[BRIEFING.COM] The major averages finished Thursday's session with a sharply divided performance as substantial selling pressure in technology and AI-related stocks overshadowed strength across much of the broader market. The S&P 500 (-1.2%) and Nasdaq Composite (-2.6%) suffered sizable losses, with both falling below their respective 50-day moving averages, while the DJIA (flat) recovered to finish near unchanged. The contrast was even more pronounced beneath the surface, as the S&P 500 Equal Weighted Index (+0.8%) registered a solid gain despite the decline in its market-cap-weighted counterpart.

The retreat marked a sharp reversal from Wednesday's technology-led advance, with the latest round of earnings reports renewing concerns about the costs and near-term growth prospects of the AI buildout. Investors have become increasingly focused on the substantial capital required to expand computing infrastructure, intensifying competition for financing, and supply chain constraints that could limit companies' ability to meet elevated growth expectations.

The information technology sector (-3.0%) was among the weakest performers, with the PHLX Semiconductor Index (-6.7%) suffering an especially steep decline. Lam Research (LRCX 230.15, -30.66, -11.76%) faced substantial selling pressure after its forward guidance highlighted supply chain constraints, adding to concerns about the semiconductor industry's ability to sustain its recent growth trajectory. The weakness extended to AI infrastructure companies such as CoreWeave (CRWV 55.60, -6.22, -10.06%), reflecting broader skepticism about the pace and financing of continued expansion.

The communication services sector (-3.0%) also struggled, weighed down by a disappointing earnings reaction in Meta Platforms (META 648.85, -48.67, -6.98%). The company reported stronger-than-expected revenue and underlying earnings, supported by continued advertising growth, but investors focused instead on the mounting costs of its AI investments. Quarterly capital expenditures exceeded operating cash flow, resulting in negative free cash flow, while underlying operating margins contracted from a year ago. Bloomberg also reported that a measure of Meta's credit risk reached a record high, underscoring concerns about the financing requirements associated with its expansion plans.

Tesla (TSLA 374.58, -11.89, -3.08%) also declined following its earnings report, contributing to weakness in the consumer discretionary sector (-1.7%). Although the company exceeded adjusted EPS expectations and reported improving automotive margins, declining operating income and a reduction in its FY26 capital expenditure outlook to approximately $20 billion from more than $25 billion raised questions about the pace of investment in its autonomous driving and robotics initiatives.

The selling extended beyond traditional technology companies, with the industrials sector (-0.9%) pressured by sharp declines in electrical equipment and power infrastructure names associated with the AI buildout, including GE Vernova (GEV 827.42, -98.50, -10.64%), Quanta Services (PWR 552.44, -48.70, -8.10%), Eaton (ETN 368.99, -24.95, -6.33%), and Bloom Energy (BE 217.77, -20.76, -8.70%).

However, the sector's losses were moderated by strength in transportation stocks following favorable earnings reports from Ryder System (R 265.53, +25.22, +10.49%) and others.

While the AI-related retreat weighed heavily on the major averages, investors continued to favor lower-beta and defensive stocks. The Vanguard Mega Cap Growth ETF (-2.8%) underperformed significantly, while gains in the consumer staples (+3.1%), utilities (+2.0%), health care (+1.3%), and financials (+1.2%) sectors helped support the broader market. The consumer staples sector led the advance, benefiting from a strong earnings reaction in Procter & Gamble (PG 165.59, +8.75, +5.58%) .

The health care sector also finished higher despite substantial weakness in Moderna (MRNA 202.63, -43.18, -17.57%), which plunged following reports that cancer vaccine data had partially leaked ahead of the European Society for Medical Oncology conference. Moderna and Merck (MRK 147.24, -2.64, -1.76%) subsequently disclosed Phase 3 melanoma results showing that their combination treatment reduced the risk of recurrence or death by 42% compared with KEYTRUDA alone, although overall survival data remain immature.

Participation outside the largest technology companies was considerably healthier than the headline index losses suggested. The Russell 2000 (+0.1%) eked out a gain, while the S&P Mid Cap 400 (-0.8%) posted a more moderate decline. The S&P 500 Equal Weighted Index's 0.8% advance further highlighted the extent to which weakness in a relatively concentrated group of influential growth stocks dictated the performance of the major averages.

