After Anthropic submitted an application for its initial public offering (IPO), the enthusiasm for artificial intelligence investment once heated up again, but this optimistic sentiment weakened on Tuesday (October 27th). European stock markets fell, with bank stocks being the main drag, while U.S. stock index futures saw a slight rise. Traders shifted their attention back to the密集ly released corporate financial reports, the upcoming Federal Reserve monetary policy meeting, and the ongoing tense situation in the Middle East.

As of press time, the Dow Jones futures have risen by 0.28%, the S&P 500 index futures have risen by 0.37%, and the Nasdaq futures have risen by 0.55%.

HSBC's stock price plummeted, dragging down European stocks

In terms of European stock markets, as the financial report performances of some large companies varied, the Euro Stoxx 600 index fell by 0.3%, with the banking sector index declining by 1.3%. The London FTSE 100 index also fell by 1%, mainly due to the slump in HSBC's stock price. HSBC Holdings, Europe's largest bank, saw its stock price plummet by 7% because the growth of its wealth management business slowed down, resulting in third-quarter revenue falling short of market expectations. However, the bank's pre-tax profit met analysts' forecasts.

After Procter & Gamble Group lowered its annual sales forecast, its stock price also fell by 6%. In contrast, Novartis' stock price rose after it raised its outlook for new drug business growth. Automobile manufacturer Porsche saw its stock price increase due to profits exceeding market expectations. Meanwhile, the Dutch chip equipment manufacturer BE Sem's token issuance nductor Industries caused its stock price to surge by 10% for a time. Previously, Applied Materials increased its stake in the company to about 20%.

Ipek Ozkardeskaya, a senior market analyst at UBS, stated: "In the last quarter, bank stocks were consistently winners in the market. Due to increased market volatility and growing AI financing needs, the banking sector reported record-breaking results."

She added, "But now bank stocks are starting to come under pressure because we see interest rates rising, and the increase in short-term yields has exceeded that of long-term yields, which is actually eroding banks' interest income." However, she still believes that bank stocks have the potential to outperform other industries, especially those that are more directly affected by rising living costs.

Focus on Anthropic's IPO

Following the strong gains on Monday, financing activities of tech companies have become a major factor affecting market sentiment. Meta Platforms is seeking to raise up to $97.5 billion by selling common and preferred stocks. Broadcom has arranged a $63 billion financing deal to support chip purchases, while SpaceX has signed a equipment finance lease agreement worth approximately $40 billion.

Previously, due to market concerns that the valuation of AI companies was too high and their capital expenditures were excessively large, chip stocks faced large-scale selling. Against this backdrop, the IPO of Anthropic will become an important test of investors' interest in investing in AI companies. The market is now focusing on the financial reports to be released later this week by technology giants such as Alphabet, Microsoft, and Amazon, as well as the Federal Reserve's interest rate decisions on Wednesday.

Anthropic, which owns the Claude artificial intelligence model, submitted its application for a initial public offering (IPO) in the United States on Monday. In its listing documents, the company disclosed significant losses, but at the same time showed extremely strong revenue growth. The market expects that Anthropic will complete its listing before the end of November.

Jeffrey Currie, Chief Economist and Strategist at Jefferies, wrote in the report: "Today, the focus of the market will be on AI trading, as well as whether the upward momentum from yesterday can continue. We expect the capital expenditure cycle to remain strong, and corporate earnings to continue to be solid. However, as with any investment cycle, there will ultimately be winners and losers in AI trading."

Currently, quarterly financial reports have become the focus of attention in global markets. Investors are assessing the impact of the Iran conflict on corporate performance, including the pressures arising from rising costs and high interest rates. This week, more than a third of the components of the S&P 500 index are expected to release their financial reports. Super-large cloud computing companies in industries such as Microsoft, Amazon, and Alphabet, along with other AI firms, will be under close scrutiny. Investors hope to confirm whether the billions of dollars invested by these companies are generating the expected returns.

The Fed's decision is approaching.

Later this week, the Federal Reserve, the European Central Bank, and the Bank of Japan will successively announce their monetary policy decisions. Economists generally expect that all three central banks will maintain their interest rates unchanged, so the market's focus will shift to the speeches of policymakers in order to judge the future trend of interest rates.

The market currently believes that the likelihood of the Federal Reserve raising interest rates by 25 basis points this week is low, but the probability of a rate hike in December remains high. Inflation concerns remain at the center of policy discussions, and investors think that a pause in rate hikes may not last too long. If the Federal Reserve maintains current interest rates on Wednesday, Chairman Kevin Warsh ( Kevin Warsh ) will need to assure investors that the Fed is still committed to curbing inflation despite high energy prices.

