Futures Rebound From Session Lows As Government Shutdown Becomes Longest Ever
Welcome to day 36 of the government shutdown which officially makes it the longest shut down in history. Futures are trading moderately lower, following weaker Asian and European sessions, but well off session lows as Japan retraced nearly 50% of its losses during the session. As of 8:00am ET, S&P futures are down 0.2% having earlier slid far more following Tuesday’s 1.2% slump as technology shares dragged stocks lower globally; Nasdaq futures are down 0.1%, also recovering most of their losses. In premarket trading, Mag 7 stocks are mixed with Semis weaker. Confirming just how dented upward momentum is, many of the larger Tech companies that reported last night are weaker this morning. Both Cyclicals and Defensives are mixed without reflecting which will outperform today. According to JPM, so far yesterday’s price action has yet to spill over to the US session and the view that a valuation-induced sell-off with Tech underperforming was a narrative that was forming. It may be the case that as the market looks to remove froth that we see Mag7 outperform the higher beta segments of TMT / AI. In overnight news, China banned foreign-made chips in state-funded data centers. Bond yields are unchanged, erasing an earlier and the USD is also flat. Commodities are poised for a rebound with WTI, Precious Metals, and Ags all higher. Today’s macro data focus is on ADP and ISM-Srvcs. With the shutdown in Washington leaving a vacuum in official data, the private ADP employment numbers out today will get more attention than usual.
In premarket trading, Magnificent Seven stocks are mixed (Tesla +1.2%, Meta +0.3%, Apple -0.05%, Microsoft -0.1%, Alphabet -0.1%, Amazon -0.2%, Nvidia -0.7%)
- AMD (AMD) falls 4% after the chipmaker reported its third-quarter results and gave an outlook. While analysts are broadly positive, they note some issues with margins and the outlook. The stock has more than doubled this year.
- Arista Networks (ANET) slides 10% after the company’s forecast for adjusted gross margin in the fourth quarter fell short of the average analyst estimate.
- Axon (AXON) drops 18% after the Taser maker reported disappointing third-quarter adjusted EPS and agreed to buy emergency-tech company Carbyne in a deal valuing the company at $625 million.
- Biohaven (BHVN) tumbles 44% as TD Cowen calls the FDA’s Vyglxia Complete Response Letter as “highly disappointing” amid broader concerns over its impact on the firm’s R&D spending.
- Clover Health (CLOV) sinks 20% after the health insurer cut its adjusted Ebitda guidance for the full year, following third-quarter adjusted Ebitda results that fell short of expectations. The company notes high medical costs in the quarter pressured margins.
- Humana (HUM) falls 5% after the health insurer reaffirmed its forecast for medical costs for the full year, with the outlook below the average analyst estimate. The firm also reported higher medical costs for the third quarter than analysts anticipated.
- Kennedy-Wilson (KW) surges 26% after receiving a buyout proposal letter from CEO William McMorrow and Fairfax Financial Holdings to acquire all outstanding common stock.
- Kratos (KTOS) falls 8% after the defense contractor forecast revenue and adjusted Ebitda for the fourth quarter that missed the average analyst estimate.
- Mosaic (MOS) shares are up 5% after the agricultural chemicals company reported adjusted earnings per share for the third quarter that beat the average analyst estimate.
- Pinterest (PINS) is down 18% after the search platform gave a revenue outlook that is weaker than expected.
- Super Micro Computer Inc. (SMCI) falls 7% after the server maker missed reduced estimates for first-quarter sales and profit and gave a disappointing earnings forecast for the current period, reinforcing concerns about its ability to capitalize on demand for AI equipment.
- Toast (TOST) gains 3% after the restaurant software company reported third-quarter results that beat expectations and raised its full-year forecast for adjusted Ebitda.
- Trex (TREX) sinks 33% after the maker of decking products forecast net sales for the fourth quarter that fell short of the average analyst estimate.
- United Parcel Service Inc. (UPS) slips 1.8% after one of its freighter jets crashed and exploded shortly after takeoff on Tuesday from Louisville, Kentucky, killing three crew members and at least four people on the ground.
