U.S. equities are pointing sharply lower Thursday as strong headline earnings fail to settle concerns over the cost and eventual returns of the AI investment cycle, while another surge in oil adds a renewed inflation headwind. At 4:56 a.m. ET, Dow futures were down 0.69%, S&P 500 futures were down 1.10% and Nasdaq 100 futures were down 1.93%. Wednesday, the Dow gained 0.69%, S&P 500 rose 0.58%, Nasdaq advanced 1.05% and Russell 2000 added 0.27%, with strong results from SpaceX and Super Micro temporarily restoring enthusiasm for AI-linked stocks.
Treasury yields were little changed Wednesday, with the 2-year up 2 basis points to 4.81%, the 10-year up 1 basis point to 5.12% and the 30-year down 1 basis point to 5.41%. That backdrop has changed overnight: risk-off demand has pushed the 10-year toward 5.09% as investors move toward government bonds in response to AI-sector weakness and escalating Middle East tensions. The move is supportive for equity duration mechanically, but the fact that yields are falling alongside sharply lower growth-stock futures suggests the bond rally is being interpreted primarily as a flight to safety rather than a clean valuation tailwind.
The dollar was essentially unchanged Wednesday, with the DXY at 101.69. The euro slipped 0.04% to $1.1234, sterling gained 0.12% to $1.3396, USD/JPY edged 0.02% higher to ¥158.21 and EUR/JPY was nearly unchanged at ¥177.71. The dollar is softer this morning as falling Treasury yields weigh on U.S. rate support, while the yen is posting its strongest daily advance in roughly a month as investors seek traditional safe havens.
Energy is again the most important cross-asset macro variable. December WTI gained $0.11, or 0.11%, Wednesday to $97.93, while December gold rose $9.10, or 0.22%, to $4,151.70. WTI is up toward $99.80 this morning, while Brent has surged more than 3% to roughly $112, near a five-month high, following additional Houthi attacks in Saudi Arabia and increased concern about disruption around the Strait of Hormuz. The U.S. has ordered some diplomatic personnel to leave Saudi Arabia and other regional missions as tensions escalate. Gold is softer despite the risk-off tone as investors balance safe-haven demand against the inflationary implications of another energy spike.
Today’s U.S. economic calendar begins with weekly initial jobless claims at 8:30 a.m. ET, with consensus around 200,000 versus 199,000 last week; continuing claims are expected around 1.72 million. At 10:00 a.m., the Conference Board releases its September Leading Economic Index, which is expected to decline approximately 0.1% after falling 0.1% in August. The August LEI’s six-month growth rate had already slipped slightly negative, although the Conference Board said it was not yet signaling recession. The Kansas City Fed manufacturing survey follows at 11:00 a.m.
S&P 500 Sector Performance
Wednesday’s leadership was concentrated in growth and Industrials. Technology +1.61% led, followed by Industrials +0.91%. Financials gained 0.56%, Utilities +0.37%, Energy +0.28%, Consumer Discretionary +0.23% and Materials +0.19%. The laggards were Communication Services -1.33%, Real Estate -0.79%, Consumer Staples -0.59% and Health Care -0.45%. Breadth was modestly positive at 1.01:1 on the NYSE and 1.31:1 on the Nasdaq. Technology therefore drove most of the index-level upside, but participation was considerably healthier than during several of the recent AI rebound sessions.
Communication Services
- Meta Platforms (META) is down roughly 1.9% premarket despite reporting third-quarter revenue of $64.6 billion versus $63.37 billion expected and guiding fourth-quarter revenue to $73-$76 billion. The issue is spending: Meta raised the low end of its 2026 capital-expenditure forecast to $135-$145 billion, reported negative free cash flow of $2.12 billion for the quarter and announced a new non-voting Class C share class that can be used to fund acquisitions and AI investment. Muse has already attracted more than 10 million users in the U.S. and Canada, but investors are again asking how quickly that adoption can translate into returns on Meta’s escalating AI investment.
Consumer Discretionary
- Tesla (TSLA) is down roughly 5.3% premarket despite better-than-expected revenue and positive third-quarter free cash flow of $1.53 billion. Tesla reduced its 2026 capital-spending forecast to roughly $20 billion from more than $25 billion, raising questions about the pace of investment in robotaxis, AI infrastructure and humanoid robotics. Automotive gross margin excluding regulatory credits improved to 18.1%, but the reduced spending plan—and continuing discussion of a possible combination with SpaceX—has shifted investor attention toward the company’s longer-term strategic direction.
Information Technology
- IBM (IBM) is down roughly 5.7% premarket despite beating third-quarter expectations and raising its annual software-growth outlook to 7%-8% from 6%-8%. Management said previously delayed large software deals are beginning to close, but the negative stock reaction illustrates the unusually high bar facing Technology companies as investors distinguish between companies directly benefiting from AI infrastructure spending and more traditional software and services franchises.
- Lam Research (LRCX) reported exceptionally strong September-quarter results, with revenue rising 22% sequentially to $8.22 billion, non-GAAP gross margin improving to 52.4% and adjusted EPS increasing to $2.20 from $1.82 in the June quarter. The results provide another strong fundamental confirmation of semiconductor fabrication spending, particularly around advanced memory and AI-related process complexity, even as the entire chip group trades lower this morning.
- Texas Instruments (TXN) forecast fourth-quarter sales above consensus, citing recovering industrial semiconductor demand and growing momentum in AI data-center applications. That combination is important because it suggests semiconductor improvement is extending beyond leading-edge GPUs and HBM into more traditional analog and embedded applications. Nevertheless, the broader group is under heavy pressure this morning: Intel is down roughly 5%, while AMD, Qualcomm, Marvell, Broadcom and Micron are falling roughly 3%-5% and Nvidia is down about 2.4%.
Industrials
- Lockheed Martin (LMT) has reached a preliminary agreement with the Pentagon covering production and sustainment of as many as 850 F-35 fighter jets over the next decade. The arrangement is not yet a final order, but it establishes a framework designed to maintain annual production near 156 aircraft and also includes international purchases, spares and modification kits. Lockheed expects a multiyear structure to lower manufacturing costs and improve supply-chain visibility.
- Honeywell (HON) reports third-quarter results before the open, followed by its 8:30 a.m. ET conference call. With Industrials outperforming Wednesday and aerospace and automation demand remaining firm, investors will focus on organic growth, margins, aerospace demand and management’s outlook for its increasingly focused automation portfolio.
Financials
- Blackstone (BX) reports third-quarter results this morning, followed by its 9:00 a.m. ET investor call. Assets under management exceeded $1.3 trillion entering the quarter, and investors will focus on fundraising, realizations, private-credit flows and the performance of Blackstone’s substantial data-center and AI-related infrastructure portfolio. With concerns around AI financing now affecting both equity and credit markets, commentary on valuations and capital availability could be particularly relevant.
