Overnight US Stocks | AI Performance Concerns Resurface, Nasdaq Falls Over 1%, Micron Technology (MU.US) Drops Over 4%

According to Zhichong Finance APP, on Thursday, the three major indexes showed mixed performance, with the Nasdaq falling over 1%. Reports indicate that OpenAI’s annualized revenue is $20 billion lower than previously reported, putting pressure on technology stocks. St. Louis Fed President Musalem stated that the Federal Reserve needs to hike rates again to bring inflation back to the 2% target level.

[U.S. Stocks] At the close, the Dow Jones Industrial Average rose by 52.61 points, or 0.10%, to 51,232.48 points; the S&P 500 Index fell 36.35 points, or 0.47%, to 7,765.42 points; the Nasdaq Composite Index dropped 345.35 points, or 1.25%, to 27,193.34 points. Nvidia (NVDA.US) fell nearly 3%, SpaceX (SPCX.US), Micron Technology (MU.US), and SK Hynix (SKHY.US) all dropped over 4%, Oracle (ORCL.US) and Intel (INTC.US) fell more than 5%. The Nasdaq Golden Dragon China Index dropped 0.62%.

[European Stocks] The German DAX30 Index fell by 303.00 points, or 1.21%, to 24,801.36 points; the UK FTSE 100 Index fell 23.16 points, or 0.22%, to 10,435.34 points; the French CAC40 Index dropped 39.52 points, or 0.51%, to 7,729.69 points; the Euro Stoxx 50 Index declined 55.94 points, or 0.91%, to 6,124.35 points; Spain’s IBEX35 Index dropped 194.89 points, or 1.02%, to 18,923.11 points; Italy’s FTSE MIB Index fell 693.75 points, or 1.39%, to 49,278.50 points.

[Asia-Pacific Markets] The Nikkei 225 Index fell 1.42%, Korea’s KOSPI Index fell 2.62%, and the Indonesia Composite Index dropped 1.88%.

[Forex] The U.S. Dollar Index, which measures the dollar against six major currencies, fell 0.1% on the day, closing at 102.138 at the end of trading in the foreign exchange market. As of the close in New York, 1 euro exchanged for $1.1209, up from $1.1199 the previous trading day; 1 British pound exchanged for $1.3225, up from $1.3219 the previous trading day. 1 dollar exchanged for 157.86 yen, down from 157.96 yen the previous trading day; 1 dollar exchanged for 0.8316 Swiss francs, down from 0.8330 Swiss francs the previous trading day; 1 dollar exchanged for 1.4224 Canadian dollars, down from 1.4256 Canadian dollars the previous trading day; 1 dollar exchanged for 9.9757 Swedish krona, down from 9.9992 Swedish krona the previous trading day.

[Cryptocurrency] Bitcoin once fell below the $81,000 mark, and as of press time was trading at $80,311.94; Ethereum dropped 3.5% to $2,479.

[Precious Metals] Spot gold was quoted at $4,133.67 per ounce; spot silver was quoted at $59.187 per ounce.

[Crude Oil] On the New York Mercantile Exchange, light sweet crude oil futures for November delivery rose $3.21 to close at $91.49 per barrel, up 3.64%; December Brent crude oil futures in London rose $4.08 to settle at $104.28 per barrel, an increase of 4.07%.

[Macro News]

Federal Reserve’s Musalem: Additional rate hikes may be needed in the next 6 to 9 months. James Musalem, President of the Federal Reserve Bank of St. Louis, said the Fed needs to raise rates again to drive inflation back to the 2% target level. He said that in order to achieve the inflation goal “in a timely manner,” monetary policy must be further tightened. Musalem indicated that if “timely” means about 18 months, then rates may need to be hiked again in the next 6 to 9 months at an appropriate time. He noted that inflation remains the main challenge facing the U.S. economy, though economic growth is strong and the job market remains stable, so the Fed may be able to suppress inflation without significantly harming employment. Asked whether the FOMC meeting on October 27-28 should hike rates, Musalem said he remains open and has not prejudged the meeting’s outcome, but the inflation situation requires policymakers to keep considering further tightening. Musalem also said that although U.S. Treasury yields have risen significantly, financial conditions remain loose and continue to support economic growth. He explained that rising yields do not mean investors have lost confidence in the Fed, but rather reflect market expectations of higher real rates and increased capital competition in a robust economic environment.