- Upstart (UPST) falls 13% after the AI lending marketplace reported third-quarter revenue that missed expectations and lowered its full-year revenue forecast.
In corporate news, Google and Fortnite game maker Epic Games reached a settlement in their long-running antitrust fight over how developers distribute and monetize apps on Android phones. A UPS freighter jet crashed and exploded shortly after takeoff from Louisville, Kentucky, killing at least seven people. Toyota’s annual profit guidance disappointed investors, a sign that the impacts of US tariffs are still weighing on its bottom line. Amazon.com is suing Perplexity AI to try and stop the startup from helping users buy items on the world’s largest online marketplace.
The VIX jumped to 19 on Tuesday but there’s no sign of panic so far in derivatives markets with the gauge holding under 20, with some 25/30 call spread buying, a likely hedge into year-end playing a moderate rise in volatility.
“There has been way more nervousness than usual during the last rally, and that’s not a good sign,” said Alexandre Baradez, chief market analyst at IG in Paris. “The market was priced for perfection so that explains why emerging questions about rate cuts, liquidity, and valuations are having such an impact.”
Crypto markets offered an early warning signal on the recent liquidity rush, with Bitcoin about 20% below a record high reached a month ago — before paring some of those losses in Wednesday trading. Holders of the cryptocurrency have offloaded around 400,000 Bitcoin over the past month, an exodus of about $45 billion that’s left the market unbalanced.
Meanwhile, the US government has reached a major milestone of dysfunction, with the federal shutdown now the longest in history — and economic pain is deepening. The CBO estimates 4Q growth could be cut by as much as 2 percentage points if the impasse continues for eight weeks.
In politics, Democrats landed a series of local election wins. Zohran Mamdani was elected the 111th Mayor of New York, and his proposals and inexperience — he’s sponsored only a handful of bills while serving three terms as a state assemblyman — is said to have unnerved business leaders and real estate groups.
ADP jobs data today comes in the face of recent corporate cutbacks which economists fear may be a warning sign, with companies such as Starbucks, Target, and Amazon making significant job cuts.
Turning to earnings, by Tuesday night, three-quarters of S&P 500 companies had reported results this season with a positive surprise ratio of 82% — similar to 2Q, which was the highest beat percentage since the third quarter of 2021. Price reaction to AI-related earnings remains volatile, with AMD falling despite lifting guidance, perhaps reflecting elevated buyside expectations. Other AI-related names to fall on results include Tempus AI, Super Micro Computer and Arista Networks.
Emerson Electric, FIS, Humana, McDonald’s, Unity Software and Zimmer Biomet are among companies expected to report results before the market opens. Sales growth at McDonald’s is expected to accelerate to 3.6% from a 1.5% drop last year, as its enhanced value offerings resonate with consumers. Earnings from AppLovin, DoorDash, ARM, Duolingo, Figma, Fortinet, Robinhood, Qualcomm and Lyft follow later in the day.
European stocks fall for a second day, though with less severity than seen earlier in Asia. Stoxx 600 down by 0.5% with tech stocks underperforming on a drag from ASML. That followed weakness in chip stocks in the US and drops for the tech-heavy Nikkei 225 in Japan and Kospi in Korea. Here are some of the biggest movers on Wednesday:
- Barry Callebaut climbs as much as 7.8% following results on Wednesday, with analysts noting its “sober” outlook, but Vontobel saying the chocolate product manufacturer is at least setting more realistic goals.
- Vestas gains as much as 15% after the Danish wind-power manufacturer reported a strong set of earnings, with analysts highlighting outperformance for its Power Solutions division, with a new and unexpected buyback program welcome.
- Aixtron shares climb as much as 7.6%. Demand for power from AI infrastructure could drive growth at the semiconductor equipment manufacturer, according to Barclays, which upgraded the stock to overweight from equal-weight.
- Ahold Delhaize shares rise 4.6% as the retailer reported adjusted operating profit for the third quarter that beat the average analyst estimate.
- Demant gains as much as 7.6%, despite the firm saying it now expects full-year organic sales growth to come in toward the lower end of its existing 1%-3% guidance range.
