S&P 500 futures edged up 0.2% as markets steadied after a sharp tech-led sell-off, though the S&P 500 is on course for a 0.9% weekly loss and the Nasdaq for 2.4%. Tesla jumps on its flying Roadster, Import prices rise 8.1% on the year, and Fed Chairman Kevin Warsh declines to signal the next move.

1. AI TRADE: Chip Stocks Slide Again and CoreWeave Falls 4% as Credit Worries Cap the Rebound

The VanEck Semiconductor ETF (NASDAQ:SMH) fell 0.7% pre-market, led by Micron (NASDAQ:MU), AMD (NASDAQ:AMD) and Sandisk (NASDAQ:SNDK), and is down 7.4% for the week amid jitters about competition from China. CoreWeave (NASDAQ:CRWV) fell 4% after a roller-coaster Thursday in which it tumbled on fears over its Debt before ending higher. The spread on its credit-default swaps, a form of insurance for bondholders, is up 16% from a week ago. SK hynix and Samsung Electronics, which tumbled 10% on Thursday, recovered slightly. One investor said fears should ease as Anthropic and OpenAI go public and "detailed information on core metrics" reaches the market over 2027.

  • The worry has moved from chip valuations to the Debt Financing the AI build-out, so credit spreads now matter as much as earnings.
  • Risk note: much of the AI boom sits in private markets, so the information gap may last until those firms list, with relief not expected before 2027.

2. TESLA: Shares Rise 3% After a Roadster That Flies on SpaceX Thrusters, With Production Set for 2028

Tesla (NASDAQ:TSLA) rose after unveiling its long-delayed second-generation Roadster at an event in Waco, Texas. The car uses SpaceX-developed rocket-style thrusters and demonstrated aerial maneuvers, and Tesla describes it as the world's first flying car, able to reach 60 miles per hour in less than a second. SpaceX (NASDAQ:SPCX) rose more than 1%, also helped by a price target increase from Evercore ISI and by rival Blue Origin's plan to ramp New Glenn launches to multiple flights a week by the end of the decade. The Roadster was first announced in 2017, and some customers have paid $250,000 to reserve one.

  • Elon Musk leads both companies, and the demonstration tied Tesla's Brand to SpaceX's rocket technology.
  • Risk note: production is 2 years away after a delay of nearly a decade, so the shares are pricing a promise rather than a product.

3. INFLATION: Import Prices Jump 1.1% for an 8.1% Annual Rise, Adding to Hot Producer and Consumer Readings

Import prices, which exclude tariffs, rose 1.1% in September against 0.8% expected, after a downwardly revised 0.5% in August. Over 12 months they rose 8.1%, the most since July 2022, after 6.7% in August. The report follows Thursday's producer price index, up 6.3% on the year against 5.5% expected, the biggest gain since 2022, and Wednesday's consumer price index, up 0.6% on the month and 3.7% on the year against estimates of 0.6% and 3.6%. Higher energy costs from the US-Iran war are the main driver, though economists now say Inflation is broadening beyond energy. Consumer inflation remains well above the Fed's 2% target.

  • The war has snarled Supply chains and kept oil elevated, and import costs can pass through to consumer prices later.
  • Risk note: markets still expect a hold this month and a hike in December, but a third hot reading in 3 days leaves little room for complacency.

4. BONDS/FED: Warsh Rejects Forward Guidance, Leaving a Hold Likely; 10-Year Yield Rises 3 Basis Points to 5.12%

Warsh, in a fireside chat with IMF chief Kristalina Georgieva in Bangkok, said "I don't prejudge meetings" and, on forward guidance, "we're not in that Business anymore." He described a "synchronous tightening" by central banks in which "there's no free riders." Goldman Sachs economists said the comments indicate the Fed will pause in October, and they still expect a second and final hike in December. Traders price 85% to 87% odds of a hold at the Oct. 27-28 meeting. The 10-year Treasury Yield rose 3 basis points to 5.119%, the 30-year 3 basis points to 5.457% and the 2-year was flat at 4.749%. The dollar index fell 0.4% to 101.65, on course for its first weekly decline after 3 weeks of gains. Gold rose to about $4,174.52 an ounce, and Brent Crude is at $106.14, headed for a weekly gain as attacks around the Strait of Hormuz have surged in the past 10 days.

  • Warsh paired optimism about AI-led productivity with a warning that the road may be "very bumpy," as energy costs and AI Investment push up borrowing costs worldwide.
  • Risk note: the Fed raised rates to 3.75% to 4% last month, its first hike since 2023, and with no guidance on December, another hot inflation reading could move pricing quickly.

5. PRE-MARKET MOVERS: Travelers Falls 4% Despite a Big Beat, Netflix Slips on a Content Chief's Exit and Alcoa Rises

Travelers (NYSE:TRV) fell 4% even after core third-quarter Earnings of $9.18 per share beat the $7.42 expected, on Revenue of $12.48 billion against $11.38 billion. Netflix (NASDAQ:NFLX) fell nearly 1.5% after saying chief content officer Bela Bajaria is leaving and will be replaced by former Disney executive Peter Rice, a day after it said it would cut about 6% of its workforce, or about 1,000 jobs. Alcoa (NYSE:AA) rose more than 2% on better-than-expected third-quarter earnings, helped by a rebound in its alumina business.

  • Travelers' drop after a wide beat shows how high the bar is this earnings season.
  • Risk note: Netflix is changing its content Leadership just as it trims about 1,000 jobs, so execution on programming will be watched.

6. GLOBAL MARKETS: Asia Rebounds and Europe Rises, but Indonesia Suffers Its Biggest Drop Since 1998 After an MSCI Decision

Japan's Nikkei 225 closed 1.39% higher at 65,324.29 and South Korea's Kospi rose 2.05% to 5,668.05. Australia's ASX 200 gained 1% to 8,806.70, Hong Kong's Hang Seng was up 0.51% in the last hour of trade and China's CSI 300 closed 0.11% higher at 4,170.61. The STOXX 600 rose 0.6%, Germany's DAX about 1%, France's CAC 40 0.5% and London's FTSE 100 less than 0.1%. The MSCI World index rose 0.4% but is set for a weekly loss. Indonesian equities fell the most since 1998 after index provider MSCI said the country's market no longer merited emerging market status and outlined plans to remove it from key indexes tracked by funds. Turkey's main index slid more than 3% after MSCI froze certain changes to its Turkey indexes.

  • Europe was hit less hard by Thursday's sell-off, and one portfolio manager still expects earnings strong enough to limit any market correction.
  • Risk note: the same manager said monetization "is still the big question that is not fully answered" for AI firms.

7. MARKET SETUP: Futures Edge Higher, Berkshire Backs Bending Spoons Again and the G7 Plans AI Cyber-Attack Drills

S&P 500 futures rose 0.2%, Nasdaq-100 futures were about flat and Dow futures gained 61 points, or 0.1%. Berkshire Hathaway (NYSE:BRK.B), led since January by CEO Greg Abel, invested $330 million in Bending Spoons, the Italy-based serial acquirer, after $600 million in July when it listed on the Nasdaq. As of Oct. 15 Berkshire had a gain of nearly 80% on its investment. G7 finance leaders agreed to hold tabletop exercises to guard against AI cyber attacks, Japan's finance minister said, after the IMF warned this week that an AI-enabled attack on a critical service of a financial institution could undermine confidence.

  • An analyst called the deal a sign that Berkshire is "finally moving out of its comfort zone" to put Capital to work.
  • Risk note: the drills could include private financial institutions, and the Bank of England said banks can no longer assume their defenses are immune to AI-enabled attacks.