STRAIGHT FROM THE TRADING FLOOR
by Eric Criscuolo - Market Strategist
Published on 10/22/26 (a/o 1:45 pm)
DOW 52,759 (-97), S&P 500 7,652 (-105), Russell 2000 2,776 (-5), NYSE FANG+ 18,334 (-514), ICE Brent Crude $112.97/barrel (+$4.15), Gold $4,062/oz (-$88), Bitcoin ~81.1k (-3684)
MAC Desk Commentary:
Yesterday the S&P 500 rose 0.6% while the equal-weight gained 0.4% and Russell 2000 0.3%. The AI complex was strong across sectors, with Tech and Industrials leading. SPCX and SMCI provided an early push with extremely bullish AI commentary and a pre-announcement, respectively. Comm Services was a laggard with GOOG lower and telecom hit on SPCX competitive concerns despite solid numbers from AT&T. Equities were at their highs and Treasury yields were around flat until news that the State Dept. was going to order personnel to leave US embassies across the Gulf. That came after reports suggested there was progress toward a resolution in That Other War (Russia-Ukraine). That was the setup before a slew of big earnings after the close including META, IBM and TSLA.

The tech strength yesterday has completely disappeared today, like an opponent’s big lead against the Knicks last year in the playoffs. Global markets came under heavy pressure overnight, especially the tech-heavy Asian markets. The S&P 500 opened below its 50d ma and has since moved lower, down >1% currently. Once again though the damage is basically concentrated inside Tech and the AI-infrastructure plays in Industrials- apparent in the heat map below. 
The equal-weight is up, with a defensive tilt as Consumer Staples and Utilities lead and Treasury yields move sharply lower. 9/11 of equal-weight sectors are higher. Small caps are down modestly but outperforming the large caps. Value is easily beating Growth.
META (-7%) is at the epicenter of the weakness after reporting last night. Shares initially jumped on the earnings print yesterday evening but faded throughout the after-hours. The company didn’t provide 2027 outlooks for revenue or capex, but qualitatively said AI investments would be aggressive. That “aggressiveness” would come om top of FY 2026 capex of between $135B - $145B. Much of the conference call focused on Muse and the associated roadmap. Meta expects to 10x the cost efficiency of the platform next year. Ad revenue was better than expected, with the company noting AI driving growth- a prominent example of a company showing tangible impact from AI adoption. The company also announced it will be creating a new class of non-voting common stock which will be allocated to shareholders, effectively creating a 2:1 stock split. There was a lot of talk leading into the call about an equity raise soon. That didn’t happen, but these new shares would act as a new funding method for further investments. Speaking of, the 10-Q disclosed $825B in future spending agreements, mostly related to AI. It looks like markets reacted a lot to this info.   

Resurgent geopolitical risk is adding to the weakness. There were signs of progress on the Russia-Ukraine front, but attacks between the two continued and the US-Iran situation appears to be deteriorating. The State Department recalled personnel from Saudia Arabia and there was an attack on the country’s refineries. President Trump said the US isn’t negotiating with Iran and that “something” will happen soon.

Looking at some other earnings reports:

  • TSLA (-2%) was rejected at its 200d ma (like yesterday) after attempting to rally. The company had a big beat on the FCF line ($1.5B vs -$4.6B estimate) due to lower than expected capex, and also cut full year capex guide from $25B to $20B. That is driving concern around demand and new product (Optimus, Cybertaxi) development, while a merger with SPCX is under consideration.
  • LRCX (-10%) as the quarterly guide was only inline, though management noted demand remains unprecedented while supply is constrained across the ecosystem.
  • NBIS (-8%) announced a $3.5B credit facility from Citi. The data center/neoclouds are all down 4% or more.
  • SAP (+3%) is trading higher as cloud backlog grew 26% and cloud revenue guidance was moved to the top-end of the prior range. The IGV software ETF is flat with MSFT and ORCL weighing on the group.
  • IBM (-1%) has seen a wide range, now only slightly lower after looking at losses of >5% in the pre-market. The company raised FCF guidance but maintained the revenue guide.
  • KMI (flat) committed to build a $4.2B natural gas pipeline across Texas to supply a data center.
  • PG (+5) is benefiting from both a solid quarter as well as the rotation into defensives.
Tech and Comm Services are the big lagging sectors. The NYSE Semis index is down 6%. META’s 7% drop, and GOOG 3% decline is causing basically all of the weakness in Comm Services.  Telecom is bouncing from yesterday’s weakness. Discretionary is another laggard but again, its mostly being dragged lower by the tech mega cap constituents (AMZN, TSLA). Most other stocks in the sector are higher. Energy is lower despite oil’s strength as refiners are under pressure after Valero reported. 
Treasuries are seeing a strong bid today as investors flock to safety. Yields are down 10-20bp across the curve, and Dollar weakened against the Swiss Franc and yen havens, and strengthened against the Euro. Today’s 5y TIPS auction tailed by 0.7bp, indicating less demand for inflation hedges. Market expectations are at over 90% for the Fed to keep rates on hold at next week’s meeting, up from 85% yesterday. Pricing for another hold in December rose to ~30%, from 10%.  

