US stock futures declined as investors reassessed earnings from major technology companies, particularly Meta and Tesla, amid growing questions about whether heavy spending on artificial intelligence can generate returns that justify elevated market valuations. Nasdaq 100 futures fell to 29,800 points, while S&P 500 futures slipped to 7,768 points and Dow Jones futures declined to 52,640 points, reflecting continued caution as the third quarter earnings season progresses.
Tesla shares dropped more than 3% in after hours trading despite reporting adjusted earnings of $0.48 per share, above expectations of $0.45, and revenue of $28.05 billion compared with estimates of $27.92 billion. The share price reaction reflects investor concerns about the impact of spending on artificial intelligence and autonomous robotaxi projects on profit margins. Meanwhile, Meta shares rose more than 2% after reporting earnings of $3.83 per share and revenue of $64.6 billion, representing annual growth of 26%, supported by stronger advertising activity and higher user engagement across its platforms.
These moves followed a positive session for US equities, supported by technology company results, including those of SpaceX and Super Micro Computer. Markets are now awaiting earnings reports from Procter & Gamble, Western Digital, Lockheed Martin and Honeywell, while monitoring oil prices, with Brent crude trading above $110 per barrel amid concerns that persistent inflationary pressures could influence Federal Reserve decisions.
US Treasury yields declined as demand for government debt increased, with concerns over elevated artificial intelligence valuations prompting some investors to reduce exposure to riskier assets. The yield on 10 year US Treasury notes fell to 5.110% for a second consecutive session, while the 30 year yield declined to 5.419%. Meanwhile, the two year yield remained near its highest level in a week at 4.776%. Despite stronger demand for bonds, long term yields continue to face pressure from the widening US budget deficit and increased government debt issuance.
In Europe, the yield on French 10 year government bonds rose to 5.001%, its highest level since 2002, as investors grew increasingly concerned about France’s political and fiscal conditions and ongoing protests. The country’s budget deficit stands at 5.4% of gross domestic product, while the yield spread between French and German 10 year bonds widened to around 157 basis points as investors demanded greater compensation for holding French debt and some foreign investors reduced their positions. In the United Kingdom, inflation rose to 3.5% in September from 3.1% in August, pushing two year government bond yields toward their highest levels since late 2023 as expectations for near term interest rate cuts diminished.
The US dollar index remained around 101.78 points amid relatively subdued currency trading, reflecting a limited flow of economic data and the Federal Reserve’s blackout period ahead of its next policy meeting. Major currencies moved within narrow ranges as investors avoided taking larger positions before central bank decisions, particularly amid continued concerns over inflation, energy prices and the global monetary policy outlook.
The euro rose to $1.1234 for a second consecutive session but remained under pressure from political and fiscal uncertainty in France, with its monthly losses approaching 1%. Meanwhile, sterling advanced to $1.3396, supported by expectations of a tighter monetary policy in the United Kingdom. The Japanese yen also strengthened slightly to 158.10 per dollar, amid concerns about possible intervention by Japanese authorities in the foreign exchange market and expectations that the Bank of Japan will continue gradually raising interest rates.
Investors are turning their attention to central bank meetings scheduled between October 28 and 30. Markets expect the US Federal Reserve to leave interest rates unchanged within the 3.75% to 4.00% range, while looking for signals about potential decisions in December. In Japan, the central bank is expected to keep its policy rate at 1.25%, with investors closely watching Governor Kazuo Ueda’s comments and updated inflation forecasts for clues about the timing of the next policy adjustment.
With energy costs remaining elevated and supply chain pressures resurfacing, markets are increasingly concerned that inflation could remain high for longer, potentially prompting central banks to maintain or adopt tighter monetary policies. JPMorgan analysts expect most central banks in developed economies to raise interest rates over the next six months, with Australia as the exception, having already increased rates by 100 basis points since the beginning of the year. Inflation trends, oil prices and upcoming economic data will remain key factors in determining the timing and scale of future interest rate decisions.
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