US Market Wrap: Stocks gain as tech earnings begin

• SNAPSHOT: Equities up, Treasuries down, Crude mixed, Dollar flat, Gold up.
• REAR VIEW: US State Department issues an ordered departure for non-emergency US government employees and their family members in Saudi Arabia only; US 20yr bond auction sees improvement from prior, yet still weak; US issues new Iran-related sanctions; US official said Russia accepted the US proposal for a trilateral meeting with Ukraine; Iran's FM said Iran is ready for diplomacy but sees little reason to expect progress now; SPCX earnings and guidance top expectations; NFLX falls on disappointing revenue growth and guidance; UK CPI leans hot; RBA's Hauser tilts hawkish.
• COMING UP: Data: US Jobless Claims (Oct/17), Australian PMI (Oct). Events: BoK Policy Announcement (Oct), CBRT Policy Announcement (Oct), SNB Minutes (Sep). Speakers: Riksbank’s Jansson. Supply: UK, US. Earnings: Lockheed Martin, Comcast, American Airlines, Blackstone, P&G, Valero Energy, Bloom Energy, Nokia, Thales, L'Oreal, Hermes, Nestle, Roche.

US stocks climbed, with SpaceX (SPCX +7.8%) beating earnings and guidance expectations, helping sentiment; Super Micro (SMCI +9.6%) also beat on earnings and sharply raised its Q1 outlook. Tech, Industrials and Financials led gains, while Communications was the worst performer, weighed on by continued underperformance in Alphabet (GOOGL -1.6%, Cleveland Research negative on Q3 and 2027) and Netflix (NFLX -5.3%) weakness on underwhelming Q3 revenue and guidance.

Shortly after crude settlement, oil prices rose in response to a Reuters report that the US State Department is preparing to issue an ordered departure of some personnel and family members at US embassies across the Gulf. This was later clarified as pertaining only to Saudi Arabia, an update that came alongside reports of attacks on Saudi Arabia's Shaybah oilfield, although the Saudis said operations are not affected. The move sparked broad risk-off, although equities managed to hold onto most of their gains into the close; T-notes settled lower before paring some of the move after settlement. The US 20-year bond auction was met with poor demand, tailing by 0.9bps, although the tail, as well as Direct and Indirect demand, improved from the prior auction.

Gold was hit by the short-lived geopolitical risk premium yet managed to recover to small gains at pixel time; meanwhile, the dollar was more or less flat against peers.

AUD outperformed on hawkish remarks from RBA Deputy Governor Hauser, while EUR remained weighed on by the French political unrest.

T-NOTE FUTURES (Z6) SETTLED 6+ TICKS LOWER AT 105-03+

Yields rose alongside oil on reports suggesting a resumption of a US-Iran conflict may be near. At settlement, 2-year +4.3bps at 4.823%, 3-year +4.2bps at 4.907%, 5-year +4.2bps at 4.969%, 7-year +3.7bps at 5.049%, 10-year +3.1bps at 5.142%, 20-year +1.8bps at 5.491%, 30-year +1.5bps at 5.437%.

THE DAY: Yields climbed across the curve, accelerating ahead of settlement on concerns that strikes between the US and Iran could resume soon. The initial move overnight and into Europe was lower for yields as equity futures were pressured. Thereafter, choppy trade ensued, but with less than 20 minutes to go until settlement, Reuters, citing US officials, reported that the US State Department is preparing to issue an ordered departure of some personnel at US embassies across the Gulf, amid a possible resumption of hostilities, particularly with the Houthis in Yemen. Post-settlement, US State Department issued an ordered departure for non-emergency US Government employees and their family members in Saudi Arabia only, not the whole Gulf. The curve was flatter, a function of the rise in short-end yields outpacing the long end, as near-term inflation expectations remain sticky on the elevated risk of a resumption of the US-Iran conflict.

In other news, US data was quiet, leaving the focus on the US 20-year bond auction. The results indicated another poor, longer-duration auction, highlighted by a 0.9bps tail, although metrics improved from the prior auction, with the tail narrowing from 2.0bps. Dealers' proportion of the bid fell to 10.3% from 16.9%, below the six-auction average of 11.9%. Directs rose to 31.6% from 30.7%, while Indirects rose to 58.2% from 52.5%, though remained below the 62.5% average.

Supply

• US sold USD 13bln of 20-year bonds; tailed by 0.9bps.
• US sold 17-wk bills at high-rate 4.155%, B/C 2.76x.

STIRs/OPERATIONS

• Fed Hike Pricing via CME FedWatch: Oct 3.7bps (prev. 4.3bps), Dec 25.3bps (prev. 25.3bps)
• EFFR at 3.88% (prev. 3.88%), volumes at USD 110bln (prev. USD 110bln) on October 20th
• SOFR at 3.88% (prev. 3.87%), volumes at USD 2.925tln (prev. USD 2.888tln) on October 20th
• NY Fed RRP op demand at USD 0.237bln (prev. USD 0.220bln) across 13 counterparties (prev. 1) on October 21st

WTI (Z6) SETTLED USD 0.67 LOWER AT 97.15/BBL; BRENT (Z6) SETTLED USD 0.03 HIGHER AT USD 108.82/BBL

The crude complex was mixed in two-way trade, as participants await any notable de- or re-escalatory action. On Wednesday, there were a few market-moving headlines, and benchmarks saw pressure as Iran's Foreign Minister Araghchi said Iran is ready for diplomacy but will defend itself, adding that the US has shown no willingness to reach an understanding and there is little reason to expect progress now. Following this, Al Hadath reported that Iran's Supreme National Security Council Secretary Rezaei informed Pakistan's Army Chief Munir of Iran's explicit rejection of the American demands. Furthermore, the US issued new Iran-related sanctions but also authorised the offloading of cargo from some blocked Iranian vessels, which participants cited as the trigger for crude hitting session lows. Note, this is a short grace period rather than relief: newly sanctioned ships have 30 days to safely wind down existing operations, after which they are fully cut off. The licence only permits the offloading of non-Iranian-origin cargo and bans delivery to Iran or Russia entirely. Elsewhere in the Middle East, Fars reported that a Houthi official said all negotiations have reached a deadlock because Saudi Arabia seeks to impose its demands on the Yemeni people, which they will not accept.