  • US 2yr -18bps to 4.63%, 5yr -19bps to 4.76%, 10yr -18bps to 4.95%, 30yr -12bps to 5.29%
  • USD index: -$0.17 to $101.44
Dec. Brent is up >3%, reaching a new high as Saudi Arabia saw more attacks and Russia/Ukraine continue to exchange fire. The US State Department has ordered non-emergency personnel to leave Saudi Arabia, adding to speculation that the US and Israel will unleash another round of airstrikes soon. US natural gas is higher after falling the past 4 days on warm weather outlooks. Prices in Europe are up ~3% pushing to fresh highs. Metals are getting hit, down 2-5%. Ag has moved lower following crop data, though soy is seeing modest gains on strong exports. Crypto is getting smoked on the risk-off move. 
Global equities were under pressure with Asia hit the hardest. The Nikkei fell >2.5%. Metals/Mining and tech were among the hardest hit. European indices were giving back most of yesterday’s gains, rallied off the lows but then turned back as US markets opened, finishing around the day’s lows. Tech, financials and cyclical were among the worst sectors this morning while defensives lead (Food & Beverage, Healthcare) along with Telecom. The UK outperformed as big biopharma, energy and consumer staples stocks rose. Moody’s scheduled review of France’s credit is expected tomorrow.  
Flash PMIs will the leading economic data tomorrow, along with more earnings flow, including AXP, FIX, NEM, and SAM.

Earnings:
  • After-Market: ABCB, APPF, ASB, BE, BY, BYD, COLB, CUBI, DECK, FIX, KN, KNSL, KRC, MXL, NEM, OMC, REXR, RNG, SAM, SLM, VRSN, WDC, ZGN
  • Pre-Market: ALV, AXP, BAH, FCNC, FLG, HTH, RITM, SLB

Economic Data:
US:
  • Weekly claims: 194K vs 200k cons, prior 199k
  • Continuing Claims: 1728K vs 1720K cons, prior 1710K
  • CB leading index: 0% vs -0.1% cons, prior -0.1%
  • Nat gas inventories: 77Bcf vs 79Bcf cons, prior 67Bcf
  • KC Fed Manuf index: 11 vs prior 14
  • 5y TIPS auction: Tailed by 0.7bp
  • 4:30pm Fed Balance Sheet
Global:
  • South Korea rate decision: Unchanged at 3% as expected
  • France Business Confidence: 105 vs 101 cons, prior 101
  • UK Industrial Trend Orders: -32 vs -20 cons, prior -9
  • Canada PPI m.m: 2.0% vs 0.9% cons, prior 1.2%
  • Europe Consumer Confidence: -17.9 vs -17 cons, prior -16.8
Good morning,
 
Yesterday the S&P 500 rose 0.6% while the equal-weight gained 0.4% and Russell 2000 0.3%. The AI complex was strong across sectors: Tech and Industrial led the sectors. SPCX and SMCI provided an early push with extremely bullish AI commentary and a pre-announcement, respectively. Comm Services was a laggard with GOOG lower and telecom hit on SPCX competitive concerns despite solid numbers from AT&T. Equities were at their highs and Treasury yields were around flat until news that the State Dept. was going to order personnel to leave US embassies across the Gulf. That came after reports suggested there was progress toward a resolution in That Other War (Russia-Ukraine).
 
S&P futures have bled lower since yesterday, with global markets following, and are currently down ~1%. Tech is under pressure again as markets react to a deluge of earnings, triggering a flight to treasuries, while oil is up on resurgent geopolitical risk. There were signs of progress on the Russia-Ukraine front, but attacks between the two continued and the US-Iran situation appears to be deteriorating. The State Department recalled personnel from Saudia Arabia there was an attack on the country’s refineries. President Trump said the US isn’t negotiating with Iran and that “something” will happen soon. The risk-off sentiment is apparent with Staples, Healthcare and Utilities leading in the pre-market.
 

