Wall Street finished Tuesday slightly in the red for a second consecutive session, as higher longer dated bond yields and a mixed batch of economic data kept investors on the defensive. European technology stocks rallied on Tuesday, and overnight Asian shares mostly advanced and US futures pointed higher.
US markets close lower for a second session
The S&P 500 lost 0.2% on Tuesday, the Dow Jones gave up 0.3% and the Nasdaq slipped 0.1%. The majority of sectors closed down, with energy the weakest performer and utilities among the stronger areas.
Rates and the Federal Reserve
US equities continue to face a challenging combination of elevated borrowing costs and doubts over where interest rates go next. Against that, resilient economic activity and strong company earnings continue to offer support. The next inflation and labour market releases are now firmly in focus, as they may shape expectations for the Federal Reserve’s next decision.
Consumer confidence and job openings
Sentiment took a knock from a sharp deterioration in consumer confidence, which dropped to its weakest reading since 2014. Job openings for August also edged down.
Oil, technology and financials
Crude fell steeply, with WTI down 3.8% at $89.09 a barrel. The drop eased some inflation concerns but dragged on energy stocks. In technology, Microsoft, Apple and Amazon stayed under pressure with the wider sector, while JPMorgan and other financial stocks were weighed down by the high rate backdrop. Taken together, the session looked like caution rather than a deeper shift in the equity outlook, as investors weighed strong earnings against higher yields, weaker consumer mood and renewed uncertainty over monetary policy.
Global markets overnight
Asia Pacific
Most Asian markets rose on Wednesday, even as global bond yields climbed sharply. Japan’s Nikkei added 0.9% and South Korea’s Kospi was heading for a monthly gain of 1.4%. The MSCI Asia Pacific ex Japan index gained 0.2%, supported by solid earnings, economic growth and ongoing enthusiasm for artificial intelligence.
US equity futures
US futures moved up overnight. S&P 500 futures rose 0.25%, Nasdaq 100 futures added 0.15% and Dow futures climbed 0.40%, helped by Treasury yields pulling back from recent peaks and a steep fall in oil. Chipmakers bounced, with the Philadelphia Semiconductor Index up 1.3%, and a return of AI optimism helped technology shares recover.
European equities
In Europe, the Euro Stoxx 50 advanced 0.4% on Tuesday while the wider Stoxx 600 ended broadly flat. Technology drove the gains, with ASML climbing 4%, and SAP and Siemens also benefited from stronger sentiment towards technology and industrials. Energy shares lagged as crude prices softened.
Currencies and commodities
Dollar and euro
The US dollar stayed strong on Wednesday. The Dollar Index traded near 101.4 and was set for a monthly rise of about 2%, backed by robust US growth and expectations of further Fed rate hikes. EUR/USD dropped to roughly 1.1334, as the dollar kept its strength ahead of important inflation and jobs figures.
Oil
Crude recovered slightly on Wednesday following a decline of more than 2% the day before. Brent gained 0.6% to $103.16 a barrel and WTI rose 0.1% to $89.46. Continued disruption in the Strait of Hormuz lent support, although a pickup in Saudi exports and additional supply reduced near term fears of shortages.
China manufacturing returns to growth
China’s factory sector gained momentum in September. The private RatingDog PMI climbed to 52.1, a five month high, and the official manufacturing PMI moved back into expansion at 50.1. Services activity improved too. Firmer domestic and export demand drove the recovery, though soft consumer spending and the property slump remain obstacles.
Companies in focus
Several companies moved on earnings, analyst calls and corporate news.
Technology and AI
US AI framework. President Donald Trump said he had signed a voluntary AI framework with senior technology executives, presenting it as a safeguard for the industry. His administration is also weighing an oversight committee. The step comes amid growing global efforts to address AI risks, although Trump has in the past resisted new rules aimed specifically at AI.
Robinhood. The brokerage is broadening its active trading platform with AI agents able to analyse markets, build strategies and place trades. It also plans weekend trading in selected US shares and ETFs, subject to regulatory approval, and is adding perpetual futures and earnings based trading as part of its drive towards round the clock access and more automation.
OpenAI. The company is reported to be looking for at least $30bn of new funding at a valuation near $1.4trn, giving it more capital ahead of a possible IPO. The fundraising remains at an early stage and follows a $122bn round in March. OpenAI and Anthropic are competing for enterprise clients as both prepare for potential listings.
