US stock index futures rose, signaling a potential recovery on Wall Street following the sharp losses recorded by the technology sector in October, as concerns grew over the scale of artificial intelligence spending and the returns expected from these investments. Investors are turning their attention to a series of major corporate earnings reports due this week, particularly Apple’s results on Monday, alongside the US midterm elections scheduled for Tuesday. Both events could have a direct impact on economic and legislative policy during the remainder of President Donald Trump’s second term.
Futures on the S&P 500 rose to 7,630 points, while Nasdaq 100 futures advanced to 28,644 points and Dow Jones futures climbed to 52,016 points. The gains followed a negative Friday session that capped a month of considerable pressure on US equities. The Nasdaq Composite fell more than 5% in October, while the S&P 500 also declined. In contrast, the Dow Jones Industrial Average gained 1.7%, supported by a shift in investment flows away from technology stocks and toward more defensive sectors.
Semiconductor companies and artificial intelligence related stocks were among the worst performers during the recent selloff. Mixed earnings results from several major technology companies raised questions about whether the substantial investments in artificial intelligence would generate returns sufficient to justify the spending. Apple and Palantir Technologies are scheduled to report their results on Monday, alongside Berkshire Hathaway, while Advanced Micro Devices is due to report on Tuesday. Their performance will be closely watched, particularly after the recent pressure on technology shares.
On the political front, markets are monitoring the US midterm elections, which will determine the balance of power in Congress for the remainder of Trump’s term. All 435 seats in the House of Representatives and 35 Senate seats are being contested. Polling data cited in the report showed Trump’s approval rating falling to 31%, amid voter dissatisfaction over high fuel prices and the ongoing war with Iran. Analysts note that a shift in congressional control could create additional obstacles to passing economic and legislative policies. A divided Congress could also force the administration to rely more heavily on executive actions, keeping political and economic uncertainty elevated.
In currency markets, the dollar and other major currencies traded within relatively narrow ranges as investors awaited the US election results, October employment data and upcoming interest rate decisions from central banks in the UK, Australia, Norway and Sweden. The euro fell to $1.1159, approaching its lowest level in 17 months, after Fitch revised France’s credit outlook from stable to negative. Meanwhile, the British pound held at $1.3387, while the US Dollar Index stood at 101.94. The Japanese yen weakened to 157.78 per dollar, while the Australian dollar remained at $0.7033 ahead of the Reserve Bank of Australia’s interest rate decision. The New Zealand dollar slipped to $0.5625 after declining 1.2% the previous week, following its central bank’s decision to leave interest rates unchanged.
Analysts at Standard Chartered noted that opinion polls reflect dissatisfaction with the incumbent party, although this does not necessarily translate into corresponding election results. The bank added that a change in congressional control could create obstacles for capital expenditure plans involving data centers and artificial intelligence infrastructure at the state level. It could also make the next negotiations over raising the US debt ceiling more contentious. Separately, an official at AMINA Bank said hedge funds had suffered significant losses during October, reducing their capacity to absorb unexpected developments surrounding the elections. This could amplify market movements if the results differ from expectations.
In precious metals markets, gold prices rose during Monday’s session as buyers returned to take advantage of lower prices following the metal’s steepest monthly decline since 2008. Lower oil prices also helped ease some inflation concerns. Spot gold climbed to $3,907 per ounce, while US gold futures advanced to $3,916. Silver gained 1.9% to $50 per ounce. In contrast, platinum fell 3.4% to $1,434, while spot palladium declined 2.6% to $980. Palladium futures, however, rose to $978. The US Dollar Index also advanced to 101.93.
Gold’s recovery followed a 3.7% decline in the previous session, which pushed prices to their lowest level in a year and marked the metal’s worst monthly performance since 2008. Prices moved back toward $3,900 per ounce as investors returned to the market to buy at lower levels. Meanwhile, oil prices declined for a second consecutive session ahead of the US midterm elections. US Secretary of State Marco Rubio indicated that Trump preferred a diplomatic resolution to the conflict with Iran, raising hopes of a possible settlement and easing concerns over potential energy supply disruptions and inflationary pressures.
Nevertheless, the risk of military escalation remains. Trump has repeatedly warned that the United States could resume strikes against Iran following the elections, while Tehran has threatened a broader retaliatory response. Several Gulf countries have also expressed concern that another US attack could trigger a wider and more destructive regional conflict. Gold also remains exposed to selling pressure from equity markets, as recent losses in technology stocks have prompted some investors to liquidate gold holdings to cover losses elsewhere in their portfolios. These developments come amid continued concerns over technology company valuations and the scale of artificial intelligence investments.
In its assessment of gold’s outlook, ANZ analysts noted that rising US Treasury yields are becoming an obstacle to further gains, particularly as US consumption remains strong, growing at an annualized rate of 3.8%. This points to continued resilience in economic activity. Nevertheless, investment demand for gold has remained firm despite higher interest rates, with gold backed exchange traded funds attracting more than 50 tonnes in September even as US Treasury yields exceeded 5%. The bank expects higher yields and a stronger dollar to limit gold’s gains in the near term, leaving prices vulnerable to consolidation around $4,000 per ounce and potentially trading below that level before a more sustained recovery develops.
You can now benefit from LDN company’s services through the LDN Global Markets trading platform.
