STRAIGHT FROM THE TRADING FLOOR
by Michael P. Reinking, CFA - Sr. Market Strategist
Published on 10/26/26 (a/o 9:00 am)
Good morning,
Equity markets were mixed last week with tech underperforming for the third consecutive week. The S&P 500 fell 0.5% as the AI trade continued to unwind amidst growing concerns about capital constraints. Oil prices were up ~5% trading to fresh highs. However, Treasury yields pulled back. This helped the equal-weight and small/midcap indices outperform.
It was a somewhat quiet weekend on the news front though it has gotten a little busier this morning. The big headlines were the surprise victories by Lula in Brazil and the New York Football Giants in Houston. After loosing in the first round of voting incumbent Lula shockingly won in the runoff. There is some controversy around the extension of voting with Bolsonaro looking to have the results annulled. Brazilian markets rallied sharply after the first round of voting but look like they will give back all of those gains and then some (EWZ -25%).
Back stateside the focus continues to revolve around the AI trade ahead of a big week of earnings. Elon Musk threw a little fuel on the neocloud fire as SpaceX reportedly closed a $40B round of financing . After highlighting the repricing in debt markets for data center financing he said, “That means the 200+ neoclouds are going to see guppy-level death and consolidation. Some will make it through, but not many.” The neoclouds are under pressure again this morning down 2% - 5% in the pre-market. Meta announced that it was going to raise up to $95B in capital. This would be broken up into $22.5B in Class A shares, with the big three chip makers potentially buying $5B each, $12.5 in preferred stock and $60B in the new Class C shares in 2027. This highlights that the company is not planning on slowing its infrastructure spending. The stock has been wildly volatile in the pre-market trading in ~10% range, currently trading slightly lower. Meanwhile Amazon’s CEO Jassy said much of its 2027 cloud capacity has been booked. The long awaited Anthropic S1 just hit.
Futures opened modestly higher overnight, pulled back during the Asia session and but are back in the upper third of the overnight range. S&P futures and Dow futures are up ~0.3%.
The only US economic data on the calendar is the Dallas Manufacturing after the open. Treasury yields are hovering around unchanged with a slight flattening of the curve. The USD index has been grinding slightly higher throughout the morning.
It was a mixed overnight session in Asia with the tech heavy Nikkei and Kospi both under pressure given the AI concerns. China’s Communist Party Plenum is getting underway with local indices trading modestly higher. European indices are recouping some of last week’s losses trading near session highs. Financials, ex-Santander given Brazil exposure, are trading higher. Autos, manufacturing and pockets of tech are outperforming while staples and energy are lower. After the close Moody’s left France’s credit rating unchanged which has local yields down 2-10bps across the curve narrowing the spread vs. Bunds.
After last week’s move higher oil prices are pulling back modestly as there was no escalation over the weekend and as Iranian officials meet with officials from Turkey, Saudia Arabia and Pakistan. Press continues to suggest that President Trump is leaning towards a resumption of strikes. Israel’s legislative elections will be held tomorrow. US November natural futures continue to be under pressure down >4%. There was also big M&A transaction within that space with EQT announcing it will acquire RRC for ~$13B, in an all-stock transaction. The metals complex is trying to stabilize after selling off last week. Ag is under pressure after the Brazil election results as the currency weakens increasing expectations for exports. Coffee and sugar down ~3% while soy is off >1.5%. Crypto is adding to last week’s losses. Bitcoin broke below 80k over the weekend but is currently hovering right around that level.
Economic Data:
US:
Equity markets were mixed last week with tech underperforming for the third consecutive week. The S&P 500 fell 0.5% as the AI trade continued to unwind amidst growing concerns about capital constraints. Oil prices were up ~5% trading to fresh highs. However, Treasury yields pulled back. This helped the equal-weight and small/midcap indices outperform.
It was a somewhat quiet weekend on the news front though it has gotten a little busier this morning. The big headlines were the surprise victories by Lula in Brazil and the New York Football Giants in Houston. After loosing in the first round of voting incumbent Lula shockingly won in the runoff. There is some controversy around the extension of voting with Bolsonaro looking to have the results annulled. Brazilian markets rallied sharply after the first round of voting but look like they will give back all of those gains and then some (EWZ -25%).
Back stateside the focus continues to revolve around the AI trade ahead of a big week of earnings. Elon Musk threw a little fuel on the neocloud fire as SpaceX reportedly closed a $40B round of financing . After highlighting the repricing in debt markets for data center financing he said, “That means the 200+ neoclouds are going to see guppy-level death and consolidation. Some will make it through, but not many.” The neoclouds are under pressure again this morning down 2% - 5% in the pre-market. Meta announced that it was going to raise up to $95B in capital. This would be broken up into $22.5B in Class A shares, with the big three chip makers potentially buying $5B each, $12.5 in preferred stock and $60B in the new Class C shares in 2027. This highlights that the company is not planning on slowing its infrastructure spending. The stock has been wildly volatile in the pre-market trading in ~10% range, currently trading slightly lower. Meanwhile Amazon’s CEO Jassy said much of its 2027 cloud capacity has been booked. The long awaited Anthropic S1 just hit.
Futures opened modestly higher overnight, pulled back during the Asia session and but are back in the upper third of the overnight range. S&P futures and Dow futures are up ~0.3%.
The only US economic data on the calendar is the Dallas Manufacturing after the open. Treasury yields are hovering around unchanged with a slight flattening of the curve. The USD index has been grinding slightly higher throughout the morning.
- US 2yr +2bps to 4.71%, 5yr +1bps to 4.82%, 10yr -1bps to 4.99%, 30yr -2bps to 5.31%
- USD index: +$0.14 to $101.79
It was a mixed overnight session in Asia with the tech heavy Nikkei and Kospi both under pressure given the AI concerns. China’s Communist Party Plenum is getting underway with local indices trading modestly higher. European indices are recouping some of last week’s losses trading near session highs. Financials, ex-Santander given Brazil exposure, are trading higher. Autos, manufacturing and pockets of tech are outperforming while staples and energy are lower. After the close Moody’s left France’s credit rating unchanged which has local yields down 2-10bps across the curve narrowing the spread vs. Bunds.
After last week’s move higher oil prices are pulling back modestly as there was no escalation over the weekend and as Iranian officials meet with officials from Turkey, Saudia Arabia and Pakistan. Press continues to suggest that President Trump is leaning towards a resumption of strikes. Israel’s legislative elections will be held tomorrow. US November natural futures continue to be under pressure down >4%. There was also big M&A transaction within that space with EQT announcing it will acquire RRC for ~$13B, in an all-stock transaction. The metals complex is trying to stabilize after selling off last week. Ag is under pressure after the Brazil election results as the currency weakens increasing expectations for exports. Coffee and sugar down ~3% while soy is off >1.5%. Crypto is adding to last week’s losses. Bitcoin broke below 80k over the weekend but is currently hovering right around that level.
Economic Data:
US:
- 10:30 Dallas Manufacturing
- 11:30 3/6mo T-Bill auction
- 1:00 2yr Auction
- Spain PPI: 18.3% prior 13.2%
- Germany Ifo Current conditions/Expectations: 88.8/91.6 vs. 89.9/90 cons., prior 89.5/90.4
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