Stocks gain as AI bounces ahead of key macro risk events - Newsquawk US Market Wrap

• SNAPSHOT: Equities up, Treasuries flatten, Crude down, Dollar up, Gold up
• REAR VIEW: US President Trump said it's "decision time" on Iran: "finish it off" or make a deal; US forces in the Middle East reportedly ready to launch major strikes on Iran within 96 hours of Trump's approval; META plans up to $95bln stock offering; Senior Iranian official reportedly said Iran won't discuss its nuclear programme until the US meets its demands; Houthis say they fired dozens of ballistic missiles at Saudi airports, military bases and energy sites on Saturday; Anthropic's S-1 shows over USD 280bln in SPCX and AVGO compute commitments; US and Canada reportedly working on a deal to ease US tariffs on Canadian steel and auto imports; Moody's keeps France at Aa3 with a negative outlook.
• COMING UP: Data: Chinese Industrial Profits (Sep), US ADP Employment Change Weekly, Durable Goods (Sep), Richmond Fed Index (Oct), Dallas Fed Index (Oct), Atlanta Fed GDPNow. Events: Israeli legislative election for the Knesset. Supply: Australia, UK, Italy, Germany, US. Earnings: SoFi, Coca-Cola, UPS, Corning, PayPal, Boeing, S&P Global, Robinhood, Seagate, Visa, SK Hynix, HSBC, Novartis.
• WEEK IN FOCUS: Click here for the full report.
• WEEKLY US EARNINGS ESTIMATES: Tech earnings ramp up with GOOGL, MSFT, INTC, and AMZN due. Click here for the full report.

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MARKET WRAP

US equities started the week on the front foot, with semiconductors leading a tentative recovery from the recent AI-driven sell-off. Neoclouds managed to recover and gain despite initial pressure after Elon Musk said debt markets have almost entirely shut off access to money for any company that doesn’t have substantial revenue independent of AI data centers. Despite the AI rally, AI funding remained in focus. Meta (META -1.9%) launched a USD 35bln equity offering with a further USD 60bln ATM sale planned to fund its infrastructure build-out, and Anthropic’s S-1 revealed over USD 280bln in compute commitments with SpaceX and Broadcom. The S-1 was viewed as positive, on a cash and balance sheet basis as of June 30th 2026; Total assets were USD 147.358bln vs total liabilities of USD 117.467bln.

Elsewhere, Brazilian ADRs were hit hard after Lula unexpectedly won a fourth term, which left the BRL the standout mover in FX, sinking alongside bonds on renewed fiscal concerns.

Crude prices were lower in choppy trade. Benchmarks came under pressure after Saudi Arabia said a Mecca Agreement delegation visit to Tehran was part of efforts to de-escalate tensions. This outweighed Trump saying it was “decision time” on Iran, reports that US forces are ready to strike within 96 hours of his approval, and Houthi claims of attacks on Saudi Arabia’s East-West pipeline.

The Treasury curve flattened, with short-end yields rising while the long end edged lower despite the risk-on tone in equities. The move came as markets positioned ahead of Wednesday’s FOMC, where a hold is widely expected, leaving focus on the vote split and whether Warsh leans hawkish to offset the recent easing in financial conditions. The 2yr auction tailed, extending a run of soft demand. The Dollar edged higher in light newsflow ahead of a busy week of central bank meetings, the UK Budget, US PCE and big tech earnings.

FIXED INCOME

T-NOTE FUTURES (Z6) SETTLED 1+ TICKS LOWER AT 106-03+

Curve flattens as markets await FOMC, big tech earnings, and PCE. At settlement, 2-year +3.2bps at 4.718%, 3-year +2.9bps at 4.782%, 5-year +1.6bps at 4.828%, 7-year +0.6bps at 4.903%, 10-year -0.9bps at 4.990%, 20-year -2.4bps at 5.351%, 30-year -2.4bps at 5.303%

THE DAY: The Treasury curve flattened as 2-, 3- , 5-, and 7yr yields ticked higher while the rest of the curve was flat to lower. US data was absent to start the week, with the Fed and big tech earnings the main catalysts ahead of PCE data on Thursday. A hold is widely expected at the FOMC's Wednesday meeting, shifting the focus onto the vote split and any hawkish lean within the statement or Warsh's press conference to offset the recent easing in financial conditions following the AI debt scare.

Stocks rallied to start the week, as semiconductors and neoclouds began a potential recovery from recent weakness, although long-end yields still shifted lower despite the risk-on backdrop.

In the US afternoon, the 2yr note auction tailed by 0.3bps, again signalling recent weakening demand relative to the six-auction average stop-through of 0.2bps. Dealers' proportion of the bid was little changed at 13.0%, as Directs picked up the slack from weaker Indirect demand.

Supply

• US Treasury sold USD 69bln of 2-year notes; tailed by 0.3bps.
• US Treasury announced a preliminary liquidity support buyback of up to USD 6bln in nominal coupon securities with maturities of 20-30 years, scheduled for October 27th, with settlement on October 28th.
• US sold 3-month bills at a high rate of 4.050%, B/C 3.07x; sold 6-month bills at a high rate of 4.210%, B/C 2.63x.