Elsewhere, crude oil prices climbed amid heightened geopolitical concerns surrounding potential additional U.S. and Israeli strikes against Iran. WTI crude futures settled $2.29 higher (+2.4%) at $99.45 per barrel, adding another source of uncertainty for investors already contending with the reassessment of AI-related growth expectations. Treasury yields, meanwhile, fell sharply as safe-haven demand and short-covering supported government bonds. The 2-year note yield declined 17 basis points to 4.65%, while the 10-year note yield settled 19 basis points lower at 4.95%, falling below 5.00% for the first time since September 22.

Although lower yields helped support rate-sensitive and defensive stocks, they provided little relief to the technology companies at the center of the selloff. Today's session underscored the increasingly selective nature of the market's recent trading. The sharp retreat in AI-related stocks reflected mounting scrutiny of the costs and returns associated with the industry's expansion, but strength across defensive sectors, transportation stocks, and the equal-weighted S&P 500 indicated that buying interest remained intact elsewhere. With another batch of earnings reports due after the close, investors will have additional opportunities to assess whether the outlook for AI-related growth can justify the market's elevated expectations.

• Russell 2000: +12.2% YTD
• S&P 500: +12.0% YTD
• Nasdaq Composite: +11.9% YTD
• S&P Mid Cap 400: +10.0% YTD
• DJIA: +10.0% YTD

Reviewing today's data:

• Initial jobless claims were down 6,000 for the week ending October 17 to 194,000 (Briefing.com consensus: 200,000). Continuing jobless claims for the week ending October 10 increased by 25,000 to 1.728 million.
  
  • The key takeaway from the report is still the same. Layoff activity is low, which is consistent with a solid demand environment for goods and services.
• Sep Leading Economic Index 0.0% (Briefing.com consensus -0.2%; Prior -0.1%)
  10/17 EIA Natural Gas Inventories +77 bcf (Prior +67 bcf)

[BRIEFING.COM] The S&P 500 (-1.3%) and Nasdaq Composite (-2.6%) remain near session lows with just half an hour left in the session, while the DJIA (-0.1%) continues to wrestle with its flat line. Treasury yields fell sharply today, although the decline provided little relief to the major averages amid continued selling pressure in technology stocks. The 2-year note yield was down 17 basis points to 4.65%, while the 10-year note yield settled 19 basis points lower at 4.95%. The decline nevertheless supported defensive and rate-sensitive stocks, helping the S&P 500 Equal Weighted Index (+0.3%) remain in positive territory.

The drop in yields reflected safe-haven demand and short-covering rather than easing inflation concerns, with geopolitical uncertainty and weakness in AI-related stocks contributing to the flight to Treasuries. Meanwhile, WTI crude futures settled $2.29 higher (+2.4%) at $99.45 per barrel amid concerns about potential additional U.S. and Israeli strikes against Iran.

Looking ahead, another batch of earnings reports is due after the close, including results from Bloom Energy (BE 213.30, -25.23, -10.58%) and Western Digital (WDC 354.73, -23.78, -6.28%), both of which faced substantial selling pressure during today's AI-related retreat.

[BRIEFING.COM] The S&P 500 (-1.2%), Nasdaq Composite (-2.8%), and DJIA (-0.2%) remain little changed from their previous levels as the market enters the final hour of trading, with technology stocks continuing to face substantial selling pressure.

Moderna (MRNA) remains a notable laggard, with shares down more than 20% following a CNBC report that cancer vaccine data had partially leaked ahead of tomorrow's European Society for Medical Oncology conference. The company and Merck (MRK 148.23, -1.65, -1.10%)have since disclosed Phase 3 results for intismeran autogene in combination with KEYTRUDA in patients with resected melanoma. The treatment reduced the risk of recurrence or death by 42% compared with KEYTRUDA alone and lowered the risk of distant metastasis or death by 38%. Overall survival data remain immature, although the companies reported a favorable trend and said they are engaging with regulators.

Despite the reported clinical benefits, Moderna's sharp decline has weighed heavily on biotechnology stocks and limited the health care sector's gains (+1.2%) during an otherwise favorable session for defensive areas of the market.