Geoff Yu, a senior macro strategist at Bank of New York Mellon, stated: "The market will pay more attention to the Federal Reserve, as it determines the global financial environment, which is crucial for the credit market. Although we do not expect interest rate adjustments this week, we would not oppose a raise even if the Fed decides to do so, although we are not entirely convinced of the urgency of such a move. However, we believe that maintaining policy credibility is of utmost importance to the Fed."

Oil prices recover from their decline

In other markets, the global crude oil benchmark, Brent crude, has recovered all of its previous losses and risen back above $116 per barrel. Previously, as senior officials from several countries traveled to Tehran in an attempt to restart negotiations aimed at preventing further escalation of conflicts in the Middle East, oil prices had fallen. Meanwhile, Israel is holding elections on Wednesday, which are the first national elections since Hamas launched its attacks in 2023. Those attacks caused severe trauma to Israeli society and triggered a series of wars in Gaza, Lebanon, and Iran thereafter. These elections are further exacerbating regional tensions.

In the foreign exchange market, the US dollar continued to rise slightly for the third consecutive trading day. The euro fell by 0.1% to 1.115 US dollars, approaching the lowest level since May, which it reached two weeks ago.

U.S. Treasury prices remained largely unchanged, with the yield on the benchmark 10-year Treasury note staying just below 5%. Previously, as concerns about the investment prospects of AI arose and the stock market experienced turmoil, investors flocked to U.S. Treasuries as a safe-haven, causing yields to fall from above 5% in September.

Bob Michele, the Chief Investment Officer of JPMorgan Asset Management, previously predicted that the return on U.S. bonds is expected to reach 7% to 8% in the next 12 months.

Gold prices fell, breaking below the $4,000 mark, mainly due to the strengthening of the US dollar. ActivTrades Director and Chief Executive Officer Ricardo Evangelista stated: "The strengthening of the US dollar and the high yields on US Treasury bonds continue to put pressure on gold. At the same time, high oil prices fuel concerns about inflation, further reinforcing market expectations that the Federal Reserve will maintain a restrictive monetary policy stance."

Don't forget the midterms.

KBC Securities The global stocks supervisor Andrea Gabellone stated that investors have also begun to adjust their positions in anticipation of the mid-term elections in the United States next week.

Gabellone indicates that: IPO's announcement is clearly beneficial to the entire AI industry, but the ultimate impact will still depend on how many investor demands it can attract, especially against the backdrop of the upcoming mid-term elections in the United States. Depending on the election results, the market's optimism regarding AI may be impacted, particularly if the Democratic Party wins outright. Today's market trend mainly reflects investors' cautious attitude before voting next week.

Morgan Stanley proclaims that the adjustment of U.S. stocks is coming to an end! Firmly holding onto the year-end target of 8,000 points for the S&P 500, identifying three key catalysts for a counterattack.

Michael Wilson, Morgan Stanley's chief equity market strategist, concluded in the latest research report that the internal adjustment of the U.S. stock market since June has entered the final stage, but the index may still experience one last round of decline.

Wilson stated that resolving three key uncertainties—AI related capital issues, the uncertainty of mid-term elections, and changes in Federal Reserve liquidity—is expected to help the market form a bottom, laying a significant foundation for the S&P 500 index to rebound to a record level near 8,000 points by the end of the year.

Morgan Stanley's composite sentiment indicator is currently at a neutral level, with third-quarter earnings expected to grow by 27% year-on-year. Based on this, Wilson maintains his judgment that as these key uncertainties become clearer over the coming weeks, there should be attractive buying opportunities in the market.

Has the window for increasing stock positions finally opened? Goldman Sachs maintains a 'overweight' position in stock assets.

A newly released research report by Goldman Sachs, focusing on market risk appetite and stock-bond allocation positions, titled " GOAL Kickstart ", indicates that the technology-driven risk reassessment has significantly reduced market congestion, but credit pressures have not yet eased. Earnings support, declining valuations, and reduced positions are still sufficient to support the "moderately pro-risk" ( Pro-risk ) asset allocation stance of Goldman Sachs' financial market strategists, who tend to be optimistic about the stock and government bond markets.

The report explains factors such as Goldman Sachs' exclusively compiled risk appetite indicator being reduced to -0.5, the decline in credit excess returns, the rebound of major government bonds, the pressure on European assets, and the leadership of quality and defensive styles within the same cross-asset framework, and verifies these findings through cross-validation with valuation, earnings revisions, capital flows, volatility, liquidity, and recession models.

Therefore, Goldman Sachs maintains its previously issued bullish ratings of 'overweight' for stock assets with a 3-month and 12-month time horizon.

