Friday US stocks midday brief | Nasdaq futures fall about 1.9%, technology leads early European declines; Amazon falls about 7% and Intel more than 20% after hours; 10-year Treasury yield falls to 4.91%, Brent rises to about $115.7
(Cash-market closing figures are for Thursday, 29 October, US Eastern Time; futures and early European trading data are as of approximately 16:10 Hong Kong time on 30 October; commodity and currency figures are from early European trading.)
On Thursday, the S&P 500 fell 0.30% to 7720.39, the Dow fell 0.25% to 52342.56, and the Nasdaq fell 1.38% to 26184.72. The equal-weight S&P ETF (RSP) bucked the trend, rising 1.20% to $220.04 (Reuters). In early European trading on Friday, the 10-year US Treasury yield fell to 4.91%, Brent rose to about $115.7 a barrel, spot gold hovered below $4000 an ounce, the euro traded at about $1.1194 and the dollar at about ¥157.20 (Reuters). US stock futures remained under pressure: S&P 500 futures fell 0.89% in early European trading, while Nasdaq 100 futures fell about 1.9% (Reuters).
Market focus
The core of Friday's midday brief comes down to one sentence: The “cash-flow reckoning” spread from Alphabet on Thursday to Amazon and Intel after hours, so the early European decline was no longer simply following US stocks lower, but a second repricing of global technology stocks against the same standard. Thursday's index declines were limited because 8 of the S&P's 11 sectors rose and healthcare gained 2.5%: money was merely changing seats. But the after-hours plunges in Amazon and Intel elevated the question from whether one company beat expectations to whether the entire AI buildout cycle can continue to be sustained by burning cash. AWS growth of 39% could not save the stock, and data-center revenue growth of 78% could not save the guidance; the market now cares only about free cash flow and commitments for the next quarter (Reuters). Meanwhile, bonds and oil are telling another story: money sought shelter in Treasuries, pushing the 10-year yield down to 4.91%, while oil climbed above $115 on news of Iran and Houthi attacks. Safe-haven demand and stagflation fears are appearing together, making for a particularly uncomfortable combination ahead of Friday's US market open.
I. Europe: Pullback after a seven-week high, with technology leading losses and energy providing support
- European stocks slipped in early trading on Friday. The pan-European STOXX 600 fell about 0.25% to 647.49, with technology down about 2%, although the index remained on course for weekly and monthly gains. Futures also pointed lower in early European trading: Euro Stoxx 50 futures fell 0.43%, German DAX futures fell 0.2% to 26107, while FTSE futures bucked the trend with a 0.2% gain (Reuters, republished) (Reuters). The nature of this European pullback is clear: the problem was not European earnings; the AI spending bill from US after-hours trading reached European technology stocks first, while oil prices helped energy shares support the FTSE.
- Looking back at Thursday, European stocks had just reached a seven-week high: the STOXX 600 rose 0.8%, Germany's DAX gained 1.3% to 26052.75, France's CAC 40 rose 1.1% to 7970, and Britain's FTSE 100 gained 0.3%. The ECB held its deposit rate at 2.50% and kept a December rate hike on the table (Reuters). Thursday's European gains reflected “no rate change + earnings + falling oil prices”; Friday's decline reflected “AI cash-flow concerns + an oil rebound”—the same money found two different reasons within 24 hours.
- Among European stocks, BP rose 1.1% after third-quarter net profit beat expectations, German sportswear brand Puma gained 4% after its quarterly report, and Bayer rose 4.1% after winning a lawsuit. European earnings were not poor overall, one reason the STOXX 600's early decline was limited (Reuters, republished). In European hard data, preliminary French third-quarter GDP contracted 0.1% quarter on quarter, missing expectations for 0.1% growth. Exports fell 1.7% and investment fell 0.6%, while consumption rose 0.4%. Spain grew 0.6% quarter on quarter in the third quarter, in line with expectations. Preliminary third-quarter GDP for the eurozone and Germany and Germany's preliminary October CPI were due later; markets expected eurozone third-quarter growth of 0.2% quarter on quarter (Reuters) (Reuters) (Reuters).
II. Bonds, the dollar and commodities: Treasuries on course for their biggest monthly gain in nearly three years, while oil rebounds on Middle East news
- Friday's bond-market signal was clearer than that of equities: the 10-year US Treasury yield fell more than 7 basis points to 4.91% during Tokyo trading, taking its decline for October to about 37 basis points and putting it on course for its largest monthly drop since December 2023. The 2-year yield fell more than 8 basis points to 4.57%. Reuters said the buying reflected both a flight to safety after the technology selloff and markets paring back some pricing for future Federal Reserve rate hikes after the central bank held steady on Wednesday (Reuters).
