Pre-market market moves. On Monday, October 26, US stock index futures all traded higher before the opening bell. As of the time of writing, Dow futures were up 0.32%, S&P 500 futures were up 0.14%, and Nasdaq futures were up 0.18%.
As of the time of writing, Germany's DAX was up 0.77%, the UK's FTSE 100 was up 0.43%, France's CAC 40 was up 0.65%, and the Euro Stoxx 50 was up 0.36%.
As of the time of writing, WTI crude was down 2.05% at $101.15 a barrel, while Brent crude was down 1.49% at $110.04 a barrel.
Market News
The US AI bull market is entering a pivotal week of reckoning. When the market stops buying unconditionally, how will earnings from the three cloud giants, the Federal Reserve's decision, and the PCE report shape the market's direction? US stocks have entered a highly decisive week. On the surface, it is a dense earnings window. In substance, it is a synchronized stress test of the foundations of the artificial intelligence, or AI, bull market narrative. This week's results from three hyperscale cloud providers—Alphabet (GOOGL.US), Microsoft (MSFT.US), and Amazon (AMZN.US)—along with two memory chip giants, SK Hynix and Samsung Electronics, will test the quality of the AI trade that has recently drawn heavy concern. At the same time, the Federal Reserve will announce its rate decision this week, and the market widely expects the central bank to hold steady. More noteworthy than the rate decision itself is Chair Warsh's communication stance at the post-meeting press conference. In addition, the US September personal consumption expenditures, or PCE, price index is due on October 29, the day after the Fed's decision, landing in the same week as third-quarter GDP data. This timing is expected to magnify the data's market impact: less than 24 hours after digesting the Fed's decision, investors will be forced into an independent repricing of the inflation trajectory.
Wall Street hopes for a post-election rebound, but BTIG throws cold water: the midterm elections may mark a starting point for declines, not a rebound. Wall Street investors hoping for a stock market rally after the November midterm elections may be disappointed. BTIG strategist Jonathan Krinsky believes downside risk is rising as credit conditions deteriorate and multiple sectors show signs of fatigue. In a research report, Krinsky said the S&P 500 could pull back to around 7,300, near its 200-day moving average and summer low. That equates to a decline of about 4.3% from the index's recent level of 7,631. If it breaks below this technical support, the benchmark index could fall further. The warning challenges the widespread expectation that stocks will rise after uncertainty over the November 3 election clears. Historically, midterm elections have often been a turning point for stocks, but Krinsky believes this year's unusually strong market performance reduces the likelihood of a repeat. Krinsky wrote: "The reason stocks tend to perform well in November of midterm election years is that the S&P 500 typically has already weakened before the election. This year, the situation is the opposite."
Goldman Sachs: retail trading is down 45% from late 2025, while household buying remains the ballast for US stocks, maintaining an S&P 500 year-end target of 8,000. Goldman Sachs said retail investors have sharply reduced stock trading in recent months, but overall US household demand for equities remains strong enough to help support the market as selling pressure rises and stock supply increases. Goldman strategist Ben Snider said in an October 23 research report that retail trading volume has fallen 20% since the summer and 45% since late 2025. Individual investors recently accounted for about 9% of total US stock trading volume, down from 15% at the end of last year and near the lowest level since 2020. Meanwhile, after a turbulent week for hedge fund favorites, hedge funds have reduced market exposure. This divergence—cooling speculative activity alongside still-strong household investment demand—is significant for stocks. Households are the largest holders of US equities, and their willingness to invest is an important source of support for share prices. Goldman expects net supply of US public equities in 2027 to see its largest increase since 2000, making continued household buying potentially even more important.
A tug-of-war between demand destruction and the risk of attacks on Saudi Arabia sends oil prices lower. Oil prices fell on Monday. Investors weighed the threat of further attacks on Saudi Arabia's energy infrastructure against concerns that elevated prices could eventually erode demand. The pullback followed a sharp rally on Friday, when attacks by Yemen's Houthi rebels on Saudi Arabia reignited fears of disruptions to global energy supply. In addition, Iran reportedly confirmed that senior officials from Saudi Arabia, Pakistan, and Turkey—three members of the Mecca Joint Defense Agreement—will meet with Iranian officials in Tehran today to discuss regional issues. This would be the first high-level contact between Iran and the Mecca alliance since the escalation in Yemen, where Saudi Arabia and the Houthis have frequently exchanged strikes. Iran has repeatedly said it is willing to mediate between Saudi Arabia and the Houthis.
