October 5th Pre-Market Brief

Good Morning

If this morning has a theme, it's government debt. Investors are charging France more to borrow and cheering a promise in Brazil to borrow less. US markets we opened calm, which is a nice way to start a week.

Let's dig in...

Today's Big Picture

1. Europe's Debt Worries Are Lifting The Dollar Into Earnings

Insuring $10 million of French government debt now costs $84,000 a year, nearly double two weeks ago. Spain's snap election added to the worry, and the euro hit a 17-month low. A stronger dollar trims what U.S. companies earn overseas, and earnings season starts next week.

2. A Cash Buyer Just Called Software Cheap

Schneider Electric is paying $205 a share in cash for PTC $PTC, and PTC is sharply higher. Citi called the deal opportunistic, since AI fears have already knocked software stocks down. Schneider fell in Paris on the $22.6 billion deal, its largest yet.

3. Brazil Is Rallying On A Promise To Cap Its Debt

Flavio Bolsonaro edged out President Lula on Sunday, and the two face a runoff October 25. Investors like his pledge to cap Brazil's public debt, which now tops four-fifths the size of its economy. The iShares MSCI Brazil ETF $EWZ, Nu Holdings $NU and XP $XP are sharply higher, and that rally assumes he wins in three weeks.

Market Overview

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Stock Spotlight (pre-market)

Intel $INTC ( ▼ 0.56% )  

lower premarket after Elon Musk confirmed his Terafab chip project is in talks with Taiwan Semiconductor $TSM ( ▲ 1.35% ) . The talks cover running Terafab's Texas plants, which puts the partnership Intel signed in April in doubt.

Cerebras $CBRS ( ▼ 1.82% )  

up premarket after OpenAI CEO Sam Altman called the chipmaker a "close partner." Shares hit a record low last week after OpenAI picked Nvidia chips over Cerebras for a new GPT-6.1 feature.

RXO $RXO ( ▲ 22.78% )  

up big premarket after C.H. Robinson $CHRW ( ▲ 2.99% ) agreed to buy it in a deal valued at about $5.8 billion. The deal combines two of North America's largest truck freight brokers.

Wells Fargo $WFC ( ▲ 1.18% )  

higher after Morgan Stanley upgraded it to overweight, its version of a buy rating. The firm said Wells has lagged other banks and should earn steadier profits on loans as funding costs ease.

DraftKings $DKNG ( ▼ 3.93% )  
is up after Bank of America upgraded it to buy on its prediction markets, where users bet on real-world events. The bank calls DraftKings the number three player there and sees $400 million in fees in 2027.

Harley-Davidson $HOG ( ▲ 3.87% )  
is higher after Citi upgraded it to buy. Citi pointed to a major new product launch, cost cuts and its LiveWire electric motorcycles.

What to Watch

ISM Services Report (10:00 AM ET)
The 10 year yield is still near multiyear highs despite Friday's weak jobs report. This survey asks service businesses if activity is growing, and economists expect about 55, where above 50 means growth. A strong number, especially on what these firms pay for supplies, says weak hiring isn't weak demand. That would keep a December rate hike in play.

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