Stock Market Update

Equity futures point to a higher open this morning, supported by a rebound in semiconductor and other AI-related stocks following yesterday's sharp selloff. A Bloomberg report indicating that OpenAI's annualized revenue is still expected to meet or exceed $70 billion has provided some relief after a Financial Times report yesterday suggested the figure could fall closer to $50 billion, raising concerns about the outlook for AI spending.

Modestly lower crude oil prices and easing sovereign bond yields are also providing a more favorable backdrop for equities, helping sentiment recover following yesterday's technology-led decline.

The S&P 500 and DJIA enter Friday's session with modest week-to-date gains, while the Nasdaq Composite is essentially flat for the week amid weakness in technology stocks.

Still, there are a lot of moving parts in the energy market. Hurricane Isaias is expected to make landfall on the Gulf Coast this weekend as a Category 2 storm, according to the Weather Channel, and the preliminary October University of Michigan Consumer Sentiment Index is due at 10:00 a.m. ET.

In corporate news:

• Humana (HUM 443.00, +55.88, +14.43%) said 95% of its Medicare Advantage members are enrolled in plans rated four stars or better for 2027, including its pivotal 2.4 million-member contract, restoring eligibility for 2028 CMS bonuses.
• Apple (AAPL 332.80, -7.62, -2.24%) told suppliers to reduce production of iPhone 18 Pro components due to weaker-than-expected demand following price increases, according to Nikkei.
• American Express (AXP 303.00, -5.10, -1.66%) agreed to pay a $350 million penalty to resolve regulatory reviews.
• Delta Air Lines (DAL 80.86, -1.28, -1.56%) missed the earnings consensus but beat revenue expectations, issued in-line fourth-quarter EPS guidance and guided revenue above consensus. Its full-year EPS midpoint was below consensus, though the CEO said bookings have not slowed.
• SpaceX (SPCX 167.20, +6.63, +4.13%) agreed to acquire low-band spectrum licenses, prompting weakness in AT&T (T 22.92, -1.96, -7.88%), Verizon (VZ 42.82, -3.53, -7.62%), and T-Mobile US (TMUS 158.43, -12.88, -7.52%).

Reviewing overnight developments:

According to Nikkei, Asian markets finished mixed as easing oil prices and bond yields helped equities recover from early weakness, while investors continued to scrutinize AI-related valuations.

In news:

• Nikkei reported that updated expectations for OpenAI's annualized revenue helped Japanese equities recover much of their early weakness, although several technology names remained under pressure.
• Nikkei said attention in China remained on China-EU trade discussions and tensions involving rare earths and critical minerals. South Korean markets were closed for Hangul Day.

In economic data:

• Japan's August Household Spending -3.1% yr/yr (expected -3.5%; prior -3.6%) and 0.1% m/m (expected 0.5%; prior 0.5%); September Machine Tool Orders 60.4% yr/yr (prior 64.7%)

Equity Markets:

• Japan's Nikkei: flat
• Hong Kong's Hang Seng: +1.8%
• China's Shanghai Composite: 0.1%
• India's Sensex: +1.2%
• South Korea's Kospi: closed for holiday
• Australia's All Ordinaries: +0.6%

European markets are rebounding as geopolitical concerns ease, pulling oil prices and bond yields lower after President Trump ruled out a U.S. attack on Iran before the November midterm elections and cited progress in talks with Tehran.

In news:

• Lower yields have prompted markets to pare expectations for ECB rate hikes, although France's fiscal and political outlook remains in focus.
• Technology, materials, and mining shares are among the areas showing strength.

In economic data:

• Italy's August Industrial Production -1.3% m/m (expected 0.0%; prior 0.6%) and 0.0% yr/yr (prior -0.1%)
• Switzerland's September SECO Consumer Climate -36 (expected -32; prior -33)

Equity Markets:

• STOXX Europe 600 : +0.8%
• Germany's DAX : +1.0%
• U.K.'s FTSE 100 : +0.9%
• France's CAC 40 : +0.7%
• Italy's FTSE MIB : +0.8%
• Spain's IBEX 35 : +0.8%