[BRIEFING.COM] The S&P 500 (-1.4%) has endured a rough session today, falling from its best close in a week back below its 50-day moving average (7703) toward its lowest settlement since mid-September.

Once again, AI-related stocks like CoreWeave (CRWV 55.23, -6.59, -10.66%) have been at the forefront of the weakness, but the selling has also dragged down derivative plays like power suppliers for the group and power management names. GE Vernova (GEV 826.45, -99.47, -10.74%), Quanta Services (PWR 549.73, -51.41, -8.55%), and Eaton (ETN 369.76, -24.18, -6.14%). These names are on course to end the day at multi-week lows while the industrials sector (-1.4%) trades in the red, though still ahead of technology (-2.8%).

On the upside, transport stocks have been a pocket of relative strength today, thanks in large part to above-consensus results from Ryder System (R 258.02, +17.71, +7.37%), CSX (CSX 51.63, +3.23, +6.67%), Norfolk Southern (NSC 335.58, +7.49, +2.28%), Union Pacific (UNP 295.90, +8.02, +2.79%), and Southwest Air (LUV 41.44, +1.56, +3.90%). These names have helped the Dow Jones Transportation Average (+1.5%) extend its October advance to 4.4%.

[BRIEFING.COM] There is a clear divide in the market today between higher-beta stocks and lower-beta stocks. We can look to a few ETFs as proxies for this bifurcation.

The Invesco S&P 500 High Beta ETF (SPHB 136.38, -7.62, -5.29%) is down more than 5.0%, while the Invesco S&P 500 Low Volatility ETF (SPLV 75.84, +1.30, +1.74%) is up 1.7%.

This shift has been catalyzed by worries that the AI buildout is becoming increasingly more expensive and competitive as companies at the center of it, like Meta Platforms (META 646.99, -50.53, -7.24%), compete for capital. At the same time, expansion plans are being crimped by supply chain constraints, which have resonated in Lam Research (LRCX 232.38, -28.42, -10.90%) guidance and which, in turn, have raised questions about the ability to deliver on investors' high growth expectations in the near term.

Separately, the rotation into lower-beta stocks (but not necessarily low P/E stocks) has been facilitated today by the earnings results from Procter & Gamble (PG 166.25, +9.41, +6.00%), which featured an acceleration in fiscal Q1 organic sales growth to 4.0% from 0.5% in fiscal Q4. PG maintained its core EPS guidance for FY27 of $6.89-7.11, which leaves it trading at nearly 24x FY27 estimates versus 21x for Meta.

Meta has the stronger growth profile, but PG has the lower 3-yr adjusted beta of 0.44 versus 1.31 for META, according to FactSet. For today anyway, lower beta is in and higher beta is out.

[BRIEFING.COM] The major averages remain near their session lows in early afternoon trading, with continued selling pressure in technology and AI-related stocks keeping the S&P 500 and Nasdaq Composite firmly lower despite relative strength elsewhere in the market.

The health care sector (+0.7%) remains higher amid continued rotation into defensive stocks, although its earlier gains have been cut by more than half as Moderna (MRNA 186.10, -59.71, -24.29%) faces a sharp selloff. Shares are down roughly 25% ahead of a scheduled presentation tomorrow at the European Society for Medical Oncology conference, where the company is expected to present data on adjuvant intismeran autogene plus FOLFIRINOX in patients with resectable pancreatic ductal adenocarcinoma.

The pronounced weakness in Moderna is also weighing on the broader biotechnology group, with the iShares Biotechnology ETF down 1.9% despite the health care sector's positive showing.

[BRIEFING.COM] The stock market remains under substantial pressure this afternoon, although the sharp losses in the major averages obscure a considerably more divided performance beneath the surface. The S&P 500 (-1.4%) and Nasdaq Composite (-2.6%) have both fallen below their respective 50-day moving averages as technology and AI-related stocks extend their retreat. The DJIA (-0.2%), meanwhile, is holding up considerably better, while the S&P 500 Equal Weighted Index (+0.3%) is trading higher despite the sizable decline in its market-cap-weighted counterpart.

