October 22nd Market Overview

Happy Thursday

Yesterdays green tech bounce didn’t make it into today, the Nasdaq gave it all back and then some.

Meta’s numbers and Jensen Huang’s comments reminded everyone that AI costs a fortune, and somebody has to pay. Investors scrambled to bonds, even with oil climbing.

Let’s dig in...

Today's Big Picture

1. AI Has a Money Problem

Meta posted record sales of $64.6 billion and still lost more than $120 billion in market value. A filing showed about $825 billion in AI spending commitments, up from nearly $700 billion in July. Then Nvidia’s Jensen Huang said neocloud demand is “off the charts,” but the money to meet it is scarce. Neoclouds buy AI chips and rent them out, and many run on borrowed money.

2. Money Ran From Tech Into Bonds

Investors piled into government bonds, and the 10-year Treasury yield fell below 5 percent. That’s its biggest one-day drop in more than two years. For months, yields rose almost every time oil did, on fears of more inflation. This time oil climbed and yields fell anyway, because the money leaving tech needed somewhere safe.

3. Oil Hits a Five-Month High on Iran Strike Plans

Brent crude, the global benchmark, settled at $113.17 a barrel, its highest since May 4. The New York Times reported U.S. and Israeli plans to strike Iran again after the Nov. 3 midterms. Gulf oil exports are back above prewar levels, but global stockpiles are thin, so there’s little room for error.

Market Overview

Index Performance

Stock spotlight

Moderna $MRNA ( ▼ 18.88% )  
fell hard after partial results for its cancer vaccine leaked on social media. Analysts called the full data largely positive, but after the stock more than doubled in August, positive wasn’t enough.

CoreWeave $CRWV ( ▼ 10.08% )  
, the biggest neocloud, was one of the worst-hit AI stocks. Investors were already paying up to insure its debt against default.

Blackstone $BX ( ▲ 7.76% )  
earned $1.32 a share against $1.26 expected, even as higher rates slowed its asset sales. The CFO said fees from deals already under contract should top everything it cashed out last quarter.

Spotify $SPOT ( ▲ 10.99% )  
added 6 million paying subscribers to reach 306 million, about a million more than it had forecast. It expects another 10 million this quarter.

Lockheed Martin $LMT ( ▲ 6.99% )  
beat estimates and raised its 2026 sales forecast to $80 billion to $82 billion. Its order backlog hit a record $292 billion, helped by a $52.5 billion deal for Patriot missile interceptors.

Big name updates

Nvidia $NVDA ( ▼ 4.31% )  
has lost more than $600 billion in market value since chip stocks peaked in early October. It also owns about a tenth of CoreWeave, so the neocloud cash squeeze hits close to home.

Tesla $TSLA ( ▼ 2.36% )  
earned 48 cents a share against 43 cents expected. Musk said Optimus robots could ship to other companies by the end of 2027. He wouldn’t discuss a SpaceX merger.

SpaceX $SPCX ( ▼ 8.6% )  
gave back more than half of Wednesday’s post-earnings gain.

IBM $IBM ( ▲ 0.38% )  
beat estimates and raised its cash flow forecast but kept its revenue outlook. CEO Arvind Krishna said big companies worry some AI spending is “completely out of control with no real return.”

Other notable company news

Blue Chips
MarketBeat lists “7 Blue-Chip Stocks to Add To Your Forever Portfolio”

Southwest Airlines $LUV ( ▲ 4.09% )  
cut its 2026 profit forecast to $2.60 to $2.85 a share on fuel costs. It’s the third airline to cut this month.

American Airlines $AAL ( ▲ 3.6% )  
now expects to lose $1 to $1.60 a share this year on high fuel costs. The stock rose anyway.

Netflix $NFLX ( ▲ 2.46% )  
got downgraded at Wolfe Research. The firm says viewing hasn’t grown despite $3 billion more in content spending over two years.

PepsiCo $PEP ( ▲ 3.17% )  
will keep its drinks at Taco Bell for 11 more years. That partnership gave us Mountain Dew Baja Blast, now a $1 billion brand.

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Sector Watch

Bond market

Freddie Mac says 30-year mortgage rates fell for the first time in nine weeks, to 7.32%. That’s a small break for buyers after pending home sales hit a record low in September.

Policy watch

Fed

• The Fed announces its next rate decision on Oct. 28. Nobody expects another hike after September’s, so the focus is Chair Kevin Warsh’s press conference.

• Jobless claims fell to 194,000 last week, the fewest since July. Layoffs are still rare.

International

Mediators are racing to restart talks with Iran as the U.S. sends more warships to the region.

• Attacks hit an Aramco oil field and Saudi Arabia’s Dammam airport, where one person was killed.

• The State Department ordered nonemergency U.S. government staff and their families out of Saudi Arabia.

France’s 10-year yield is at a 24-year high and now tops America’s for the first time since 2013. Weekend riots in Paris added to doubts that France can cut its deficit. Investors want to know if the European Central Bank will finally use a bond-buying tool it built in 2022.

What to Watch

Western Digital Earnings

The hard drive maker reports tonight, after a rough day for memory and chip stocks. If it says data center orders are still growing, that cuts against today’s worries.

Anthropic’s IPO Filing

Anthropic could file its IPO paperwork as soon as Friday. The filing would show what a top AI lab earns and spends, the same math that hit tech today.

American Express and the Shopper

American Express reports Friday, the same day the University of Michigan releases its consumer survey. Nestlé’s CEO said today that U.S. shoppers are stretched by the end of the month. Amex will show whether its cardholders feel the same squeeze.

Thanks for reading - you are now the more informed 🙂

- John

Today’s Sponsor

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Every time you fill up or open your power bill, an energy company gets paid. Gas prices just set an October record. Iran is firing on oil tankers in the Strait of Hormuz, and Russia's oil exports are getting choked off by attacks on its tankers and oil infrastructure.

Then there's AI. Data centers are pulling power off America's grid faster than anyone can build it, and tech giants are signing deals for entire power plants just to keep their servers running.

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