- Novo shares fluctuate in morning trading before rising as much as 2.7%. The Danish drugmaker narrowed its sales guidance for the year, while its commentary around negotiated US Medicare pricing was better than expected, according to analysts.
- Ambu slumps as much as 19%, the most in three years, after the Danish health-care equipment company reported its latest earnings. JPMorgan sees a miss to 4Q estimates, and new 2026 guidance implies large cuts to Ebit consensus expectations.
- Siemens Healthineers falls as much as 13%, the most on record, after the German health-care equipment group reported earnings which analysts describe as a disappointment.
- Pandora shares fall as much as 5.2% after the jewellery manufacturer lowered guidance for 2025 like-for-like growth and its 2026 EBIT margin target, and reported revenue for the third quarter that missed the average analyst estimate.
- Nexi shares fall as much as 9.9% after the third-quarter operating revenue of the payment services provider missed estimates.
- Qiagen drops as much as 4.4% in Frankfurt as Morgan Stanley says the German life science and diagnostics firm’s fourth-quarter growth outlook potentially overshadows decent third-quarter results.
- Evotec shares fall as much as 12% after the German company reported results RBC called “dismal” with revenue and Ebitda significantly below consensus estimates.
Earlier in the session, Asian stocks fell, weighed by a selloff in tech shares amid mounting concerns over excessive valuations. The MSCI Asia Pacific Index dropped as much as 2.3%, before trimming some losses on dip-buying. Tech heavyweights TSMC, SoftBank and Samsung Electronics were among the biggest drags. Most markets were in the red, with Japan and South Korea leading the losses. The selloff follows Wall Street chiefs’ warnings about an overdue correction, while fading expectations for Federal Reserve rate cuts and the prolonged US government shutdown also contribute to the risk-off sentiment. South Korea’s equity benchmark Kospi Index finished 2.9% lower — narrowing earlier losses of as much as 6.2% — marking its steepest daily decline since August. Japan’s blue-chip Nikkei 225 gauge also pared a plunge of 4.7% to close 2.5% lower, while the broader Topix Index fell 1.3%. China’s benchmark CSI 300 Index reversed early losses to end the day in the green, helped by solid gains in solar stocks. Indonesia also posted mild gains. Markets in India were closed for a holiday.
In FX, the Bloomberg Dollar Spot Index is in a narrow range but has reversed an earlier decline. Sterling an outperformer, Swedish krona in the middle of the pack in the G-10 after the Riksbank held rates at a three-year low.
In rates, we are seeing muted moves in bond markets, with US Treasury yields little changed amid similarly muted price action in German bonds, while long-end gilts underperform slightly. US 10-year is lower by less than 1bp near 4.08% with German counterpart similar and UK’s lagging by around 1bp. Treasury 5s30s curve is around 1bp steeper on the day. Focal points of US session focus include October ADP employment change and services PMIs, as well as Treasury quarterly refunding announcement at 8:30am New York time. For the US Treasury’s quarterly refunding announcement, dealers expect two- to 30-year auction sizes will be unchanged during the November-to-January period
IG dollar issuance slate includes at least two offerings so far. Three borrowers raised a combined $2.85b Wednesday. Issuers paid about 12bps of concession on deals that were 2.9 times covered.
In commodities, gold is higher by $34 to around $3,964/oz. Oil prices up, Brent futures heading closer to $65/barrel. Bitcoin briefly fell below $100,000, though is now holding just above that level.
US economic calendar slate includes October ADP employment change (8:15am), October S&P Global US services PMI (9:45am) and October ISM services index (10am). Fed speaker slate empty for the session
Market Snapshot
- S&P 500 mini -0.2%
- Nasdaq 100 mini -0.1%
- Russell 2000 mini little changed
- Stoxx Europe 600 -0.4%
- DAX -0.7%
- CAC 40 -0.2%
- 10-year Treasury yield little changed at 4.09%
- VIX +0.5 points at 19.54
- Bloomberg Dollar Index little changed at 1226.45
- euro little changed at $1.148
- WTI crude +0.7% at $61/barrel
Top overnight News
- The government shutdown dragged into its 36th day becoming the longest in history. Every week that passes with Congress deadlocked costs the US economy between $10 billion to $30 billion, according to analysts’ estimates, with several landing in the $15 billion range. BBG
- A "handful" of moderate Senate Democrats are considering voting to end the government shutdown. The deal would pass three full-year appropriations bills to fund some agencies, along with a short-term bill that would reopen the rest of the government: WaPo
- Democrat Mikie Sherrill won the New Jersey Governor election and Democrat Abigail Spanberger won the Virginia Governor election, while Democrat Zohran Mamdani won the New York mayoral election.