Stock News
Musk's warning of a major shakeout intensifies market concerns, and neocloud companies fall broadly before the open. As of the time of writing, CoreWeave (CRWV.US) was down nearly 5%, Nebius (NBIS.US) was down more than 3%, and IREN (IREN.US) was down more than 4%. The moves followed Musk's prediction that the neocloud industry will face a shakeout, with companies in the sector confronting large-scale consolidation or even bankruptcy. Musk said debt markets are unwilling to finance companies whose revenue depends almost entirely on AI data centers, adding that SpaceX has obtained $40 billion in debt financing to buy Nvidia GPUs, but unlike new cloud service providers, SpaceX also has revenue from Starlink and rocket launch operations. He concluded: "That means more than 200 neocloud companies will face mass death and consolidation. Some will survive, but not many."
Brazil-linked stocks plunged before the open. The second round of Brazil's presidential election concluded on Sunday, with incumbent President Lula reversing the first-round lead of right-wing candidate Flavio Bolsonaro to secure a fourth presidential term. The news triggered a wave of selling in Brazilian assets. As of the time of writing, US-listed Brazilian financial services platform XP (XP.US) was down more than 47%, Petrobras (PBR.US) was down nearly 23%, Itau Unibanco (ITUB.US) was down more than 26%, PagSeguro Digital (PAGS.US) was down more than 31%, Telefonica Brasil (VIV.US) was down nearly 18%, and National Steel (SID.US) was down more than 16%. The sharp slump in Brazilian assets followed investors' broad bets that the right-wing candidate would win. In the first round on October 4, Flavio led Lula by 47.03% to 45.16%, briefly triggering a strong rebound in Brazilian risk assets. The market expected that a right-wing government would adopt stricter fiscal policy, cut public spending, control government debt, and push interest rates lower. However, Lula's eventual comeback victory shattered that expectation, meaning Brazil's existing economic policies may continue and reigniting investor concerns about the fiscal deficit, public debt, and the future path of interest rates.
Meta (META.US) is seeking up to $95 billion in equity financing for artificial intelligence spending. Meta is seeking to raise up to $95 billion by selling common and preferred stock as it looks to win investor support to lead in artificial intelligence. The company said in a Monday statement that it will issue about $35 billion of common and preferred stock. In addition, it will raise up to about $60 billion through an at-the-market stock sale program, which allows the company to sell shares in the public market from time to time. The at-the-market program will issue its planned Class C non-voting shares.
Verizon (VZ.US) reported mixed third-quarter results and reached an AI infrastructure agreement with Amazon AWS worth more than $2 billion. The earnings showed Verizon's third-quarter sales were $34.313 billion, below the market expectation of $34.744 billion; adjusted earnings per share were $1.31, better than the market expectation of $1.27. Thanks to improved operating efficiency, the company's net income and adjusted EBITDA both hit record highs, and it raised its full-year guidance for the third consecutive quarter. The company now expects full-year adjusted earnings per share of $5.04 to $5.06, above its previous forecast of $4.99 to $5.04. At the same time, Verizon announced an expanded strategic partnership with Amazon AWS, reaching an artificial intelligence infrastructure agreement valued at more than $2 billion.
Moderna (MRNA.US) extended declines before the open as fallout from the melanoma vaccine data leak continued. As of the time of writing, Moderna was down more than 8% before the open, after falling about 26% over the final two trading days of last week. The news followed the early leak last Thursday of phase 3 data for its personalized melanoma vaccine intismeran autogene, developed jointly with Merck (MRK.US): combined with Keytruda, it reduced the risk of cancer recurrence or death by 42% and the risk of distant metastasis or death by 38%. The data were positive but below the 49%/59% reductions seen in earlier studies and at the lower end of investors' expected range. RBC called the data "clinically meaningful and likely approvable," and UBS said it strengthened confidence in subsequent kidney and bladder cancer studies, but several institutions' price targets remain well below the current share price.
A $6 billion takeover: healthcare giant Bon Secours plans to take control of Surgery Partners (SGRY.US). According to people familiar with the matter, Bon Secours Mercy Health is in late-stage talks to acquire a majority stake in surgical services provider Surgery Partners, in a deal that would value the Bain Capital-backed company at about $6 billion, including $3.5 billion of debt. Bon Secours' partial acquisition of Surgery Partners would value the company at about $20 per share. Bain Capital will retain nearly 40% of its stake. As of the time of writing, Surgery Partners surged more than 24% in Monday's US pre-market session.
Earnings Preview
Tuesday morning: Cadence Design Systems (CDNS.US). Tuesday pre-market: Novartis (NVS.US), HSBC (HSBC.US), Coca-Cola (KO.US), Boeing (BA.US), United Parcel Service (UPS.US), PayPal (PYPL.US), Corning (GLW.US), and Freeport-McMoRan (FCX.US).
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