Wall Street looks ready to buy back the chips it threw out last week. The companies that actually pay for all those chips are not joining in. Nvidia, Micron, AMD and Broadcom are all higher before the open, while Meta, Tesla and Netflix, three of this week’s biggest reporters, are flat or a touch lower.
That split matters. It means the rebound is a bet that the AI spending boom carries on, and the people who will say whether it does are only a couple of days away from reporting.
Where Things Stand Right Now
US futures are firmly higher. Nasdaq 100 futures are up about 1.2% near 29,750 and S&P 500 futures are up about 0.6% near 7,750, according to CNBC data shortly before midday UK time. Dow futures are flat. The VIX, Wall Street’s main gauge of expected volatility, has dropped about 7.5% to near 18.5, having closed just under 20 on Friday.
That follows a bruising week. On Friday the S&P 500 fell 1.09% to 7,659.44 and the Nasdaq Composite lost 2.14%. Over the week the Nasdaq Composite dropped about 4.5% and the S&P 500 nearly 2%, its steepest weekly fall since late June, according to Investing.com. The Philadelphia Semiconductor Index, the main gauge of chip shares, ended Friday on its longest losing streak since the 2008 financial crisis.
Europe is in a worse mood. Germany’s DAX is down about 1.1%, France’s CAC 40 about 1.3% and the FTSE 100 nearly 1% and the Stoxx 600 about 0.7%.
What Has Moved Since This Morning?
This morning’s brief focused on lower oil after President Trump waived tough new sanctions on Russian energy, which opened the door to a bounce after tech’s worst week in months. That bounce has held in the US, but it has not grown. S&P 500 futures were up about 0.8% early this morning and are now up about 0.6%, with Nasdaq futures easing from about 1.3% to about 1.2%.
The bigger change is in Europe. Early futures pointed to losses of only around 0.3% for the main European indices, but the selling has deepened through the morning, led by Paris after a weekend of protests across France. French 10-year borrowing costs are up about 10 basis points. Oil has also clawed back part of its early fall, with Brent now down about 1.2% rather than nearly 2%. Gold has slipped back below $4,200.
The Big Story: Chips Up, Spenders Waiting
Last week’s selloff started with debt. CoreWeave, a heavily borrowed company that rents out AI computing power, saw its bonds fall sharply, and its shares lost around a quarter of their value over the week. Investors began to worry that the rush to build AI data centres was being paid for with too much borrowed money, and chip stocks fell with it.
Two things have calmed nerves over the weekend. The first is a report in The Information that Nvidia is supporting the strongest of these smaller AI cloud companies with easier credit terms, help with finding sites and around $20 billion in leases. The same report said industry executives expect only seven to ten of hundreds of these firms to survive, so it is a lifeline for some rather than a rescue for all. CoreWeave is up about 3.6% before the open and Nebius about 5.4%.
The second is simple bargain hunting. Nvidia is up about 1.7%, while Micron, AMD and Arm are up between about 3.5% and 4.5%, and Intel about 4.7%. Broadcom is up about 3%. A basket of chip stocks, the iShares Semiconductor ETF, is up about 3.4%.
The companies on the other side of the trade are much quieter. Meta, one of the biggest spenders on AI data centres, is down about 0.5% before the open. Alphabet is up only about 0.7% and Amazon about 1.4%. These are the buyers of all that computing power. If they keep spending, the chipmakers’ bounce makes sense. If any of them hints at slowing down, last week’s worries come straight back.
That is why this week’s earnings carry so much weight. Netflix and SpaceX report on Tuesday after the US close. Meta, Tesla, IBM and Texas Instruments follow on Wednesday evening. Meta’s plans for AI spending are likely to be the single most important number of the week for the chip trade.
Stocks Moving Before The Open
The chip rebound is broad. Supermicro, which builds AI servers, is up about 4%. Oracle, which fell nearly 5% on Friday, is up about 1.4%.
Not all the AI news is good. Nscale, a data centre operator, is reportedly facing pushback on the $30 billion valuation it wants for its stock market listing, with some investors suggesting $16 billion to $19 billion, according to Bloomberg.
