Stock futures saw a modest increase early Monday after a challenging week for Wall Street. Investors are preparing for a week filled with significant earnings announcements, economic data regarding employment, and the impending midterm elections.
The S&P 500 futures were up by 0.5%, while the Nasdaq-100 futures increased by 0.9%. Futures associated with the Dow Jones Industrial Average climbed by 186 points, or 0.4%. This positive movement in futures follows a week where all three major averages faced declines due to substantial selling pressure, particularly in technology stocks linked to the expansion of artificial intelligence.
Last week, the S&P 500 and Dow Jones Industrial Average each experienced losses of less than 1%, whereas the Nasdaq Composite faced a more significant drop of 2%. Concerns about the future of tech investments and AI spending played a crucial role in influencing these market trends.
In Asian markets, Japan's Nikkei 225 index showed a slight gain of 0.38%, while the broader Topix index fell by 0.46%. South Korea's Kospi index rose by 2.38%, and the smaller Kosdaq index experienced a 1.65% uptick. Conversely, Australia's benchmark S&P/ASX 200 index decreased by 0.53%. The Hang Seng index in Hong Kong rose by 0.61%, and mainland China's CSI 300 index added 1.26% during the same timeframe.
The week's positive start was bolstered by Anthropic's public filing for an initial public offering (IPO), which provided momentum for AI-related stocks. Despite this boost, selling pressures resumed later in the week as both Alphabet and Microsoft reported lower-than-expected capital expenditures (capex) forecasts, suggesting that spending in this area might be slowing down. Notably, Amazon opted to maintain its full-year capex guidance, further contributing to investor caution.
However, Warren Pies from 3Fourteen Research expressed a level of optimism, citing a rise in forward earnings estimates and emphasizing that there remains significant potential in the AI sector despite current market pressures. During an interview on CNBC's "Closing Bell Overtime," Pies stated, "I just don't see anything broken with the AI trade fundamentally. Technicals are another story," referring to the market's technical indicators that may signal caution.
Both the tech-heavy Nasdaq and S&P 500 recorded a challenging October, heavily influenced by worries surrounding AI investments, with the Nasdaq posting its most significant losses since March 2025. In contrast, the Dow Jones Industrial Average saw a nearly 2% increase as investors shifted towards more defensive sectors such as healthcare.
Mike Dickson, the head of research and quantitative strategies at Horizon, remarked that instead of retreating amid heightened AI risks, investors are recognizing potential in other stock categories. He noted that the upcoming midterm elections could introduce uncertainty into the market, yet historically, stocks have shown resilience regardless of which party controls Congress.
The midterm elections are set for Tuesday, with expectations that the Democrats will secure control of the House of Representatives, while the Senate remains a point of contention. Investors are closely monitoring these developments as they may influence future market dynamics.
Additionally, market participants are looking forward to the release of the October nonfarm payrolls report, scheduled for Friday, which is anticipated to reveal an increase of approximately 55,000 jobs for the month, as projected by economists surveyed by Dow Jones.
This week will also witness a slew of earnings announcements. Notably, Apple, a member of the "Magnificent Seven," is expected to report its financial results after the market closes on Monday. Other major corporations such as McDonald's and Qualcomm are also set to release their earnings later in the week, further adding to the market's overall focus on corporate performance.
In the broader context of Asian markets, shares in mainland China and Hong Kong experienced gains, which stood in contrast to losses in other Asian markets. This was attributed to reports suggesting that Chinese financial regulators are expected to meet with banks and securities firms to discuss strategies aimed at strengthening the country's stock market.
The Hang Seng index posted an increase of 0.59%, while the CSI 300 index in mainland China edged up by 0.21%. The upward movement in the Hang Seng was driven primarily by consumer cyclical and technology sectors, both rising by 0.48%.
Conversely, Kioxia's shares fell by 14% after the company warned of stagnating prices for flash memory products during its recent earnings call. The Japanese semiconductor manufacturer noted that while the average selling prices of NAND flash memory had risen in the mid-20% range for the three months ending in September, this was a sharp decline from the 70% increase observed in the preceding quarter. Kioxia anticipates an operating profit of 2 trillion yen for the current quarter, which falls short of analysts' projections of 2.35 trillion yen, indicating nearly flat price increases quarter on quarter.
Early Monday trading in the Asia-Pacific region continued to reflect the overall downtrend observed last week on Wall Street, largely due to the pressure within the tech sector. Japan's Nikkei 225 index saw a decline of 0.54% while the Topix index fell by 0.74%. South Korea's Kospi index dropped by 1.39%, and the small-cap Kosdaq slid by 0.81%. Australia's S&P/ASX 200 index traded 0.24% lower.
Oil prices also experienced a downturn this past Sunday night, coinciding with the rise in U.S. equity futures. U.S. West Texas Intermediate crude futures dropped over 1% to $102.41 a barrel, while global benchmark Brent crude futures fell more than 1%, settling at $111.68 a barrel. This decrease marked a reversal from Friday's gains of over 2%, contributing to oil's overall increase of more than 10% throughout October.
Overall, as the Asia-Pacific markets prepared for a lower opening on Monday, investors remained vigilant regarding developments in the Middle East alongside the U.S. midterm elections, both of which are anticipated to significantly influence market conditions.
U.S. equity futures opened slightly higher on Sunday evening, with the S&P 500 futures rising by 0.2% shortly after 6 p.m. ET, mirroring the upward trend observed in Nasdaq-100 futures. Futures related to the Dow Jones Industrial Average also climbed by 103 points, or 0.2%, indicating a cautiously optimistic start to the trading week.
Source: CNBC