Today's weakness reflects a sharp reversal in sentiment toward AI-related stocks following yesterday's technology-led advance. The latest round of earnings reports has renewed concerns about the rising costs of AI infrastructure, supply chain constraints, and whether companies can deliver the growth necessary to justify their substantial investments. The resulting rotation away from higher-beta stocks is particularly evident in the Invesco S&P 500 High Beta ETF, which is down nearly 5.0%, compared with a gain of more than 1.0% in the Invesco S&P 500 Low Volatility ETF.

The information technology sector (-3.1%) is bearing the brunt of the selling, with the PHLX Semiconductor Index (-6.2%) posting a particularly steep decline amid widespread pressure on semiconductor and AI infrastructure stocks. Lam Research (LRCX 231.69, -29.12, -11.17%) has declined sharply after its forward guidance highlighted supply chain constraints, raising questions about the industry's ability to satisfy elevated near-term growth expectations. The weakness has also extended to data center infrastructure names, including CoreWeave (CRWV 56.07, -5.75, -9.30%).

The communication services sector (-2.9%) is another major drag, largely reflecting a disappointing earnings reaction in Meta Platforms (META 647.43, -50.09, -7.18%). Despite stronger-than-expected revenue and underlying earnings, investors have focused on the company's mounting AI investment costs. Quarterly capital expenditures exceeded operating cash flow, resulting in negative free cash flow, while underlying operating margins contracted from a year ago. Concerns about future financing requirements have also intensified, with Bloomberg reporting that a measure of Meta's credit risk has reached a record high.

Tesla (TSLA 379.03, -7.44, -1.93%) is also under pressure following its own earnings report. The company exceeded adjusted EPS expectations and reported improving automotive margins, but declining operating income and a reduction in its FY26 capital expenditure outlook to approximately $20 billion from more than $25 billion have added another dimension to the market's scrutiny of ambitious technology investment plans. Unlike Meta's expanding spending commitments, Tesla's reduced outlook raises questions about the pace of investment in its autonomous driving and robotics initiatives.

The pressure has spread beyond the technology-related sectors, with the industrials sector (-1.5%) weighed down by sharp declines in electrical equipment and infrastructure names tied to the AI buildout, including GE Vernova (GEV 817.74, -108.18, -11.68%) and Bloom Energy (BE 212.72, -25.81, -10.82%).

The consumer discretionary sector (-1.4%) is also lower, although the iShares U.S. Home Construction ETF (+4.7%) is posting a sizable gain, illustrating the selective nature of today's selling.

Defensive stocks are providing the clearest counterweight. The consumer staples sector (+2.7%) leads the S&P 500 standings, supported by a favorable earnings reaction in Procter & Gamble (PG 166.49, +9.65, +6.15%), which reported accelerating organic sales growth and maintained its FY27 core EPS outlook. The utilities sector (+1.4%) is also outperforming, while the health care sector (+1.2%) has surrendered some of its earlier gains amid a sharp intraday decline in Moderna (MRNA 190.58, -55.22, -22.47%).

Elsewhere, crude oil futures are up $2.16 (+2.2%) to $99.31 per barrel amid heightened geopolitical concerns surrounding potential additional U.S. and Israeli strikes against Iran. Safe-haven demand has simultaneously driven Treasury yields sharply lower across the curve, with the 10-year note yield down 17 basis points to 4.98%, slipping below 5.00% for the first time since September 22.

The contrast between steep losses in AI-related stocks and gains across defensive and other select areas underscores the market's shifting leadership. While concerns about the costs and returns of AI investment are weighing heavily on the major averages, the relative strength of the broader market suggests investors are reallocating capital rather than abandoning equities altogether.

Reviewing today's data:

• Initial jobless claims were down 6,000 for the week ending October 17 to 194,000 (Briefing.com consensus: 200,000). Continuing jobless claims for the week ending October 10 increased by 25,000 to 1.728 million.
  
