What moved
- US (Friday's close; futures are the live read): The S&P 500 ended Friday down 1.09% at 7,659.44, the Nasdaq Composite fell 2.15% to 26,140.03 and the Dow slipped 0.34% to 52,002.41. This morning S&P 500 futures are up 0.44% at 7,738.25 and Nasdaq 100 futures are up 1.23%.
- Europe (mid-session): The FTSE 100 is down 1.24% at 10,747.11, the DAX is down 1.34% at 25,280.33, the CAC 40 is down 1.51% at 7,836.68 and the Euro Stoxx 50 is down 1.18% at 6,130.77.
- Asia (closed): The Nikkei ended 0.62% lower at 64,916.70. The Shanghai Composite added 0.39% to 3,730.92 and the Kospi rose 1.76% to 5,768.01.
Why
Friday's damage was about how the AI build-out is being paid for. Investors are asking whether the heavily indebted companies building AI infrastructure can earn enough to repay their loans before borrowing costs climb further. CoreWeave fell 11.91% and the chip index fell for an eighth straight session. Reuters put the Nasdaq's weekly loss as its sharpest since June. Futures now show buyers stepping back in, and the bounce is concentrated in tech: Nasdaq 100 futures are up nearly three times as much as S&P 500 futures. The real test comes this week, with SpaceX reporting on Tuesday and Meta and Tesla on Wednesday. Those results will show whether AI spending is still producing returns.
Oil is the other support. President Trump suspended a raft of Russia sanctions just before they took effect and waived proposed tariffs on countries that buy Russian oil. WTI is down 3.34% at $98.02 and Brent is down 1.26% at $108.48. Cheaper oil matters because last week's consumer and producer inflation reports both came in hotter than expected. The Fed raised rates in September, and traders now see a December rise as more likely than not. Every dollar off crude eases some of that pressure. The risk premium has not gone away, though: Iran has reported another tanker hitting a mine in the Strait of Hormuz.
Europe has its own problem. Weekend unrest in France has highlighted how hard it will be to cut the budget deficit before next year's presidential election. French 10-year yields have risen 9 basis points and European banks are among the heaviest fallers.
Sentiment & risk appetite
Nerves have calmed this morning, but the damage is not repaired. The VIX has fallen 1.32 points to 18.67, yet it is still 22% higher than five sessions ago. Friday's selling was broad: our own count of US-listed stocks had 2,113 risers against 4,024 fallers. Money moved into defensive sectors. Technology dropped 3.02% while energy gained 2.52%, utilities 1.34% and consumer staples 1.08%. There is no sign of a rush to safety today. The 10-year Treasury yield is up 0.4 basis points at 5.102%, gold is up 0.06% and the dollar index is up 0.08%.
Economic calendar
No US data came out at 08:30 ET. The only scheduled release in that slot was Canada's September consumer price index, which comes ahead of the Bank of Canada's 28 October decision. Overnight, China reported third-quarter growth of 4.5% year on year, slightly ahead of the 4.4% forecast.
Still to come today is the NAHB homebuilder sentiment index at 10:00 ET, plus routine Treasury bill auctions. The rest of the week is light on US data: weekly jobless claims on Thursday and the flash October PMI surveys of business activity on Friday. Without much data, rate expectations will move on oil prices and on what companies say in their results.
Earnings
Fifth Third reported before the open. Adjusted earnings per share were $1.13 against a $1.09 consensus. Reported EPS was $0.90 after merger and other one-off charges. Net interest income (what the bank earns on loans minus what it pays on deposits) rose 3% from the previous quarter. Most of the year-on-year gain comes from absorbing Comerica, whose systems conversion is now complete. Credit quality was broadly stable.