STIRs/OPERATIONS

• Fed Hike Pricing via CME FedWatch: Oct 3.2bps (prev. 2.4bps), Dec 22.4bps (prev. 21.8bps)
• EFFR at 3.88% (prev. 3.88%), volumes at USD 109bln (prev. USD 119bln) on October 23rd
• SOFR at 3.92% (prev. 3.90%), volumes at USD 3.065tln (prev. USD 2.945tln) on October 23rd
• NY Fed RRP op demand at USD 0.200bln (prev. USD 0.200bln) across 1 counterparties (prev. 1) on October 26th

CRUDE

WTI (Z6) SETTLED USD 1.51 LOWER AT 101.76/BBL; BRENT (F7) SETTLES USD 0.96 LOWER AT 110.74/BBL

The crude complex was lower, albeit in choppy trade. Fresh catalysts were light on Monday, with plenty of macro risk events due later in the week, although focus remains firmly on geopolitics. Over the weekend, US President Trump said it was "getting to be decision time" on whether to strike a deal with Tehran or resume attacks. CNN reported on Monday that US forces in the Middle East are prepared to launch major strikes against Iran within 96 hours of Trump's approval. Nonetheless, benchmarks came under pressure after the Saudi Foreign Ministry said a visit to Tehran by representatives of the Mecca Agreement countries is part of efforts to de-escalate tensions between the parties to the crisis. This came despite the Houthis saying overnight that they had targeted pumping stations on Saudi Arabia's East-West crude pipeline with drones and attacked King Khalid International Airport in Riyadh, although Saudi Arabia did not immediately confirm the attacks. A senior Iranian official reportedly said talks in Tehran with Mecca Pact members exclude the nuclear issue; Iran will not discuss its nuclear programme until the US meets Tehran's demands. In the US, crude stocks in the SPR fell to 282.6mln bbls last week, the lowest level since 1982. For the record, WTI traded between USD 100.33-103.13/bbl and Brent between USD 109.22-112.20/bbl.

EQUITIES

CLOSES: SPX +0.71% at 7,678, NDX +1.09% at 20,273, DJI +0.29% at 52,364, RUT +0.40% at 2,787

SECTORS: Communication services -1.42%, Consumer staples -0.13%, Utilities flat, Health flat, Materials +0.15%, Financials +0.22%, Energy +0.5%, Real estate +0.53%, Consumer discretionary +1.11%, Industrials +1.4%, Technology +1.5%.

EUROPEAN CLOSES: Euro Stoxx 50 +0.74% at 6,113, Dax 40 +1.03% at 25,441, FTSE 100 +0.72% at 10,767, CAC 40 +0.83% at 7,847, FTSE MIB +1.29% at 49,187, IBEX 35 +0.23% at 19,033, PSI -0.75% at 9,176, SMI +0.53% at 14,539, AEX +0.14% at 1,133

STOCK SPECIFICS:

• Meta Platforms (META): Plans an up to USD 95bln stock offering to fuel its huge AI infrastructure spending.
• Verizon (VZ): EPS and postpaid phone net adds beat, with a strong FY profit view; revenue missed.
• EQT (EQT): Agrees to acquire Range Resources (RRC) in an all-stock deal, valuing the combined company at over USD 50bln.
• Fair Isaac (FICO): Downgraded at Wells Fargo.
• Brazil ADRs: Hit hard after left-wing Lula unexpectedly won the election, notably Braskem (BAK), Itaú Unibanco (ITUB), Petrobras (PBR) and Vale (VALE).
• Neoclouds: Elon Musk said in a post on X that "200+ neoclouds are going to see guppy-level death"; stocks such as CoreWeave (CRWV), Nebius (NBIS) and Iren (IREN) are seeing pressure.
• Tesla (TSLA): Upgraded to 'Overweight' from 'Equal Weight' at Barclays, with a PT of USD 450 (prev. 370); the firm cites Tesla's merger opportunity with SpaceX (SPCX), a stronger core business outlook and signs of a Robotaxi inflection for the upgrade.
• Surgery Partners (SGRY): Bon Secours Mercy Health is nearing a USD 6bln takeover, the FT reports; the take-private deal could be announced as soon as Monday and would value the company at USD 20/shr.
• SpaceX (SPCX): Secured USD 40bln in debt financing to purchase GPUs scheduled for delivery in Q1 and Q2 2027.
• Microsoft (MSFT): To offer buyouts to 60k workers in its latest cost-cutting move, Bloomberg reports.
• Anthropic: Its S-1 showed it has agreed to spend up to USD 120.5bln under its SpaceXAI arrangements and about USD 161.2bln on Broadcom TPU leases, and estimated that 5-7% of its revenue in the first nine months of 2026 came from customers breaching its usage policy or commercial terms. The filing also showed 48% of H1 revenue was billed through Amazon, Google and Microsoft marketplaces, and showed a USD 10.8bln contracted backlog.
• Instacart (CART): DoorDash (DASH) is in advanced talks to acquire the company, the WSJ reports.

FX

DXY saw slight strength on Monday, although currency-specific newsflow was light as participants await the week's scheduled risk events, of which there are many; highlights include the FOMC, BoJ and ECB meetings, the UK Budget, US PCE and three Mag-7 earnings reports. As for Monday, there was no US data or Fed speak, so focus was on geopolitics and AI sentiment. ING writes that the balance of risks suggests the dollar can probably hold onto its gains, and that, barring some clearly underwhelming Q3 results from the likes of Alphabet and Microsoft, higher energy prices and a hawkish Fed can keep the dollar supported this week.

G10 FX saw losses to varying degrees, with the Yen the G10 underperformer, while the global FX laggard was the Brazilian Real, which plummeted following Lula's unexpected victory for a fourth term as President. Given this, there was broad-based selling in Brazilian assets, which saw USD/BRL rise to a high of c. 5.60 from c. 5.00. Following the result, MS sees USD/BRL holding above 5.60, potentially reaching 6.00 if fiscal concerns worsen, alongside 300-400bps of pressure on interbank rates.

The EUR initially fared well after France was spared a downgrade by Moody's on Friday, while on the data front, the German Ifo survey was mixed. However, the single currency faded, with EUR/USD trading between 1.1173 and 1.1227.