The chipmakers are leading Wall Street lower this morning, and good results are not saving anyone. IBM beat forecasts and raised its outlook, Lam Research posted a record quarter, and both are sharply lower before the open. With Brent crude pushing towards $112 a barrel and Asia having a rough night, Nasdaq futures are down about 1.5%.
Where things stand
US futures are firmly in the red. S&P 500 futures are down about 0.9% near 7,728, Nasdaq 100 futures are down about 1.5% near 29,545, and Dow futures are off about 0.6%. That comes after a decent Wednesday, when the S&P 500 rose 0.6% to 7,757 and the Nasdaq Composite gained about 1%.
Europe is lower too. The DAX is down about 0.8%, the CAC 40 about 1.2% and the Stoxx 600 about 0.8%, while the FTSE 100 is holding up better, off about 0.4% near 10,712, helped by its oil producers. The VIX, Wall Street’s fear gauge, has jumped about 9% to around 18.2.
What has changed since the morning
The selling has spread and deepened. At breakfast, Nasdaq futures were down about 1.3%. They are now down about 1.5%, and the damage has moved well beyond Lam Research into the wider chip sector. Asia closed badly: Seoul’s Kospi fell about 3.5%, Hong Kong’s Hang Seng about 3% and Japan’s Nikkei about 2.7%, while China’s CSI 300 has now fallen 20% from its June peak, the usual definition of a bear market.
Oil has kept climbing. Brent is up nearly 3% on the day near $111.90, after Saudi Arabia shot down a drone aimed at an Aramco field on Wednesday and the US told non-emergency diplomatic staff to leave Saudi Arabia. The yen has also firmed, with the dollar slipping below 157 yen, which is what you often see when investors pull back from risk.
Good results, falling shares
IBM is the cleanest example of the mood. Its third-quarter revenue of $17.1 billion beat forecasts of about $16.8 billion, software sales grew 8%, and the company raised its full-year software growth outlook to 7% to 8% and lifted its cash flow guidance by more than $1 billion. The shares jumped close to 10% after Wednesday’s close. They have since given all of that back and more, and are down about 4.4% in pre-market trade near $240.
Lam Research, which makes the equipment used to manufacture chips, reported record revenue of $8.22 billion, up 54% on a year ago. But its guidance for the December quarter was only in line with expectations, and in this market in line is not enough. The shares are down nearly 8% near $241.
The selling has rippled across the sector. Intel is down about 4.6%, AMD about 4%, Micron and ASML nearly 3%, Broadcom about 2.7% and Nvidia about 2%. Super Micro Computer and SpaceX, two of Wednesday’s big winners, are giving back some of those gains. When a whole sector falls on decent news, it usually means investors were already positioned for perfection and are now taking money off the table.
Stocks on the move before the open
Tesla is down about 3.7% near $372. Revenue was flat at $28.05 billion, net income fell 43% to $787 million, and the company trimmed its spending plans, although it beat on earnings per share and produced $1.53 billion of free cash flow. Elon Musk talked up a target of 5 million vehicles a year by around 2030, which did little for the shares this morning.
Meta is down about 1.2% after its results showed AI spending running ahead of the cash its business brings in. Nokia’s US-listed shares are down about 5.6% despite strong growth in sales to AI and cloud customers. In crypto-linked stocks, Coinbase is down about 4% and Strategy more than 5% as Bitcoin slides.
On the upside, Dow Inc, the chemicals group, is up about 2.5% and Coca-Cola about 1%, a sign that some money is moving into steadier, less tech-heavy names.
The dollar and the pound
The dollar index is little changed near 101.7. Sterling is down about 0.1% at $1.338 and the euro is down about 0.2% at $1.121. The bigger move is in the yen, which is up about 0.8% against the dollar at around 156.9. For UK readers, euro-sterling is near 0.838, close to the pound’s strongest level against the euro in about 17 months after Wednesday’s hot UK inflation figure.
Bonds
Treasuries are finding some buyers as stocks fall. The US 10-year yield has eased to about 5.07% and the two-year is about 4.76%. In the UK, the 10-year gilt yield is about 5.37%. Lower yields would normally help growth stocks, so the fact that tech is falling anyway shows how much of this is about earnings and nerves rather than borrowing costs.
Oil, gold and the rest
Brent crude is up about 2.8% near $111.90 a barrel and US crude is up about 2.2% near $99.30, back within touching distance of $100. Gulf exports are still flowing, so this is a fear premium rather than a shortage, but it feeds straight into fuel costs for airlines, hauliers and consumers.
Gold is not acting as a safe haven today. Spot gold is down about 1.4% near $4,081 an ounce, silver is down nearly 3% and copper about 2%. Bitcoin is down about 3% near $81,900.
What is still to come
Weekly US jobless claims land at 13:30 UK time, with forecasts around 200,000. The US cash market opens at 14:30 UK time. There are no Federal Reserve speakers because the Fed is in its quiet period before next week’s meeting, which ends on 28 October.
The bigger tests for the AI trade come next week, when Microsoft and Alphabet report on 28 October and Amazon on 29 October. In the UK, the Budget is due on 28 October too. Flash purchasing managers’ surveys for the US, UK and Europe follow on Friday.
Levels worth knowing
For the S&P 500, Wednesday’s close of 7,757 is the first reference, with futures trading around 7,728. For the Nasdaq 100, futures near 29,545 show how much ground tech has to make up. For individual stocks, IBM near $240 and Lam near $241 show how far good news has been sold. In bonds, the US 10-year yield just above 5% is the line that matters for valuations. In commodities, $100 for US crude and $112 for Brent are the round numbers in focus, while a VIX above 18 shows nerves rising. These are reference points, not targets.
How we see it
The tone into the open is defensive. The morning has a clear message: investors are selling the chip and AI names even when the results are good, because the bar was set so high after months of gains. Add oil near $112 and a bear market in Chinese shares, and it is easy to see why money is heading for the exits in tech.
The evidence for a weak open is broad selling across chipmakers, a jump in the VIX, a firmer yen and falling Asian markets. There are a few things that could turn it. A calm jobless claims figure, a pullback in oil, or buyers stepping in to IBM and Lam after the open would suggest this is a shake-out rather than the start of something bigger. On the other side, a clear break of US crude above $100 or a slide in the Nasdaq 100 well below Wednesday’s levels would point to a longer spell of caution until Microsoft, Alphabet and Amazon report.
The markets to watch are Nasdaq 100 futures, the big chipmakers at the open, Brent around $112 and the US 10-year yield. For newer traders, the lesson is that a share price moves on what was expected, not just on whether results were good. After a strong run, even a record quarter can be sold.
If you want to see how your own approach to moves like these stacks up, the Samuel & Co Trading Assessment is a useful next step.