- Oil rose early Friday: Brent gained 0.75% to $115.74 a barrel, and WTI rose 0.71% to $102.72 a barrel. Brent was on course to rise nearly 14% for the month, while WTI was set to gain about 15% and close above $100 for the first time since April (Reuters). The rise in oil reflected supply risk, not demand: the Houthis said they had attacked several Saudi facilities, including the largest Ras Tanura refinery, while the Saudi-led coalition said it intercepted a cruise missile aimed at western Saudi Arabia. The aftermath of an attack on an oil tanker in the Strait of Hormuz was still being priced in.
- In currencies, safe-haven sentiment lifted the yen and Swiss franc: the yen gained about 0.3% to 157.20 per dollar, the franc traded at about 0.8213 per dollar, near a one-month high, and the euro edged up 0.1% to $1.1194 (Reuters). The weaker dollar here is not a signal of a deteriorating US economy: technology stocks fell and money first sought shelter in bonds and safe-haven currencies. Gold did not benefit in tandem; after falling more than 1% on Thursday, spot gold hovered below $4000, indicating that Treasuries, not gold, were the first choice for this wave of safe-haven money.
III. Stock and sector moves, including earnings: Amazon and Intel take over after hours; strong AWS and data-center numbers fail to save their shares
- Amazon fell about 7% after hours: third-quarter revenue was $201.9 billion, up 12% year on year but below expectations. AWS revenue was $46 billion, up 39% year on year, its fastest growth in nearly five years. But the company maintained its full-year capital spending plan of about $220 billion, and free cash flow over the past 12 months was negative $42.4 billion, compared with positive $14.8 billion a year earlier (Reuters) (MarketWatch). Even 39% AWS growth could not save the stock, showing that Friday's grading standard has changed: cloud growth is expected, while negative cash flow is punished.
- Intel fell more than 20% after hours: third-quarter revenue was $16.5 billion, up 21% year on year, and data-center and AI revenue was $7.3 billion, up 78%. But its fourth-quarter revenue guidance of only $15 billion–$16 billion was well below market expectations; the company partly attributed this to a weaker PC market and higher costs from memory-chip shortages (Reuters) (MarketWatch). Intel's story is harsher than Amazon's: the quarter's figures were respectable, but guidance fell short across the board. The market now rewards a willingness to make commitments for the next three months, not performance over the past three.
- Alphabet, Thursday's epicenter, remains the backdrop: it fell 12.6%, wiping out about $500 billion in market value and marking its largest one-day decline ever. Third-quarter free cash flow was negative $9.1 billion; capital spending plans remained at $195 billion–$205 billion and were set to increase substantially in 2027 (Reuters). Taken together, the three point to one conclusion: the market is not rejecting AI demand but pricing AI spending—rewarding spending funded by operating cash flow and punishing spending funded by cash burn, debt or drawing on future cash flow.
IV. AI news: Bank of Japan holds steady but accelerates ETF sales; Asian chip stocks continue to suffer
- The Bank of Japan held policy steady on Friday as expected, but announced a substantial acceleration in ETF sales. At the new pace, it would clear its entire holdings in about 43 years, versus 112 years at the previous pace. Markets currently expect the next rate hike in December or January next year (Reuters). The symbolic significance of the BOJ's move outweighs its immediate impact: it tells the market that even a central bank no longer wants to hold equities for the long term. On a morning when technology stocks are already fragile, that is hardly reassuring news.
- Asia extended the technology selloff: South Korea's KOSPI fell more than 3% and was down nearly 16% for October; Japan's Nikkei fell as much as 3% and was on course to lose about 5% in October; and China's blue-chip CSI 300 was on course for its largest monthly decline in a decade. Asian chip stocks fell alongside the after-hours plunges in Amazon and Intel (Reuters). Asia's decline was not about local earnings, but the same AI supply chain: the capital spending bills of major US cloud providers ultimately have to be fulfilled by Asian chip, equipment and memory manufacturers.
- Microsoft was a rare counterexample in the selloff: third-quarter cloud business beat expectations, free cash flow was positive, its shares fell only 0.2% on Thursday, and its $25 billion bond issue was oversubscribed (Reuters). The contrast between Microsoft and Alphabet and Amazon captures this week's earnings-season grading standard: under the same AI narrative, positive cash flow is spared while a turn to negative cash flow is severely punished.
V. Upcoming calendar (Hong Kong time)
- Later on Friday, 30 October: Preliminary third-quarter GDP for the eurozone and Germany and Germany's preliminary October CPI are released; 20:30: US third-quarter employment cost index, with the market expecting a 0.8% quarter-on-quarter rise. ExxonMobil, Chevron and AbbVie report earnings before the open; Chicago PMI is due, with the market expecting 54.8 (Reuters).
- Friday, 30 October, 21:30: US markets open; the current decline in Nasdaq futures points to continued pressure on technology stocks at the open. San Francisco Fed President Daly and St. Louis Fed President Musalem are due to speak today (Reuters).
- Tuesday, 3 November: US midterm elections; Thursday, 5 November: Bank of England decision. Apple and Palantir report earnings next week.