December Nasdaq 100 E-Mini futures (NQZ26) are down -0.50% this morning as investors continued to ditch chipmakers amid mounting worries about an overheating AI trade and growing Chinese competition.
Chip and AI infrastructure stocks slid in pre-market trading, following a slump in major tech names across Asia. SK Hynix tanked over -10% and Samsung Electronics slumped more than -7% in Seoul, extending yesterday’s losses after Chinese rival CXMT announced “key progress” in developing a new chip capable of storing more data. Concerns about the AI trade intensified after Broadcom CEO Hock Tan said on Monday that many AI investors “have no clue what they are investing in,” adding that they had “extreme expectations only to find out that it's almost like they are in a casino.”
However, lower oil prices and bond yields helped limit losses in Nasdaq 100 futures. The price of WTI crude dropped over -2% on Tuesday, retreating after three straight sessions of gains as traders weighed persistent Middle East supply risks against the prospect of additional Russian diesel exports. Treasuries rose as lower oil prices moderated inflation concerns, while the selloff in AI-related stocks spurred modest safe-haven demand for government debt.
Investors are now awaiting earnings reports from big U.S. banks and comments from a pair of Federal Reserve officials.
In yesterday’s trading session, Wall Street’s main stock indexes closed mostly lower, weighed down by higher oil prices and weakness in chipmakers. Chip and AI infrastructure stocks slumped, with Sandisk (SNDK) sliding nearly -6% and Arm Holdings (ARM) falling more than -4%. Also, Chipotle Mexican Grill (CMG) declined over -3% after Starbucks said it has no plans to acquire the burrito chain. In addition, IonQ (IONQ) sank more than -9% after the quantum computing company agreed to acquire Elisity for up to $1.3 billion in an all-stock transaction. On the bullish side, Meta Platforms (META) rose over +3% after the company unveiled two new AI models, Muse Wonder and Muse Wonder Full, which it said compete with top offerings from OpenAI and Anthropic on public benchmarks.
Remarks from Cleveland Fed President Beth Hammack on Monday were mildly hawkish, adding to pressure on equities. Hammack said smaller, more frequent policy adjustments could help keep inflation expectations anchored, but she refrained from endorsing a rate hike this month. “When feasible, I generally think it’s preferable to make smaller adjustments, and to do so relatively quickly, rather than to wait and risk needing a larger course correction,” she said.
U.S. rate futures are currently pricing in an 80.6% probability of no rate change and a 19.4% probability of a 25-basis-point rate hike at the Fed’s policy meeting later this month.
Third-quarter corporate earnings season kicks off today, with reports from big U.S. banks. Four of the six largest banks—JPMorgan Chase (JPM), Goldman Sachs (GS), Wells Fargo (WFC), and Citigroup (C)—are scheduled to report quarterly results. Johnson & Johnson (JNJ) and UnitedHealth Group (UNH) are the other major companies reporting today. According to Bloomberg Intelligence, companies in the S&P 500 are expected to post an average +25% jump in quarterly earnings for Q3 from a year earlier.
On the economic front, investors will focus on the National Association of Realtors’ existing home sales report, which is set to be released in a couple of hours. Economists expect sales of previously owned U.S. homes to come in at 3.95 million units (annualized) in September, compared with 3.98 million units in August.
In addition, market participants will parse comments from Richmond Fed President Tom Barkin and Boston Fed President Susan Collins today.
In the bond market, the yield on the benchmark 10-year U.S. Treasury note is at 5.20%, down -0.73%.
The Euro Stoxx 50 Index is up +0.37% this morning as falling oil prices and bond yields provided some relief to investors. Chemical stocks led the advance on Tuesday, buoyed by a more than +8% gain in Givaudan (GIVN.Z.IX) after the company topped Q3 organic sales growth estimates. Bank stocks also climbed. At the same time, technology stocks slumped, limiting the broader market’s gains as worries about the AI trade resurfaced. In addition, luxury stocks slid, with LVMH (MC.FP) falling over -2% after the world’s largest luxury group reported weaker-than-expected Q3 sales. Final data released on Tuesday showed that Germany’s annual inflation rate picked up to 3.3% in September, confirming preliminary estimates. Meanwhile, Eurozone government bond yields fell on Tuesday as lower oil prices eased inflation concerns, while renewed AI jitters prompted modest safe-haven flows into government debt. In other corporate news, Nokia (NOKIA.H.DX) slid over -2% after agreeing to sell its Enterprise Campus Edge business to private equity firm Aurelius.
