AI selloff stalls before the U.S. open as oil climbs back above $100
Tech funds are muted after Thursday's drop, while the Dow is lower and crude retakes $100 a barrel after attacks in Saudi Arabia.
Key takeaways
The AI selloff has stalled ahead of Friday's U.S. market open, and oil has climbed back above $100.
Nasdaq and chip funds are flat to higher a day after the Nasdaq Composite fell 2.6%.
Just after 7 a.m. ET, Invesco QQQ Trust, Series 1 QQQ was little changed from Thursday's close. The iShares Semiconductor ETF SOXX was bid 0.6% above its close. State Street SPDR Dow Jones Industrial Average ETF Trust DIA was bid 0.5% under its close, after finishing Thursday flat.
Meta and Tesla fell for opposite reasons
Thursday's drop stayed with the biggest tech names. It was the Nasdaq Composite's steepest decline since June 5, Reuters reported. The S&P 500 fell 1.2%.
Staples rose 3.3% as technology fell 3.3%
Chips took the worst of it. The Philadelphia Semiconductor Index fell 6.7%, its biggest daily drop since June 23, Reuters reported.
Meta Platforms fell 7% to $648.85. Reuters reported that Meta raised the low end of its annual spending forecast to $135 billion from $130 billion, left the top of the range at $145 billion, and posted its first cash outflow in more than a decade on AI-related spending.
Tesla fell 3.1% to $374.58 after cutting its 2026 capital-spending forecast to about $20 billion from more than $25 billion, Reuters reported.
The two reports pointed opposite ways. Both stocks fell.
Josh Gilbert, lead analyst at eToro, told Reuters that investors welcome a larger budget if they can see returns, but that a smaller one hints at slowing growth.
Crude is back above $100
West Texas Intermediate crude futures were at $101.21 a barrel just after 7 a.m. ET, up 1.7% from Thursday's settle of $99.47. Brent futures were at $114.91, up 1.5% from Thursday's settle.
Reuters reported that prices rose after Houthi attacks in Saudi Arabia. On Thursday, Saudi Aramco ordered the evacuation of its headquarters in Dhahran as the fighting intensified. Brent Crude settled Thursday at its highest since May 4.
Asia recovered overnight, and Europe has not
Asia had mostly recovered by the close. The Nikkei 225 was the exception, finishing 0.3% lower, while the Kospi rose 0.3%, the Hang Seng 0.7% and the Shanghai Composite 0.9%.
Reuters reported the Kospi had been down as much as 4% earlier in the session.
Europe had not made that turn. Around 7 a.m. ET the CAC 40 was down 0.6%, and the FTSE 100 was down 0.6%.
Two readings are due after the open
S&P Global's flash U.S. purchasing managers' indexes are due at 9:45 a.m. ET, and the University of Michigan's final October Consumer Sentiment reading at 10 a.m. CME Group's calendar shows a composite consensus of 57.6, against 58.4 previously, and a Michigan consensus of 46.3, matching the preliminary figure, which was down from 48.1 in September.
A December increase is still mostly priced
The 10-year Treasury yield closed Thursday at 4.96%. Reuters reported a drop of more than 19 basis points, the biggest since March 2023, as the tech rout sent investors into Treasuries. The iShares 20+ Year Treasury Bond ETF TLT rose 1.9% on Thursday.
Reuters reported that markets pared bets on further tightening from the U.S. Federal Reserve, and that a December rate increase is no longer fully priced. The Fed meets Tuesday and Wednesday, and the implied chance of an increase was still 85%.
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