Futures on Wall Street resumed trading on Sunday evening local time with gains after tech-heavy indices, more so the Nasdaq indices, reported their worst weekly performance since June during the week gone by.
The Dow Jones futures are trading with gains of close to 150 points, while the Nasdaq futures are up nearly 250 points. The S&P 500 futures are currently trading 20-25 points higher. The S&P 500 had declined nearly 2% during the week gone by, while the Nasdaq had dropped 4.5% after a four-week winning run.
Concerns surrounding the AI trade health were the biggest reasons behind the fall last week as shares such as CoreWeave plunged 25% after the yield tied to its debt surged to levels that generally indicate “distress.”
Anthropic also reported revenue of $16.8 billion during the third quarter, higher than the $11.6 billion reported in the previous one, but it raised concerns among investors whether the pace of growth is enough to justify the valuations.
Investment banking firm Goldman Sachs noted that the AI credit spreads and hyperscalers specifically are at the widest level of the year. A Credit spread is generally the difference in yields between a risky debt and the US treasuries, generally considered safe. Goldman Sachs went on to warn that the last time the spreads were this high, underlying equities fell 15%.
Oil prices continue to remain another major factor to watch for the markets after Brent crude touched $110 a barrel for the first time since May last week. The prices are stable this morning around the $108 – $109 a barrel mark.
Russia and Ukraine continued to trade attacks on each other’s energy infrastructure with Ukraine using over 1,000 drones on Russia, few of which led to a fire at an oil refinery and depot in St. Petersburg. Long-dated oil futures are looking to factor in the fact that energy infra disruptions may go on well into 2027.
This week happens to be an important one on Wall Street. While there is no major macro data report other than the University of Michigan’s consumer sentiment survey, which will be released on Friday, there are multiple important earnings reports that the markets will have to grapple with, including some hyperscalers as well.
GE Aerospace, 3M Company, General Motors and Netflix report their results on Tuesday, while tech names like Meta, Tesla, IBM and Texas Instruments come out with numbers on Wednesday. Memory chip maker Western Digital reports this Thursday, along with names like Lockheed Martin, Blackstone and P&G, while American Express comes out with its numbers on Friday.
Fed officials have gone into a blackout period ahead of their policy announcement on October 28.
US 10-year bond yields continued to hover around the 5.1% mark, while the US Dollar index remained around 102.