  • The key takeaway from the report is still the same. Layoff activity is low, which is consistent with a solid demand environment for goods and services.
• Sep Leading Economic Index 0.0% (Briefing.com consensus -0.2%; Prior -0.1%)
  10/17 EIA Natural Gas Inventories +77 bcf (Prior +67 bcf)

[BRIEFING.COM] The major averages remain little changed from their previous levels, with pronounced weakness in technology stocks continuing to weigh on the S&P 500 and Nasdaq Composite despite pockets of strength elsewhere in the market.

Lower-beta stocks are finding favor as investors reassess growth expectations and spending commitments across the AI industry. The health care sector (+2.7%) is among today's strongest performers, while Procter & Gamble (PG 166.49, +9.65, +6.15%) is benefiting from a well-timed earnings report that has helped reinforce buying interest in defensive stocks.

Spotify (SPOT 569.92, +44.58, +8.49%) is another notable winner, surging more than 9% following strong quarterly results. Revenue increased 16.3% to 4.97 billion, while premium subscribers grew 9% to 306 million, providing a favorable contrast to the disappointing earnings reactions among several influential technology companies.

[BRIEFING.COM] The S&P 500 (-1.1%) and Nasdaq Composite (-2.1%) remain under firm pressure from technology stocks, while the DJIA (flat) has recovered to its flat line amid relative strength across the broader market.

Meta Platforms (META 655.02, -42.50, -6.09%) remains a notable drag following its earnings report, with concerns about the company's substantial AI infrastructure spending extending beyond the equity market. According to Bloomberg, a measure of Meta's credit risk has reached a record high, reflecting growing investor concerns about the financing requirements associated with its aggressive AI investment plans.

Meanwhile, safe-haven buying in U.S. Treasuries continues to push yields lower. The 10-year yield briefly slipped below 5.00% for the first time since September 22 and is currently down 15 basis points to 5.00%.

[BRIEFING.COM] The major averages remain under pressure just before midday, although the selling has been heavily concentrated in mega-cap technology and AI-related stocks. The S&P 500 (-1.2%) and Nasdaq Composite (-2.0%) are posting sizable losses, while the DJIA (-0.2%) is holding up considerably better as buying interest in defensive areas offsets some of the weakness elsewhere.

The divergence is particularly evident in the S&P 500 Equal Weighted Index, which is trading near its flat line, compared with a 2.2% decline in the Vanguard Mega Cap Growth ETF. The information technology sector (-2.5%) remains under substantial pressure, with the PHLX Semiconductor Index (-5.4%) extending its steep retreat. Meta Platforms (META 656.85, -40.67, -5.83%) is also a major drag following its earnings report, as concerns about the substantial costs of its AI infrastructure investments overshadow strong advertising results.

Despite the weakness in the major averages, five S&P 500 sectors are trading higher. The consumer staples (+2.3%) and health care (+1.8%) sectors are leading the advance as investors rotate toward defensive stocks, with Procter & Gamble (PG 166.64, +9.80, +6.25%) benefiting from a favorable earnings reaction.

Elsewhere, crude oil prices remain higher amid escalating geopolitical tensions, although they have retreated from their earlier highs. Elevated energy prices are adding pressure to some cyclical areas of the market, while safe-haven demand for Treasuries has pushed the 10-year yield down 14 basis points to 5.01%.

[BRIEFING.COM] The major averages have stabilized in a narrow range near their session lows, with technology stocks continuing to face substantial selling pressure following the latest round of earnings reports.

Meta Platforms (META 652.00, -45.52, -6.53%) is among the biggest drags on the market despite reporting stronger-than-expected revenue and underlying earnings, supported by continued growth in its advertising business. Investors have instead focused on the mounting costs of its AI investments, with underlying operating margins contracting from a year ago and quarterly capital expenditures exceeding operating cash flow, resulting in negative free cash flow. The company's substantial spending commitments have also raised questions about future financing needs and the timeline for generating sufficient returns on its AI infrastructure investments.

Tesla (TSLA 386.97, +0.50, +0.13%), meanwhile, has recovered from an early decline to trade near its flat line following its own earnings report. The company exceeded adjusted EPS expectations and reported improving automotive margins, while lowering its FY26 capital expenditure outlook to approximately $20 billion from more than $25 billion. However, declining operating income and continued spending requirements for its Robotaxi and robotics initiatives remain important considerations as investors assess the company's longer-term profitability.

