US futures are higher as blowout results from SpaceX and a monster preannouncement from Super Micro gave the battered AI trade a reason to bounce, while Elon Musk's open endorsement of a SpaceX-Tesla merger added to the buzz; but with more attacks on shipping around the Strait of Hormuz, oil is back on the rise and as a result Brent is again above $110 while French 10Y yields hit 5% for the first time since 2002. As of 8:00am ET, S&P futures are 0.3% higher while Nasdaq futures are up 0.
6% and Dow futures are up 0.1%. That follows a session in which the S&P rose 0.
3% to 7,712 with 403 advancers, the most since April, as the equal-weight index jumped 1.15% while the Nasdaq slipped 0.02% in yet another rotation day out of AI.
In premarket trading, the AI complex is back in demand with SpaceX up 9.1% and Super Micro up 12.4%, confirming our post from last night, and Nvidia leads the Mag 7 with a 1.
3% gain, while Netflix tumbles 6.2% on a soft Q4 guide and Intuitive Surgical slides 7.8%.
The day's driver is AI (again), and this time it's the bulls' turn: SpaceX revenue of $14.6 billion crushed the $12.8 billion consensus and Super Micro guided fiscal Q1 sales to $18.
5-19.5 billion vs its own prior $14.5-15.
5 billion guide, reviving the AI trade one day after Korea's Elice IPO faceplant and Ken Griffin's warning that investors are "almost certainly" in an AI bubble. Treasuries are slightly cheaper across the curve, led by the front-end and belly, with the 10Y around 5.12% as stocks climb on better AI sentiment and a leg higher in oil adds to the upside pressure on yields ahead of today's $13 billion 20-year reopening; French bonds are the weak link in Europe, with the OAT-Bund spread widening to 158bps on fiscal worries and $110 crude, while gilts outperform even after UK CPI rose to an 11-month high of 3.
5%, cementing a November BOE hike. The Bloomberg dollar index is little changed while the Aussie is the best G10 performer, rising 0.5% to 0.
7036, the highest since Sept. 28, after hawkish RBA comments. In commodities, WTI rises 1.
4% to about $99 and Brent 1.2% to $110, Dutch TTF gas jumps 4%, gold is flat near $4,120 and silver drops 1%. Bitcoin rises 0.
8% to about $83,400. US economic data slate is empty after MBA mortgage applications fell 5.3% last week (7am); the Fed is in its external communications blackout ahead of next week's meeting.
The Treasury will sell $75 billion of 17-week bills (11:30am) and $13 billion of 20-year bonds (1pm). Earnings from Meta, Tesla, IBM, Texas Instruments and Lam Research come after the close.In premarket trading, Mag 7 stocks are mixed: Tesla (TSLA) climbs 1.
3% after Elon Musk openly endorsed the prospect of combining SpaceX with the electric-car maker. Nvidia is also gaining amid a broad AI rally (Nvidia (NVDA) +2%, Amazon (AMZN) +0.2%, Alphabet (GOOGL) -1%, Meta Platforms (META) -0.
5%, Apple (AAPL) -0.4%, Microsoft (MSFT) -0.5%).
AT&T (T) falls 3% after the wireless carrier reported third-quarter wireless postpaid phone net additions that missed the average analyst estimate.Capital One (COF) rises 2% after reporting third-quarter earnings that beat estimates as the largest US credit-card lender benefited from revenue climbing and kept its expenses in check.DigitalOcean (DOCN) climbs 4% after Piper Sandler upgraded the software company to overweight from neutral, writing that it is seeing an acceleration in growth due to AI.
Fortinet (FTNT) slips 3% after Arete downgraded the security software company by two notches, to sell from buy, citing concerns about its growth and valuation.Intuitive Surgical (ISRG) falls 5% after the robotic-surgery company reported US growth for its da Vinci surgical robots in the third quarter that fell short of investor expectations.Netflix (NFLX) is down 6% after the streaming-video company gave a revenue forecast that was weaker than expected, compounding concerns about its growth.
Philip Morris International (PM) slips 2% after the tobacco maker cut its profit forecast for this fiscal year as rising energy costs stemming from conflict in the Middle East take a toll.SpaceX (SPCX) is up 6% after Elon Musk’s satellite, rocket and artificial intelligence conglomerate reported third-quarter revenue that was better than the average analyst estimate. The beat was driven by substantial growth in its artificial intelligence and satellite internet businesses.
Super Micro Computer (SMCI) jumps 11% after the maker of servers reported preliminary first-quarter sales that were stronger than expected, citing AI-related demand.Zoom Communications (ZM) rises 4% after Oppenheimer upgraded the software company to outperform, writing that its AI platform was working better than expected.In other corporate news, Elon Musk, never one to think small, said SpaceX and Tesla are studying a possible merger, saying the idea has "a lot of merit": the potential $3.
5 trillion combination would be the biggest-ever corporate merger, and both companies have formed special committees to consider it. Musk also said ASML and other key providers of chipmaking machines have expedited supplies for his Terafab semiconductor project. Anthropic could spend $750 billion on additional computing power in the coming years, the WSJ reported citing a draft IPO prospectus, while Reuters reports OpenAI is racing to raise about $30 billion at a valuation above $1.
4 trillion before Anthropic's IPO. Nvidia is in talks to invest hundreds of millions of dollars in Australian AI cloud provider Firmus, per The Information, after the company abandoned plans for an IPO. Abbott said it will separate its global nutrition business into a public company.
United Airlines forecast earnings below estimates as soaring jet fuel prices eat into profits. AT&T reported 3Q wireless postpaid phone net adds of 379,000, short of the 387,410 estimate. Optimum Communications is closing in on a restructuring agreement that will hand control to its lenders, and Getty Images is starting a prepackaged bankruptcy.
EQT is in advanced talks to buy Qiagen with a binding offer above $50 a share, with KKR also bidding. Salesforce agreed to buy Braze at a 58% premium, prompting a dozen downgrades of Braze to neutral/hold. DayOne Data Centers is weighing a delay or size cut to its US IPO as data center volatility rises, Disc Medicine priced a 6 million share offering at $75, Sachem Head is planning a more active role at Ionic Digital and Ananym Capital has taken a position in CTS Eventim.
The AI trade is getting a reprieve this morning: Nasdaq futures are higher after solid earnings from SpaceX and Super Micro soothed nerves around the AI trade, but as Bloomberg's Neil Campling notes, lots of questions remain, not least over how companies will pay for their lofty AI ambitions. “SpaceX appears to have provided exactly what the market was looking for: evidence that AI-related demand remains very real,” said Simon Wiersma, chief investment strategist at ING. “That has improved sentiment not only toward SpaceX itself, but toward the broader AI ecosystem.
”Speaking in Berlin, Nvidia's Jensen Huang said a 1 gigawatt data center now costs about $50 billion (or roughly the same it has been for the past two years before Vera Rubin pushes itg to $100 billion/GW); Anthropic could spend $750 billion on compute; and Musk's ambition to bring 10GW of compute online by the end of 2027 will cost around $500 billion, according to JonesTrading's Mike O'Rourke. SpaceX has $100 billion in cash to start the buildout, but O'Rourke can envision Nvidia offering "some version of Buy Now, Pay Later (BNPL) financing for SpaceX's GPU purchase." Meanwhile, markets keep doing what they're not supposed to: just one day after the biggest Korean IPO of the year cratered 32% on its debut, Elice is up 30%, and the AI CDS frenzy has done little to stop the Kospi from triggering a sidecar on the way up.
“This sounds ludicrous, but ludicrous is what happens in a bubble,” says Jonestrading’s Mike O’Rourke.“More impo