U.S. projects federal budget deficit of $2 trillion for fiscal year 2026. On October 8 local time, according to estimates by the U.S. Congressional Budget Office, the federal government budget deficit for FY 2026 is expected to total $2 trillion, $218 billion higher than in FY 2025. During FY 2026, income is expected to increase by $169 billion (an increase of 3%) and expenditures by about $386 billion (an increase of 6%). Spending increases are mainly driven by higher net interest on debt, major welfare programs, defense, and education; whereas income growth is mainly due to higher personal income and payroll tax receipts.

OpenAI’s annualized revenue is $20 billion lower than previously reported. According to reports, OpenAI recently disclosed to investors that as of the end of September, its annualized revenue was close to $50 billion, substantially lower than the $70 billion reported by that publication and other media at the end of last month. Sources say the difference comes from investors trying to directly compare OpenAI’s annualized revenue with that of competitor Anthropic, but the two companies use different accounting methods: Anthropic includes sales revenue generated via cloud partners like AWS and Google Cloud, while OpenAI does not. Previously, by adjusting OpenAI’s revenue accounting, investors estimated its annualized revenue in August at $40 billion, then further extrapolated to $70 billion based on the company’s disclosed revenue growth of over 70%. OpenAI declined to comment.

U.S. 30-year mortgage rate rises to 7.4%, hitting a three-year high. According to Fannie Mae data, the average 30-year fixed mortgage rate in the U.S. climbed from 7.28% last week to 7.4%, rising for a seventh straight week—the first such streak in three years, and the highest rate since November 2023. At this time last year, the rate was 6.3%. High home prices together with rising borrowing costs have further intensified U.S. housing affordability pressures. With a 20% down payment, monthly principal and interest payments on a $500,000 home at current rates are about $172 higher than four weeks ago; for a $1 million home, the increase is about $345. As fixed rates continue to climb, more borrowers are switching to adjustable-rate loans with lower initial rates, pushing the share of adjustable-rate mortgages up to 12.2% in early October, the highest in four years.

ING: Broad support for ECB's September rate hike, but another hike in October is unlikely. ING economist Carsten Brzeski stated in a report that minutes from the European Central Bank’s September monetary policy meeting show broad support for that month’s rate hike. However, Brzeski noted that internal discussions were actually more balanced than ECB President Lagarde’s post-meeting remarks suggested, meaning the chance of another rate hike in October is low. Some officials think the duration of the energy shock may be shorter than previously assumed, while others question assertions of Europe’s resilience to such shocks. Meanwhile, the continuous rise in bond yields has reinforced the view among some officials that there’s no need for further hikes. Brzeski added: “As the bond market is tightening financial conditions for the ECB, the will among some officials to hike rates further may be weaker than it was at the September meeting.”

[Company News]

SpaceX acquires low-band spectrum, targeting U.S. wireless carriers. SpaceX (SPCX.US) announced on Thursday that it has reached an agreement to acquire a bundle of nationwide low-band spectrum licenses, allowing it to compete directly with traditional U.S. wireless giants across the country. While Starlink Mobile’s existing global 2 GHz mid-band spectrum will offer high bandwidth capacity, the new spectrum will enable its signals to penetrate obstacles. This speeds up Elon Musk’s ambition to bypass traditional wireless infrastructure and provide cellular network connectivity to smartphones directly from low Earth orbit. The transaction involves buying 100% of a nationwide 800 MHz spectrum portfolio from private equity firm Grain Management and remains subject to U.S. Federal Communications Commission (FCC) approval. In addition, the FCC this week approved Starlink Mobile’s application for its second-generation satellite constellation, authorizing SpaceX to launch 15,000 satellites worldwide optimized for the 2 GHz band. After the news was announced, shares of U.S. telecom companies fell in after-hours trading, while SpaceX (SPCX.O) rose more than 1.7%.

Apple officially announces smart home product launch event on October 13. Apple (AAPL.US) announced it will hold a new product launch event themed “Welcome home” on October 13 in New York, unveiling several smart home devices, including a smart home hub with an approximately 6-inch square screen, an upgraded Apple TV 4K set-top box, and a new HomePod mini speaker. All products will support Apple’s latest Siri AI features. The smart home hub will use a built-in camera and voice recognition to identify different household members and provide personalized content, integrating apps such as Calendar, Messages, Photos, FaceTime, and more. In addition, Apple is working with LG Electronics to develop accessories like smart doorbells, thermostats, and indoor security cameras, further expanding its smart home ecosystem.

[Major Bank Ratings]

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