[BRIEFING.COM] The major averages continue to extend their losses, with the S&P 500 (-1.3%), Nasdaq Composite (-2.2%), and DJIA (-0.5%) moving further into negative territory. The latest retreat has pushed both the S&P 500 and Nasdaq Composite slightly lower for the week, erasing their gains from earlier sessions.

The information technology sector (-2.7%) remains under pronounced selling pressure, with the PHLX Semiconductor Index (-5.1%) extending its sharp decline amid widespread weakness in AI-related stocks. CoreWeave (CRWV 57.90, -3.92, -6.35%) has fallen back toward its lows for the week, while other data center infrastructure names are also facing heavy selling pressure.

The weakness follows a 3.5% overnight decline in South Korea's Kospi and broader losses across global technology stocks. The PHLX Semiconductor Index has fallen to its lowest level since early August and is now down 1.7% for the week and 13.4% in October, underscoring the extent of the recent retreat in semiconductor stocks.

[BRIEFING.COM] The S&P 500 (-0.9%) and Nasdaq Composite (-1.5%) have seen much of this week's progress erased at the open as technology stocks retreat sharply following the latest batch of earnings reports. The DJIA (-0.2%) is holding a more modest loss as buying interest in defensive areas provides some support, even as rising oil prices add to pressure on the broader market.

The communication services sector (-2.1%) is once again at the bottom of the standings, weighed down by a sharp post-earnings decline in Meta Platforms (META 654.32, -43.20, -6.19%). Concerns about the substantial costs associated with the company's AI infrastructure investments are pressuring the stock, while its five-year credit default swaps have reached new highs, reflecting heightened concerns about its credit risk.

Mega-cap technology stocks are mostly lower this morning, with the Vanguard Mega Cap Growth ETF down 1.7%. Tesla (TSLA 387.59, +1.12, +0.29%), however, is a relative standout after reversing its premarket losses following its own earnings release.

Meanwhile, the information technology sector (-1.5%) is also firmly lower, with increased scrutiny of capital spending plans across major hyperscalers weighing on AI infrastructure stocks. The PHLX Semiconductor Index (-3.3%) is facing particularly pronounced selling pressure.

Elsewhere, crude oil prices are up 2.0%, hovering around $99 per barrel and adding to pressure on economically sensitive stocks. The defensive health care (+1.1%) and consumer staples (+1.3%) sectors are both posting solid gains, while the financials sector (+0.8%) is also outperforming as safe-haven buying in U.S. Treasuries pushes yields lower.

Just released, the September Leading Economic Index was flat month-over-month (Briefing.com consensus -0.2%), from a prior decrease of -0.1%.

The stock market remains on track for a considerably lower open as disappointing reactions to earnings from Meta Platforms (META) and Tesla (TSLA) weigh on the AI trade, with concerns about the costs, pace, and profitability of AI investment adding to the pressure. Meanwhile, crude oil prices are moving sharply higher amid escalating geopolitical tensions.

On the data front, initial jobless claims were down 6,000 for the week ending October 17 to 194,000 (Briefing.com consensus: 200,000). Continuing jobless claims for the week ending October 10 increased by 25,000 to 1.728 million.

The key takeaway from the report is still the same. Layoff activity is low, which is consistent with a solid demand environment for goods and services.

U.S. equity futures point to a sharply lower open, with the S&P 500 futures currently 74 points below fair value. 

Asian markets sold off sharply on Thursday, with renewed pressure on technology shares compounded by escalating Middle East tensions and a surge in oil prices. Japan's Nikkei 225 plunged 2.7% to its lowest close in nearly three months, with Tokyo Electron (-7%), SoftBank Group (-7%), Kioxia Holdings (-7%), Advantest (-6%), and Taiyo Yuden (-6%) leading the retreat as persistent questions surrounding returns on AI investment collided with a fresh energy shock. China's Shanghai Composite fell 1.5%, with the Shenzhen Component dropping 3.0% as Zhongji Innolight (-9%), Eoptolink Technology (-12%), and Foxconn Industrial Internet (-4%) joined the regional technology selloff. Hong Kong's Hang Seng sank 3.0% to its lowest level since July, pressured by Lenovo (-12%), Wuxi Biologics (-9%), Alibaba (-6%), SMIC (-6%), and Tencent (-3%). South Korea's KOSPI tumbled 3.5% to its lowest close since April, reversing Wednesday's rally as Samsung Electronics (-4%) and SK Hynix (-6%) renewed their declines even as semiconductor exports surged 222.5% yr/yr during the first 20 days of October, underscoring continued underlying chip demand. The Bank of Korea left its policy rate unchanged at 3.00%, as expected. Brent crude climbing above $110 following deadly attacks on a Saudi oil field added another layer of pressure across the region, raising concerns surrounding energy supplies and inflation, particularly for import-dependent economies such as Japan.

