained its fiscal 2026 constant-currency revenue growth outlook of 4-5%.

Reviewing overnight developments:

According to Nikkei, Asian markets sold off sharply as renewed weakness in technology shares coincided with escalating Middle East tensions and Brent crude trading above $110.

In news:

• Technology shares were broadly pressured amid persistent questions about returns on AI investment.
• Higher oil prices raised additional supply and inflation concerns for energy-importing economies.

In economic data:

• South Korea's Bank of Korea left its policy rate unchanged at 3.00%, in line with expectations.
• New Zealand's Q3 CPI +0.7% qtr/qtr (expected +0.8%; prior +1.5%) and +3.7% yr/yr (expected +3.8%; prior +4.1%)
• Japan's Foreign Bond Buying -JPY161.6 bln (prior -JPY339.9 bln) and Foreign Investment in Japanese Stocks -JPY66.5 bln (prior +JPY3,545.5 bln)
• China's September FDI -4.3% (prior -5.3%)
• Hong Kong's September CPI +0.3% m/m (prior +0.1%) and +1.9% yr/yr (expected +1.8%; prior +1.9%); Unemployment Rate 3.9% (prior 3.8%)

Equity Markets:

• Japan's Nikkei: -2.7%
• Hong Kong's Hang Seng: -3.0%
• China's Shanghai Composite: -1.5%
• India's Sensex: -0.6%
• South Korea's Kospi: -3.5%
• Australia's All Ordinaries: -0.4%

European markets trade broadly lower as Middle East tensions, oil prices above $110, concerns about AI investment returns, and elevated borrowing costs remain in focus.

In news:

• France's 10-year government bond yield remained above 5% amid political and fiscal uncertainty ahead of Friday's Moody's sovereign-rating review.
• Rising oil prices following deadly attacks in Saudi Arabia added to regional inflation concerns, while miners weakened alongside declines in gold, silver, and copper prices.

In economic data:

• France's October Business Survey 105 (expected 101; prior 101)
• U.K.'s October CBI Industrial Trends Orders -32 (expected -20; prior -9) The Swiss National Bank's summary of its September monetary policy assessment showed policymakers left the policy rate unchanged at 0%, judging monetary policy appropriate while retaining a willingness to intervene in foreign exchange markets if necessary. September car registrations rose 12.0% yr/yr in the U.K., 11.6% in France, 9.8% in Italy, and 9.0% in Germany.

 Equity Markets:

• STOXX Europe 600 : -0.9%
• Germany's DAX : -1.0%
• U.K.'s FTSE 100 : -0.4%
• France's CAC 40 : -1.3%
• Italy's FTSE MIB : -1.7%
• Spain's IBEX 35 : -1.6%