Castle Investment Warning: The sell-off of tech stocks is just the first alarm bell; AI trading "has almost no room for error."

Noshad Shah, the head of fixed-income sales at Castle Investments ( Citadel EMEA ), stated that the selling of tech stocks indicates that investors' expectations for whether huge AI expenditures will ultimately generate sufficient profits are becoming increasingly high. "Given that the current economy and stock market are betting so heavily on AI transactions, there is almost no room for error once other risks begin to emerge."

Shah stated that trade policies, fiscal stimulus, and high energy prices have made the financing and operating costs of AI investments more expensive, while public opposition to data center construction may slow down project progress and drive up costs. He added that the United States has so far been able to withstand these pressures because profits and confidence remain strong. However, the ongoing decline in AI investment and financing may threaten the growth and household wealth that previously helped cushion higher costs.

Focus on Individual Stocks

Digital payment platform PayPal releases third-quarter financial report; revenue falls short of expectations, stock price drops 1%. The company reported revenue of $8.58 billion, while analysts from Reuters (LSEG) expected $8.71 billion. However, profits exceeded market expectations, and PayPal raised its full-year profit forecast.

Corning's third-quarter performance exceeded expectations, with its stock price rising by nearly 3%. Corning reported earnings per share of $0.91 on a non-special items basis and revenue of $5.08 billion; analysts surveyed by Reuters expected earnings per share of $0.88 and revenue of $5.02 billion.

United Parcel Service's financial report performance exceeded Wall Street's expectations, and the company also raised its full-year performance forecast, causing the stock price to rise by 1.6%. UPS expects total annual revenue to be around $92.6 billion, higher than the previous forecast of $91.2 billion; fourth-quarter revenue is expected to be $25.7 billion.

Despite weak local market demand, Coca-Cola raised its earnings forecast for the third consecutive quarter, with its stock price rising by 0.3%. Coca-Cola expects comparable earnings per share to increase by at least 11%, up from the previous forecast range of 9%-10%; it also expects organic revenue to grow by at least 5%, a slight upward revision from the previous estimate of about 5%.

Meta and NVIDIA announce plans to raise up to $95 billion for AI infrastructure investments, with NVIDIA participating in this investment. NVIDIA's stock price rose by 0.7%, while Meta's stock price fell by 0.3%.

In the third quarter, Ankao Technology, a chip packaging and testing company, fell short of analysts' expectations in both earnings and revenue, yet its stock price still rose by more than 3.5%. Ankao reported earnings per share of $0.76 and revenue of $1.99 billion; FactSet analysts expected earnings per share of $0.78 and revenue of $2.04 billion. The company also lowered its capital expenditure forecast for the current fiscal year to approximately $2.5 billion, from the previous range of $2.5 to $3 billion.

Royal Caribbean's third-quarter financial report exceeded analysts' expectations, with the stock price rising by 4.4%. After excluding certain items, the cruise operator reported earnings per share of $6.57, which is higher than FactSet's forecast of $6.38; the company also raised its full-year profit guidance for 2026.

Boeing's financial report led to a slight increase of 0.5% in its stock price. Although the reported loss exceeded expectations, revenue was higher than the consensus market forecast from Reuters.

Whirlpool's financial report and performance guidance fell short of expectations, causing the stock price to plummet by 7%. In the third quarter, Whirlpool reported a loss of $0.21 per share after adjustments, with revenue of $3.68 billion; Reuters analysts expected an adjusted earnings per share of $0.80 and revenue of $3.92 billion. The company has lowered its annual revenue forecast from $15 billion to $14.5 billion; it now expects an annual loss of $1.30 per share, whereas the market consensus is for a profit of $1.55 per share.

JetBlue Airways stated that despite fuel prices expected to rise by 85% year-on-year, the profit margin in the fourth quarter is expected to improve further, with the stock price soaring by over 11%. The company reported a loss of $0.60 per share after adjustments in the third quarter, while Reuters analysts expected a loss of $0.55 per share; revenue also fell slightly short of expectations.

Supply chain management company Celestica raised its full-year performance forecast, with its stock price soaring by nearly 15%. The company expects adjusted earnings per share to be $11.55, which is higher than the previous forecast of $11.30 and also exceeds the consensus forecast of $11.16 from FactSet.

Cade Electronics' third-quarter performance exceeded expectations, and the company raised its full-year revenue growth forecast; its stock price rose by 1.8%. Cade Electronics' adjusted earnings per share are $2.11, with revenue at $1.63 billion; Reuters analysts expect earnings per share to be $2.05 and revenue at $1.61 billion.

Responsible Editor: Guo Mingyu