 
  • META (-3%) shares initially jumped on the earnings print, gaining as much as 7% but faded throughout the after-hours. The company didn’t provide 2027 outlooks for revenue or capex, but qualitatively said AI investments would be aggressive, and if this year’s capex is any indication, it’s gonna be a big number. The bottom-end of FY 2026 capex guidance raised from $130B, to $135B. FCF this quarter was better than expected (-$2B versus -$8B) Much of the conference call focused on Muse and the associated roadmap. Meta expects to 10x the cost efficiency of Muse next year. Ad revenue beat, with the company noting AI driving growth- a leading example of a company showing tangible impact from AI adoption. The company also announced it will be creating a new class of non-voting common stock which will be allocated to shareholders, effectively creating a 2:1 stock split. There was a lot of talk leading into the call of META announcing an equity raise soon. That didn’t happen, but these new shares would act as a new funding method for further investments. Speaking of, the 10-Q disclosed $825B in future spending agreements, mostly related to AI.  
  • TSLA (-4%). The company had a big beat on the FCF line ($1.5B vs -$4.6B estimate) due to lower than expected capex, and the company also cut full year capex guide from $25B to $20B. That is driving concern around demand and new product (Optimus, Cybertaxi) development, while a merger with SPCX is under consideration.
  • LRCX (-10%) as the quarterly guide was only inline, though management noted demand remains unprecedented while supply is constrained across the ecosystem.
  • NBIS (-4%) announced a $3.5B credit facility from Citi.
  • SAP (+3%) is trading higher as cloud backlog grew 26% and cloud revenue guidance was moved to the top-end of the prior range.
  • IBM (-7%) raised FCF guidance but maintained the revenue guide. The company will celebrate my birthday by discussing its Quantum computer business on December 10.  
  • KMI (+1%) committed to build a $4.2B natural gas pipeline across Texas to supply a data center
  • PG (+3) with a beat and raise, and revenue growth driven by volume and mix, with price only a minor positive.
Treasuries are bid this morning as investors look for safety, taking yields sharply lower while the Dollar is holding steady despite those moves.  
 
  • US 2yr -9bps to 4.72%, 5yr -10bps to 4.86%, 10yr -9bps to 5.03%, 30yr -7bps to 5.35%
  • USD index: +$0.01 to $101.61
Oil prices are up >2% retesting the recent highs as more tankers have been attacked in the Strait and Russia/Ukraine continue to exchange fire. The US State Department has ordered non-emergency personnel to leave Saudi Arabia and other areas in the Middle East which is adding to speculation that the US and Israel will unleash another round of airstrikes soon. Nat gas is around unchanged in the US while prices in Europe are up ~3% pushing to fresh highs. This backdrop is adding to a risk off environment and weighing on the metals complex which is down between 1% - 3.5%, testing recent lows.  Ag is hovering around unchanged trying to stabilize after recent weakness.  Crypto which has been bouncing over the last couple of days, reversed sharply during Asian trading hours overnight. Bitcoin and Ethereum are down >3%.
 

 
Global equities are under pressure with Asia hit the hardest. The Nikkei fell >2.5%. Metals/Mining and tech were among the hardest hit sectors. Europe was giving back most of yesterday’s gains but has rallied off the lows. Tech, financials and cyclical are among the worst sectors this morning while defensives lead (Food & Beverage, Healthcare) along with Telecom. The UK is outperforming as its big biopharma, energy and consumer staples stocks are higher.
 

 
Earnings:
After-Market: BANR, BBT, CACI, CCI, CSX, EGP, FAF, FULT, GGG, GL, GTY, HXL, IBM, KALU, KNX, LBRT, LUV, LVS, LRCX, MEDP, META, MOH, OII, PKG, PNFP, ROL, RS, SAP, SLG, SON, TCBI, TSLA, TXN, URI, WDFC, WH
Pre-Market: AAL, ALLE, BCS, BFH, BMI, BX, CBRE, CMCSA, CRS, DGX, DOV, DOW, FBP, FCFS, HBAN, HON, LAZ, LMT, LNN, MSM, NDAQ, NOK, NSC, ORI, PCG, PHM, POOL, R, ROP, SNA, SPOT, THRM, TSCO, TTMI, UNP, VC, VLO, VLY
After-Market: ABCB, APPF, ASB, BE, BYD, COLB, DECK, KN, KNSL, KRC, MXL, NEM, REXR, RNG, SAM, SLM, VRSN, WDC
 
Economic Data:
 
US:
  • Weekly claims: 194K vs 200k cons, prior 199k
    • Continuing Claims: 1728K vs 1720K cons, prior 1710K
  • 10:00am CB leading index
  • 10:30am Nat gas inventories
  • 11:00am KC Fed Manuf index
  • 1:00pm 5y TIPS auction
  • 4:30pm Fed Balance Sheet
 
Global:
  • South Korea rate decision: Unchanged at 3% as expected
  • France Business Confidence: 105 vs 101 cons, prior 101
  • UK Industrial Trend Orders: -32 vs -20 cons, prior -9
  • Canada PPI m.m: 2.0% vs 0.9% cons, prior 1.3%

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