Here is Schwab's early look at the markets for Thursday, October 22.
Magnificent Seven earnings are underway and results from Tesla and Meta Platforms late yesterday could help set the tone on Wall Street. Separately, investors are beginning to gear up for the next Federal Reserve decision next Wednesday.
Meta topped consensus expectations for both earnings and revenue and now expects capital expenditures of $135 billion to $145 billion in 2026. That's up slightly from the prior estimate of $130 billion to $145 billion for this closely watched metric. It also pegged fourth quarter revenue at between $73 billion and $76 billion, putting the average slightly above FactSet consensus.
Meta shares jumped 4% initially in post-market trading. One possible disappointment was Meta's decision to not share a full-year 2027 revenue outlook, though it said it expects strong growth as AI investments deliver benefits to the core business.
Tesla edged up about 1.6% initially in post-market trading after earnings per share topped analysts' estimates and revenue met expectations but fell slightly year-over-year as auto revenue declined. Cumulative unsupervised Robotaxi miles grew eight-fold quarter-over quarter, Tesla said in its release, and the quarter ended with the largest backlog for its passenger vehicles in four years. In its outlook, the company said it's focused on maximum capacity utilization at factories..
The results came after strong earnings and guidance from SpaceX earlier this week appeared to inject some life into a weak AI sector. Several AI infrastructure and chip firms seemed to hitch a ride on SpaceX's coattails Wednesday after SpaceX noted strong demand in its AI business.
Behind the scenes, crude remains a direction setter on Wall Street. More attacks on oil vessels had investors worried yesterday even as the Wall Street Journal reported that exports of oil from the Middle East now exceed levels before the war. Crude eased slightly Wednesday but remains near one-month highs.
Diplomatic contacts between Washington and Tehran continue, the newspaper reported, while exporters have found alternate routes to bypass the Strait of Hormuz. Product prices remain high, especially for diesel. Shipping costs are also a burden.
Results from Union Pacific, Norfolk Southern, and Valero Energy later today could give investors a better sense of crude's impact on transports and the energy industry.
Treasury yields climbed across the curve Wednesday but remained well under recent peaks. A weak auction for 20-year bonds was one source of pressure on Treasuries. Worries about the Middle East also played a role.
Meetings of the Bank of Japan and European Central Bank next week, along with next Wednesday's Fed decision, could help determine direction for Treasury yields. Recent unrest in France, where the country's debt to gross domestic product (GDP) ratio is above 100%, is in focus as the ECB gathers.
"With elections not for another six months, France’s bond market could remain a source of volatility," said Michelle Gibley, director of international equity research and strategy at the Schwab Center for Financial Research (SCFR).
Debt concern extends across the European Union amid heavy government borrowing, Reuters reported, with banks particularly exposed.
Back home, market participants see chances of an October Fed rate hike at 15%, according to the CME FedWatch Tool. A December hike is seen as far more likely followed by more hikes next year.
Data has been light this week but picks up today with weekly initial jobless claims before the open. They're expected to remain historically low near 200,000, according to Briefing.com.
Another data point today is the Leading Economic Index from the Conference Board at 10 a.m. ET, with Briefing.com consensus at -0.2% for September, worse than August's drop of -0.1%.
Major indexes built on gains Wednesday in a broad rally led by AI and other tech names after earnings from SpaceX. The S&P 500 Index slightly outpaced the S&P 500 Equal Weight Index, indicating the strength in mega-caps, but the equal-weight index posted moderate gains. Checking technicals, the S&P 500 Index is back above its 50-day moving average, a positive sign, and so is the Nasdaq Composite.
Seven of 11 S&P 500 sectors rose, led by 1.6% gains in tech as well as solid advances in cyclical sectors like industrials and financials. Utilities also did well, helped by ideas that AI growth could raise demand. Communication services fell 1% on post-earnings struggles from Netflix.
Volatility remains elevated compared with summer lows and might stay that way a while, reflecting growing concern about chances of a more dramatic stock market correction. Investors are pricing in slower earnings growth in coming quarters, as well, and hedges continue getting added.
Volume remains low for S&P 500 stocks, a trend in place for some time. That could suggest there's not much conviction that these levels will hold, said Rachel Dashiell, head of technical research and strategy at SCFR. A test of the 100-day S&P 500 Index moving average near 7,600-- if it happens--might be key. Failure to hold support there could mean a test of longer-term support below 7,300.
Checking individual movers Wednesday, SpaceX rose 7.3% after earnings and revenue exceeded expectations. Guidance and AI business revenue, up ninefold annually, impressed. Investors also seemed enthused about CEO Elon Musk noting that SpaceX and his other company, Tesla, have formed committees to discuss a possible merger. Tesla climbed 3.9%.
Netflix dropped 5% despite earnings and revenue topping analysts' expectations. However, its 12% annual revenue rise appeared relatively weak compared to historic growth, and advertising guidance appeared to disappoint.
Super Micro Computer jumped 9.5% after the company shared fiscal first quarter revenue guidance well above FactSet's consensus.
Texas Instruments climbed almost 3% after yesterday's close as earnings and guidance for the chip firm topped estimates.
Applied Digital soared 8% on news of a data center agreement with Solaris Energy Infrastructure, shares of which rose almost 10%.
CoreWeave, in the spotlight recently due to its AI-related spending and debt, ended marginally lower.
Dell rose 5% and may be another beneficiary of better AI sentiment indicated by SpaceX. Also, the company announced an expansion of its AI Factory with Nvidia designed to help companies move AI into production. Dell competitor Hewlett Packard also gained.
Other AI-related shares, including some that have been hurt lately like Lumentum, Advanced Micro Devices, ASML, and Arm Holdings. The PHLX Semiconductor Index (SOX) rose 2%.
Utility and energy firms expected to benefit from AI rose sharply Wednesday, including Constellation Energy, Bloom Energy, and GE Vernova.
United Airlines rose 4% despite narrowing earnings guidance, lifted by optimism about demand, CNBC reported.
Crypto-related stocks like Strategy, Circle Internet Group, and Coinbase rose as bitcoin jumped 2.5%.
IBM jumped 5% in initial post-market trading Wednesday as earnings and revenue topped expectations.
AT&T backtracked 6% despite earnings and revenue that topped consensus. Subscriber growth appeared to underwhelm, Investor's Business Daily reported, and some analysts worry about possible broadband competition from SpaceX.
The Dow Jones Industrial Average® ($DJI) added 360.21 points (+0.69%) Wednesday to 52,856.09; the S&P 500 Index ($SPX) climbed 44.60 points (+0.58%) to 7,757.17, and the Nasdaq Composite® ($COMP) rose 278.04 points (+1.05%) to 26,702.86.