Understanding the Biggest AI Risk (for This Market)
What’s in Today’s Report:
- Understanding the Biggest AI Risk (for This Market)
Futures are modestly higher on strong tech earnings and despite further escalation between Saudi Arabia and the Houthis.
Semiconductor company ASML posted much better than expected quarterly results and order backlog and that’s helping the entire AI infrastructure sector to rally this morning.
The Houthis attacked Saudi Aramco headquarters and threatened to target energy infrastructure, sending oil 1% higher.
Today focus will be on CPI (E: 0.6% m/m, 3.6% y/y) and, more importantly, Core CPI (E: 0.2% m/m, 2.5% y/y). Put simply, we need to see in-line or better than expected numbers to further pressure Treasury yields and if we get that, stocks should rally. Conversely, if inflation metrics run hot, look for October rate hike odds (and yields) to rise again, likely pressuring stocks. Away from CPI we also have two Fed speakers, Barkin (1:30 p.m. ET) and Bowman (10:55 p.m. ET), but they shouldn’t move markets.
On earnings, they continue to roll on with a focus on the banks and notable reports today include BAC ($1.11), MS ($2.83) and BLK ($14.01). Additionally, Anthropic will release some revenue information to investors this afternoon and that will likely become public. If that revenue information is better than expected it could be a late day boost for tech/markets (and if it’s weak, a late day negative).