• In economic data:
  • South Korea's Bank of Korea left its policy rate unchanged at 3.00%, as expected.
  • South Korea's semiconductor exports surged 222.5% yr/yr during the first 20 days of October.
  • New Zealand's Q3 CPI increased 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 totaled -JPY161.6 bln (prior -JPY339.9 bln).
  • Foreign investment in Japanese stocks totaled -JPY66.5 bln (prior +JPY3,545.5 bln).
  • China's September FDI was down 4.3% (prior -5.3%).
  • Hong Kong's September CPI increased 0.3% m/m (prior 0.1%) and 1.9% yr/yr (expected 1.8%; prior 1.9%).
  • Hong Kong's unemployment rate increased to 3.9% from 3.8%.

European markets trade broadly lower as escalating Middle East tensions and oil prices above $110 compound renewed concerns surrounding AI investment and elevated borrowing costs. Germany's DAX falls 1.0%, with Infineon (-3%) and Siemens Energy (-3%) leading technology-related weakness, while SAP (+1%) bucks the decline after quarterly revenue topped EUR10 bln for the first time and the company raised its full-year revenue outlook. France's CAC 40 drops 1.3% as the country's 10-year government bond yield remains above 5% amid political and fiscal uncertainty ahead of Moody's sovereign-rating review on Friday, while Hermes (-7%), STMicroelectronics (-3%), and Kering (-3%) retreat. London's FTSE 100 declines 0.4%, with Barclays (-2%) falling after investment-banking revenue missed expectations and Sainsbury's (-3%) retreating despite better-than-expected first-half profit, while miners weaken alongside sharp declines in gold, silver, and copper prices. Rising oil prices following deadly attacks in Saudi Arabia add another inflationary concern for the region at a time when elevated rates are already increasing scrutiny of AI investment returns and government borrowing costs. The STOXX Europe 600 falls 0.9%, while Italy's FTSE MIB drops 1.7% and Spain's IBEX 35 loses 1.6%, underscoring the breadth of the risk-off move across the region.

• In economic data:
  • France's October Business Survey increased to 105 (expected 101; prior 101).
  • The U.K.'s October CBI Industrial Trends Orders fell to -32 (expected -20; prior -9).
  • The Swiss National Bank's September assessment showed policymakers left the policy rate unchanged at 0%, judged monetary policy appropriate, and retained 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.

The S&P 500 futures currently trade 70 points below fair value.

Just released, Initial jobless claims for the week ending October 17 decreased by 6,000 to 194,000 (Briefing.com consensus: 200,000), from the upwardly revised previous level of 200,000 (from 199,000).

Continuing jobless claims for the week ending October 10 increased by 25,000 to 1.728 million, from the downwardly revised prior level of 1.703 million (from 1.710 million).

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%

[BRIEFING.COM] The major averages finished Wednesday's session with solid gains as a significant pickup in third-quarter earnings reports helped restore technology stocks to a leadership position. The S&P 500 (+0.6%), Nasdaq Composite (+1.1%), and DJIA (+0.7%) all advanced, although the Nasdaq Composite enjoyed the strongest showing as renewed enthusiasm for AI-related stocks fueled gains across semiconductor, hardware, and software names.

The day's advance was driven largely by favorable earnings developments, particularly strong results and upbeat guidance from SpaceX (SPCX 159.28, +11.49, +7.77%) and Super Micro Computer (SMCI 35.55, +3.08, +9.49%). Both companies reinforced expectations for continued investment in AI computing infrastructure, helping revive buying interest in a group that had struggled to maintain its momentum during yesterday's choppy session.

