US stock index futures exhibited an upward trend on Monday, as technology and AI-related stocks showed signs of stabilisation following a lacklustre October. Investors are now focusing on the upcoming midterm elections and a week filled with earnings reports. The tech-heavy Nasdaq-100 shed over $2.5 trillion in market value last month and was on the brink of entering correction territory, as investors grew wary of Big Tech’s soaring AI spending while awaiting evidence of stronger returns. Several companies have also accessed the bond market to finance those investments recently, heightening concerns that debt-funded spending will become increasingly difficult to justify as borrowing costs escalate. Last week, the prevailing sentiment regarding the AI trade was predominantly negative. Reports on Friday indicated that OpenAI has reduced the target for its latest funding round by $10 billion. A separate report indicated that Blackstone informed investors that Anthropic might not achieve an investment-grade rating following its IPO.
At 7:01 a.m., the Dow E-minis recorded an increase of 256 points, representing a rise of 0.49%, while the S&P 500 E-minis saw an uptick of 35 points, equating to a gain of 0.46%. Nasdaq 100 E-minis experienced an increase of 212.5 points, representing a rise of 0.74%. The mood improved on Monday, as most megacap and growth stocks experienced an uptick in premarket trading. SpaceX and Alphabet were among the top gainers. Intel opens a new tab of extended losses, down about 1%, following its worst one-day decline since the 1980s on Friday. The chipmaker projected quarterly revenue that falls short of market estimates and indicated that it does not anticipate achieving positive cash flow this year. Rival AMD is set to report its earnings later this week, while tech giant Apple eased 0.4% ahead of its quarterly earnings due after the bell.
“It is likely to remain volatile through the earnings season, and individual companies may get punished by the market if they’re not fulfilling the market’s asks on all of those fronts,” said Kiran Ganesh. Risk sentiment received a boost as oil prices declined by over 4%, following discussions between Iranian and Qatari officials regarding a potential agreement to resolve the US-Israeli conflict concerning Iran. This development has sparked optimism that supply disruptions in the Middle East may be alleviated. This week’s key catalysts include the US midterm elections on Tuesday, which will determine whether Democrats can wrest control of Congress away from President Donald Trump’s Republican Party.
Democrats are broadly anticipated to secure a victory in the House of Representatives, whereas the outcome for the Senate remains uncertain. During the first two years of the Trump administration, Republicans held both chambers of Congress. “Midterm elections tend to be unfavourable events for the party in power and a Democratic victory in the House of Representatives would return the US to divided government, which would hardly be unusual,” said Seth Meyer. Among other early-moving stocks, Estée Lauder gained 2.6% after the beauty products maker raised its annual sales and profit forecasts, while Okta rose 2.7% as S&P Dow Jones Indices announced that the identity management firm would join the S&P 500, replacing Kenvue.