- In addition to Mamdani’s victor in New York, Democrats also scored other victories throughout the country. The party won gubernatorial races in New Jersey and Virginia around a message of economic affordability. California voters approved a new congressional map intended to create five new Democratic-leaning districts. BBG
- New Yorkers squeezed by the city’s housing crunch also voted in favor of proposals to fast-track affordable housing projects, expedite modest developments and create an appeals board, vote tallies recorded by the AP and the NYT showed. BBG
- The Chinese government has issued guidance requiring new data center projects that have received any state funds to only use domestically-made artificial intelligence chips. Order likely to affect U.S. chipmakers Nvidia, AMD, Intel as Beijing tries to cultivate domestic AI chipmakers like Huawei. RTRS
- Japan’s top currency official, Atsushi Mimura, said recent moves by the yen are deviating from what might be expected given interest rate differentials. The yen touched an eight-month low against the dollar after the BOJ left rates unchanged, despite subtle hints of a potential hike from Governor Kazuo Ueda. BBG
- A growing number of policymakers at the Bank of Japan believed that conditions were falling into place for interest rates to rise, with two members advocating an immediate increase, minutes of the central bank's September meeting showed on Wednesday. RTRS
- The Bank of England is exploring ways of encouraging lenders to use more of their regulatory capital buffers in a bid to boost economic growth. BBG
- German factory orders rose for the first time in five months. Demand increased 1.1% in September, led by automotive and electrical equipment manufacturers and beating estimates. BBG
Trade/Tariffs
- US President Trump posted the "United States Supreme Court case is, literally, LIFE OR DEATH for our Country. With a Victory, we have tremendous, but fair, Financial and National Security. Without it, we are virtually defenceless against other Countries who have, for years, taken advantage of us. Our Stock Market is consistently hitting Record Highs, and our Country has never been more respected than it is right now. A big part of this is the Economic Security created by Tariffs, and the Deals that we have negotiated because of them."
- US President Trump posts it was his "Great Honor to just meet with high level Representatives of Switzerland. We discussed many subjects including, and most importantly, Trade and Trade Imbalance. The meeting was adjourned with the understanding that our Trade Representative, Jamieson Greer, will discuss the subjects further with Switzerland’s Leaders."
- White House posted the Executive Order modifying duties addressing the synthetic opioid supply chain in China.
- White House said it is not interested in selling to China at this time regarding NVIDIA (NVDA) Blackwell chips.
- China announced it will suspend 24% US tariffs for a year but will maintain 10% US tariffs, while it will lift some tariffs on US agriculture goods from November 10th.
- Chinese Premier Li said some unilateral and protectionist measures have had severe impacts on the economic world order, while he said they should uphold equality and mutual benefit and consolidate the foundation of legitimate common interest. Li stated that it is all the more important for them to stay committed to mutual cooperation and pursue free trade when economic growth is slowing. Furthermore, he said China is willing to stand with all parties to foster an open and inclusive environment, as well as commented that countries should not seek unilateral wins at the expense of others, and need to balance their interests against the greater good.
- White House said US President Trump feels positively about the relationship with India and trade teams continue to be in serious discussions, while it added that President Trump and Indian PM Modi speak frequently.
- China Commerce Ministry suspends unreliable entity list announced in April; removes entity list announced in March and will adjust the list.
A more detailed look at global markets courtesy of newsquawk
APAC stocks were mixed after an early sell-off following the losses stateside, where tech underperformed amid valuation concerns. ASX 200 was rangebound as resilience in defensives and the top-weighted financial sector provided a cushion. Nikkei 225 suffered heavy losses and briefly fell beneath the 50,000 level with the downturn led by tech-rela