The PHLX Semiconductor Index (+2.0%) posted a sizable gain, while strength in software and other technology stocks lifted the information technology sector (+1.6%) to the top of the S&P 500 standings. The renewed enthusiasm extended to several influential mega-cap names, with NVIDIA (NVDA 221.86, +5.39, +2.49%) contributing to the advance and Tesla (TSLA 386.47, +12.76, +3.41%) standing out ahead of its quarterly earnings report after the close. The Vanguard Mega Cap Growth ETF (+0.9%) outperformed the broader market, reflecting a shift back toward the large-cap growth stocks that had taken a back seat during yesterday's more broadly based rally.

Some of the strength in AI-related stocks also carried into the industrials sector (+0.9%), where companies tied to electronic production equipment and data center infrastructure benefited from the positive outlook for AI spending. United Airlines (UAL 101.67, +3.90, +3.99%) was another notable contributor to the sector's performance following a favorable earnings reaction.

Despite the technology-led advance, participation was less uniform than the gains in the major averages might suggest. Seven of the 11 S&P 500 sectors finished higher, while the communication services sector (-1.3%) was the weakest performer. Netflix (NFLX 65.04, -3.65, -5.31%) declined after disappointing fourth-quarter guidance and a reduction in its full-year advertising revenue outlook overshadowed its earnings beat. AT&T (T 21.91, -1.51, -6.45%) also faced substantial selling pressure despite exceeding earnings expectations, as slowing subscriber additions raised concerns about competitive conditions in the wireless industry. Alphabet (GOOG 330.95, -5.45, -1.62%) was another notable drag on the communication services sector, contrasting with the strength across several other influential technology-related stocks.

Elsewhere, the real estate (-0.8%), consumer staples (-0.6%), and health care (-0.5%) sectors finished lower, reflecting some reversal of yesterday's rotation into areas outside the technology trade.

The Russell 2000 (+0.3%) and S&P Mid Cap 400 (+0.4%) registered more modest gains, further illustrating the difference between today's mega-cap-led advance and yesterday's stronger participation among smaller companies.

The market's upward trajectory was briefly interrupted during the afternoon following a report suggesting the State Department was preparing to order the departure of certain personnel from U.S. embassies across the Persian Gulf. Stocks retreated modestly and crude oil prices ticked higher before State Department spokesperson Tommy Pigott clarified that the order applied only to non-emergency U.S. government employees and their families in Saudi Arabia. The clarification helped stocks recover much of the brief pullback, while WTI crude had already settled $0.66 lower (-2.1%) at $97.16 per barrel following the front-month contract's roll to December. The relatively subdued movement in oil prices and Treasury yields for much of the session allowed earnings and corporate developments to remain the primary drivers of trading.

The Nasdaq Composite also reclaimed its 50-day moving average, joining the S&P 500 and DJIA above their respective technical levels, as the major averages maintained the bulk of their gains into the close. Today's performance offered another example of the market's shifting leadership, with AI-related stocks regaining momentum after investors favored a much broader range of sectors and smaller companies yesterday. While the continued willingness to rotate between market groups remains an encouraging feature of the broader market, the contrast between technology's strength and weakness in several other sectors underscores the selective nature of today's advance.

With Meta Platforms (META 697.52, +3.27, +0.47%), Tesla, and others reporting after the close, the next round of results will be particularly important in determining whether renewed enthusiasm for AI investment can sustain the market's recent gains.

U.S. Treasuries ended the midweek session with losses after a mostly sideways session gave way to some late selling. The 2-year note yield settled up three basis points to 4.82%, and the 10-year note yield settled up three basis points to 5.15%.

• Nasdaq Composite: +14.9% YTD
• S&P 500: +13.3% YTD
• Russell 2000: +12.1% YTD
• S&P Mid Cap 400: +10.9% YTD
• DJIA: +10.0% YTD

Reviewing today's data:

• 10/17 MBA Mortgage Applications Index -5.3% (Prior -2.7%)
• 10/17 EIA Crude Oil Inventories -3.061M (Prior -8.557M)