Stocks Bounce as Oil Slips and AI Jitters Subside: Markets Wrap

(Bloomberg) — The S&P 500 is set to bounce back from two days of losses as oil prices fell and worries over the sustainability of the artificial-intelligence investment boom receded.

Futures for the US benchmark rose 0.4%, while Nasdaq 100 contracts climbed 0.8%. OpenAI expects to reach or exceed $70 billion in annualized revenue by year-end, according to people familiar with the matter, helping ease concerns that its sales were falling short of earlier estimates. An exchange-traded fund tracking chipmakers rebounded 1.7% in US premarket trading.

Brent crude slipped below $103 a barrel after President Donald Trump said the US will not attack Iran before the midterm elections. He also cited “productive discussions” with Tehran. The benchmark hit a two-week high in the previous session over fears that an escalation in the Middle East could be imminent.

Treasuries fell modestly following a turbulent session that ended with yields retreating from multidecade highs. Losses were skewed toward the short end of the curve, with two-year yields rising two basis points to 4.78%. The dollar was muted, though remained on course for a fourth straight weekly gain.

Higher crude prices have acted as a brake on equities by keeping pressure on interest-rate expectations, offsetting some support from robust corporate profits that have pushed the S&P 500 to a record high. And while optimism over AI remains intact, there’s little certainty about which companies will ultimately capture the profits, particularly as borrowing costs rise.

“The key risk for the AI trade is not necessarily a collapse in demand, but rather a gradual moderation in growth or monetization that falls short of the market’s increasingly ambitious assumptions,” said Francisco Simon at Santander AM. “Even incremental information can trigger an outsized response.”

Europe’s Stoxx 600 jumped 1.2%, erasing losses of as much as 1.3% for the week. The region’s bonds also rallied, tracking gains late in the US session, with French securities outperforming. France was the focal point of worries this week over fiscal pressures and political gridlock.

With US big banks set to unofficially kick off the third-quarter reporting season next week, stocks will increasingly be driven by earnings delivery rather than macro uncertainty, according to Santiago Mateo Yanguas at CaixaBank AM.

Corporate results “will ultimately determine whether strong fundamentals can continue to justify current valuations,” he said.

A mild correction in September has brought stock valuations back to reasonable levels, suggesting earnings season should provide support for markets, said Mary-Sol Michel at Swiss Life Banque Privée.

“We expect the AI trade to continue to be the main driver, and that’s illustrated by the impact of OpenAI’s revenue update,” she said. “Of course, rising oil prices are fueling inflation and lifting bond yields, but this backdrop is somewhat expected to pause as we get closer to the midterms.”

Corporate News:

Humana Inc. shares surged as the company improved its performance on crucial Medicare Advantage quality ratings that will boost future revenue. Delta Air Lines Inc. reduced its full-year earnings outlook as high jet fuel prices stemming from the war in the Middle East continue roiling US airlines. Firmus Grid Ltd. is exploring a private funding round to raise as much as $3 billion after the collapse of its planned initial public offering left the data center operator looking for other financing options. SoftBank Group Corp. seeks to raise as much as $100 billion from Gulf investors to help it amp up its bets on AI, the Financial Times said. Elon Musk’s SpaceX said it acquired low-band spectrum that will enable it to use its Starlink satellites to become a “major mobile carrier” in the US, sending shares in incumbent cell providers falling as much as 8%. The stock rallied in premarket trading. Some of the main moves in markets:

Stocks

S&P 500 futures rose 0.4% as of 8:28 a.m. New York time Nasdaq 100 futures rose 0.8% Futures on the Dow Jones Industrial Average were little changed The Stoxx Europe 600 rose 1.2% The MSCI World Index rose 0.2% Currencies

The Bloomberg Dollar Spot Index was little changed The euro was little changed at $1.1204 The British pound was little changed at $1.3221 The Japanese yen fell 0.2% to 158.26 per dollar Cryptocurrencies

Bitcoin rose 1.6% to $83,021.53 Ether rose 1.1% to $2,499.81 Bonds

The yield on 10-year Treasuries advanced one basis point to 5.24% Germany’s 10-year yield declined four basis points to 3.46% Britain’s 10-year yield declined seven basis points to 5.41% Commodities

West Texas Intermediate crude fell 0.8% to $90.77 a barrel Spot gold rose 1.3% to $4,185.27 an ounce This story was produced with the assistance of Bloomberg Automation.

–With assistance from Julien Ponthus.

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