Briefing.com Summary:
*Taiwan Semiconductor delivered results and guidance that have provided an added boost for the AI trade.
*Dow component Salesforce announced some new and pleasing long-term guidance.
*The October Philadelphia Fed Index was weak and has contributed to the impending rate cut narrative.
Stop us if you have heard this before (just don’t stop reading): enthusiasm about AI growth prospects and impending rate cuts are underpinning the equity futures market.
Currently, the S&P 500 futures are up 29 points and are trading 0.5% above fair value, the Nasdaq 100 futures are up 168 points and are trading 0.7% above fair value, and the Dow Jones Industrial Average futures are up 110 points and are trading 0.3% above fair value.
Taiwan Semiconductor Manufacturing Co. (TSM) is behind the AI enthusiasm. The chip-making giant easily hurdled Q3 expectations and issued better-than-expected Q4 guidance, with the company’s CEO saying AI demand is stronger than three months ago and that the company’s conviction in the AI megatrend is strengthening.
These remarks have run in tandem with Dow component Salesforce (CRM) announcing a new long-term revenue target of $60 billion+ by FY30 and adding that it is already seeing strong momentum with its Data and AI offering. CRM is up 6.7% in pre-market trading, which is offsetting a 5.4% drop in fellow Dow component Travelers (TRV) following its Q3 earnings report.
Earnings news has permeated the tape; fortunately, most of it has been good. Charles Schwab (SCHW), US Bancorp (USB), J.B. Hunt Transport Services (JBHT), and Snap-On (SNA) are among the companies trading higher after their results.
United Airlines (UAL) is down slightly after its better-than-expected Q3 earnings results that were tainted a bit, reportedly, by a 4.3% year-over-year TRASM decline. Hewlett-Packard Enterprise (HPE), meanwhile, is down 8.6% after the company issued a disappointing FY26 EPS outlook.
Another disappointment was the October Philadelphia Fed Index. It dropped to -12.8 (Briefing.com consensus: 9.1) from 23.2 in September. The dividing line between expansion and contraction is 0.0, so manufacturing activity in the Philadelphia Fed region contracted in October. Strikingly, the report also highlighted a pickup in the prices paid index in October and an increase in the diffusion index for future general activity to 36.2 from 31.5.
Treasury yields dipped on the weak headline number, which is getting sold as a basis for the Fed to cut rates later this month along with the continuation of the government shutdown (day 16). The 2-yr note yield is down two basis points to 3.48%, and the 10-yr note yield is down four basis points to 4.01%.
Other headlines drawing some added attention include President Trump acknowledging the U.S. is in a trade war with China, that he has been assured by Prime Minister Modi that India will soon stop purchasing Russian oil, and chatter that a U.S. trade deal with South Korea is close.
What is also close is a higher open for the stock market.
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