Outside tech, Disc Medicine is up about 26% in pre-market trade ahead of results from a late-stage trial of its treatment for a rare disorder that causes severe sensitivity to sunlight. Tesla and Netflix are flat ahead of their results.
The Dollar Holds Its Ground
The dollar is steady. The dollar index is flat near 101.87. The euro is down about 0.2% near $1.1217, weighed on by the unrest in France, and the pound is flat near $1.3331. Dollar-yen is a touch higher near 158.2. Currency traders are treating the stock bounce as relief, not a change of mood.
Bonds
US Treasury yields are a little lower. The 10-year yield is near 5.08%, down about 1.7 basis points from Friday, and the two-year is near 4.72%.
The Federal Reserve is in its quiet period before its 27 to 28 October meeting, so there are no Fed speeches to steer things. Markets broadly expect rates to be left alone this month, with a rise seen as more likely in December. In Europe, borrowing costs are higher. The UK 10-year gilt yield is near 5.40%, up about 2.5 basis points, and the French 10-year yield is near 4.88%.
Commodities
Oil is lower. Brent crude is down about 1.2% near $108.53 a barrel, while US crude is down about 0.3% near $101.09. The Russia sanctions waiver could mean more Russian fuel reaching the market, and Iran’s foreign minister said on Sunday that a proposal to the US to reopen the Strait of Hormuz within seven days still stands. Oil is still high by any normal standard.
Gold futures are flat near $4,185 an ounce, and silver is up about 0.6%. Copper is a little higher.
What Is Still To Come Today
It is a light day for US data. Canada’s September inflation figures are due at 13:30 UK time. The US cash market opens at 14:30. At 15:00 the NAHB housing index, a survey of US homebuilders, is expected to slip to 31 from 32, a reminder that high borrowing costs are still weighing on housing.
Later in the week, US weekly jobless claims are due on Thursday at 13:30, and UK wage and inflation figures land on Tuesday and Wednesday.
Levels Traders Are Watching
These are reference points, not targets. S&P 500 futures are near 7,750, with Friday’s futures settlement near 7,704 and Friday’s cash close near 7,659 below. Nasdaq 100 futures settled near 29,392 on Friday, so a slide back towards that level would mean the bounce has faded. Nvidia closed near $214 on Friday and CoreWeave near $61.39, useful markers for whether the chip rebound holds once real volume arrives. The VIX at 20 is the line between a nervous market and a calmer one. For the US 10-year yield, 5.00% is the big figure below and 5.10% above. Brent closed near $109.86 on Friday and the pound has $1.33 underneath.
How We Read It Into The Open
The fair reading into the open is cautiously positive, with plenty of room for doubt. The case for the bounce is decent: chip shares were sold very hard last week, the VIX has eased, Treasury yields are a little lower and the report of Nvidia support has taken some of the panic out of the AI cloud companies. The case against is that the rebound is concentrated in the stocks that fell hardest, the big spenders are not joining in and nothing has yet changed the debt worries that started the selloff.
That suggests the clearest opportunities today are more likely to come from how individual chip and AI names behave after the open than from a big move in the wider index. The main risk is that the bounce proves to be a one-morning relief rally and fades before this week’s results. The view would weaken if Nasdaq futures slip back towards Friday’s settlement, the VIX climbs back above 20 or CoreWeave turns lower after the open. It would strengthen if chip gains hold and the big spenders start to follow. The markets to watch are the Nasdaq 100, Nvidia, the chip ETF, CoreWeave, the VIX and the 10-year yield.
For beginners, the lesson is to look at who is rising, not just whether the index is up. A rally led only by the shares that fell furthest is often a relief move, while a rally that spreads to the wider market tends to carry more conviction. This is an educational view of the market, not advice to buy or sell anything.
If you want to see how you would handle a week like this, with a sharp bounce on one side and big results on the other, the free Samuel & Co Trading trader assessment is a good way to test your approach.