Germany’s CPI was released today.
The German September CPI rose +0.6% m/m and +3.3% y/y, in line with expectations.
Asian stock markets today settled mixed. China’s Shanghai Composite Index ($CHSC) closed up +0.10%, and Japan’s Nikkei 225 Stock Index ($NKY) closed down -1.82%.
China’s Shanghai Composite Index reversed earlier losses and closed slightly higher today as a selloff in technology stocks subsided. Tech shares pared steep losses in the afternoon session to end little changed. Gains in energy stocks also supported the benchmark index. At the same time, new-energy vehicle stocks slid after China said it would reduce export tax rebates for NEVs starting in April. Morningstar analyst Vincent Sun said China’s reduction in export tax rebates for NEVs will cost manufacturers approximately 4,000 to 6,000 yuan per vehicle. Meanwhile, the International Monetary Fund lowered its forecast for China’s economic growth in 2026 by 0.1 percentage point to 4.5%, warning that robust exports are no longer enough to fully offset persistent weakness in domestic demand. “Higher global oil prices, together with protracted uncertainty and structural headwinds, are expected to weigh on activity,” the IMF said, adding that policy support from Beijing was expected to help avert a “sharper slowdown.” In corporate news, Jiangsu Leadmicro Nano-Equipment Technology slid over -5% after announcing plans to raise as much as 4.94 billion yuan through a private placement of A-shares. Investor focus now turns to China’s key inflation gauges for September, scheduled for release on Wednesday. Economists expect China’s consumer and producer inflation to accelerate in September. Attention will then shift to the nation’s September trade data, with economists projecting export and import growth to remain strong.
Japan’s Nikkei 225 Stock Index closed sharply lower today as renewed concerns about the AI trade weighed on sentiment. Technology was the only sector to post steep losses on Tuesday, but its heavy weighting in the Nikkei was enough to drag the benchmark sharply lower. Chipmakers and other AI-related stocks bore the brunt of the selling as worries about Chinese competition and the “Casino” warning from Broadcom CEO Hock Tan prompted investors to reduce their exposure to the AI trade. Memory chipmaker Kioxia Holdings tanked over -13%, tech investor SoftBank Group slumped more than -8%, and chip gear maker Tokyo Electron slid over -7%, putting significant pressure on the Nikkei. Meanwhile, Japanese government bond yields were mixed on Tuesday as investors assessed signs of persistent inflation and the Bank of Japan’s monetary policy outlook. BOJ Governor Kazuo Ueda said on Tuesday that underlying inflation is gradually approaching the central bank’s 2% target, emphasizing the need to keep inflation stable around that level. On the economic front, data showed that Japan’s annual wholesale inflation eased again in September, though it remained elevated, suggesting that cost-driven inflationary pressures may have peaked for now and reducing the urgency for the BOJ to raise interest rates this month. Investor focus now turns to remarks from BOJ board member Junko Koeda and Deputy Governor Shinichi Uchida later this week for further clues on the timing of the central bank’s next rate hike. The Nikkei Volatility Index, which takes into account the implied volatility of Nikkei 225 options, closed up +0.90% at 30.41.
The Japanese September PPI fell -0.3% m/m and rose +6.8% y/y, weaker than expectations of +0.5% m/m and +7.6% y/y.
Pre-Market U.S. Stock Movers
Chip and AI infrastructure stocks slid in pre-market trading. Sandisk (SNDK) was down over -3%, while Micron Technology (MU) and Marvell Technology (MRVL) each fell more than -2%.
You can see more pre-market stock movers here
Today’s U.S. Earnings Spotlight: Tuesday - October 13th
JPMorgan Chase (JPM), Johnson & Johnson (JNJ), UnitedHealth Group (UNH), Goldman Sachs (GS), Wells Fargo (WFC), Citigroup (C), Domino’s Pizza (DPZ), Albertsons Companies (ACI), AZZ Inc. (AZZ), FB Financial (FBK).
On the date of publication, Oleksandr Pylypenko did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.