Meta. Meta is rolling out its Muse AI agent to small businesses, connecting tools such as Shopify, QuickBooks, Stripe and Canva to help with operations, marketing and winning customers. Muse can draw on business data but needs user approval before acting. The app has recorded 2.8 million downloads since launch.
Travel, aerospace and industrials
Carnival. The cruise operator beat expectations on third quarter earnings and revenue, sending its shares up by double digits. Record net yields, strong customer deposits and record bookings for 2027 point to further growth. Carnival lifted its 2026 profit guidance despite higher fuel costs, and debt reduction plus a better credit rating have further strengthened its balance sheet.
Airbus. Airbus completed the first flight of its delayed A350F freighter, starting the certification process ahead of a planned 2027 entry into service. The aircraft is designed to challenge Boeing’s dominance in freighters, helped by rising air cargo demand from e-commerce, pharmaceuticals, electronics and AI related semiconductor shipments.
Legrand. Legrand raised its sales and margin targets for 2027 to 2030, pointing to continued demand from AI data centres. It now expects organic sales growth of 6% to 8% a year, with acquisitions contributing around 5%, and targets an operating margin of 21% to 22%. Data centre sales are forecast to top €3 billion in 2026, driven by growing power and cooling needs.
Consumer goods and infrastructure
British American Tobacco. BAT expects 2026 revenue and adjusted operating profit growth to land near the lower end of its guidance ranges, with EPS growth around the midpoint. At its Capital Markets Day, the group set out plans to grow New Category revenue at a mid teens rate through 2030 and lift margins, while continuing to cut debt and return cash to shareholders.
Eiffage and Vinci. The French government has proposed lifting the tax on motorway concessions and major airports from 4.6% to as much as 12.2% as part of its 2027 budget. The change could weigh significantly on concession earnings for operators such as Eiffage and Vinci, with little room to pass the cost on through higher tolls.
Analyst views
Wells Fargo on US sectors: Wells Fargo raised S&P 500 Industrials to favourable, citing strong demand for AI infrastructure, backlogs and wider industrial support. It cut Information Technology to neutral following a strong run, flagging high expectations, valuations and debt financing as risks, while broader participation and pricing power favour Industrials.
Bernstein on Korean memory makers: Bernstein expects Samsung Electronics to win share in high bandwidth memory and kept its 440,000 won price target, while lowering its SK Hynix target to 2.7 million won. It sees conventional memory prices rising further on ongoing shortages, with pricing likely to normalise from 2028 as capacity grows and AI spending meets limits.
TD Cowen on SpaceX: TD Cowen began coverage of SpaceX with a Buy rating and a $200 price target, naming AI computing as the main short term growth engine. It projects AI compute revenue of $133bn by 2028 alongside fast capacity growth, while Starlink, satellite launches and space infrastructure could provide significant additional growth over the longer term.
Deutsche Bank on Netflix: Deutsche Bank upgraded Netflix to Buy, arguing its lower valuation understates future growth. It forecasts 23% EPS growth in 2027, supported by international engagement, Netflix’s global production scale and platform potential, and views AI as a way to improve content production, personalisation and advertising.
JPMorgan on PepsiCo: JPMorgan lowered PepsiCo to Neutral, pointing to a stalled North American turnaround, rising costs and softer snack sales. It trimmed 2027 and 2028 earnings forecasts below consensus and expects the company to lean more on cost savings. Deutsche Bank also downgraded PepsiCo recently, citing doubts over its North American strategy and mixed results from turnaround efforts.
UBS on ASML: UBS reaffirmed its Buy rating on ASML with a €2,350 price target, highlighting the company’s dominant position in EUV lithography. Recent positive calls from Bank of America and Barclays, strong second quarter results and AI driven chip demand have lifted sentiment ahead of third quarter results.
Deutsche Bank on Iberdrola: Deutsche Bank upgraded Iberdrola to Buy from Hold and raised its price target to €22, citing higher power prices and stronger earnings expectations. It sees potential upside from the utility’s 2027 strategic plan, data centre demand and higher power purchase agreement prices, and forecasts double digit earnings growth through 2028.
What to watch today
Inflation is the headline theme on Wednesday. In the US, PCE and core PCE figures are due alongside GDP, personal spending and ADP employment data. In Europe, inflation readings from France, Italy and Germany are scheduled. Fed officials Barkin, Goolsbee and Kashkari are set to speak, and Micron Technology reports fourth quarter earnings.
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