Still on geopolitics, but away from the Middle East, a US official said Russia accepted the US proposal for a trilateral meeting with Ukraine. On the supply side, Argus reported, citing sources, that Saudi Aramco facilities at Yanbu and Shaybah are undamaged, after the Houthis claimed they had hit the facilities with drones on Monday.

In the weekly EIA data, crude and gasoline saw larger draws than forecast, consistent with last night's private data, while distillates saw a surprise build. Crude production was down 410k BPD W/W to 13.269mln BPD, with the SPR falling to 282.7mln bbls (prev. 283.0mln bbls).

CLOSES: SPX +0.60% at 7,759, NDX +1.13% at 29,823, DJI +0.69% at 52,857, RUT +0.32% at 2,782

SECTORS: Communication services -1.33%, Real estate -0.79%, Consumer staples -0.59%, Health -0.45%, Materials +0.19%, Consumer discretionary +0.23%, Energy +0.28%, Utilities +0.37%, Financials +0.56%, Industrials +0.91%, Technology +1.61%.

EUROPEAN CLOSES: Euro Stoxx 50 +1.50% at 6,213, Dax 40 +1.35% at 25,647, FTSE 100 +0.19% at 10,753, CAC 40 +1.06% at 7,922, FTSE MIB +1.17% at 49,644, IBEX 35 +1.08% at 19,300, PSI +0.46% at 9,374, SMI +0.51% at 14,552, AEX +0.77% at 1,142

STOCK SPECIFICS:

• Super Micro Computer (SMCI): Sharply raised Q1 outlook on stronger AI platform demand & also lifted GM guidance.
• Netflix (NFLX): Guidance notably underwhelmed following slowest rev. growth in 3yrs.
• SpaceX (SPCX): Sharp increase in AI rev. drove a swing to profit & saw stronger-than-exp. rev & Starlink growth.
• United Airlines (UAL): EPS missed w/ dismal next Q guidance.
• AT&T (T): Post-paid net additions missed.
• Capital One (COF): EPS & rev. topped, NIM expanded & credit loss provisions declined.
• Moody's (MCO): Headline metrics disappointed.
• Philip Morris International (PM): FY bottom line guidance fell short.
• Abbott Laboratories (ABT): Plans to separate its Nutrition Business & reduced 2026 sales growth forecast.
• Cleveland Research earlier said Alphabet (GOOGL) Q3 trends slowed at quarter-end on mixed retail and softer ROI trends; 2027 advertising outlook lower on reduced enthusiasm for LLM monetisation ramp.

The Dollar Index was more or less flat as geopolitics dominated newsflow. The latest update is that the US State Department is preparing to order the departure of some personnel and family members from US embassies in Saudi Arabia. This comes amid renewed attacks on Saudi Aramco's Shaybah oilfield. Elsewhere, there was no tier-1 US data on Wednesday, as traders await a deluge of risk events next week. Earnings season remains in full flow, with Mag-7 reports from Meta and Tesla. ING writes that the dollar continues to trade with a soft undertone but no longer looks particularly stretched on short-term valuation metrics. ING added that the softer dollar backdrop has shifted the balance of risks somewhat further in a USD-bearish direction, but it still favours a gradual and orderly dollar decline rather than a sharper depreciation, as the broader Fed, oil and rates narrative remains supportive of the dollar.

G10 FX performance was mixed vs. the Greenback, with the Antipodeans outperforming. The AUD sat atop the pile, buoyed by hawkish remarks from RBA Deputy Governor Hauser, who said monetary policy is working, but the inflation outlook has deteriorated and appears worse than forecast.

CAD and GBP were little changed, with the latter digesting a slightly hotter-than-expected UK CPI print for September. This dataset, alongside the recent solid jobs report, should offer MPC members enough evidence that the UK economy is resilient enough to justify a hike in November.

CHF, JPY and EUR all posted mild losses vs. the Buck, with the single currency the slight laggard as it continues to be weighed on by the French fiscal situation, which remains front of mind, as well as the ongoing protests. For the Yen, BoJ Deputy Governor Himino remarked overnight that upside inflation risks remain high, warning that delays in adjusting monetary policy could allow those risks to materialise and harm the economy. In addition, Kyodo reported that the BoJ is expected to assess at its October 29th-30th meeting whether underlying inflation has reached 2%, while holding rates at 1.25%. As a reminder, reports yesterday said the BoJ is likely to hold in October but could signal a December hike, and may slightly raise its FY27 inflation forecast.

A daily wrap of this breadth is a retrospective rather than a single catalyst, and the threads here are familiar ones. The equity tape is being carried by early tech earnings with wide single-name dispersion: beats on AI-linked hardware demand are being rewarded, while any disappointment on revenue growth or guidance in the streaming and megacap cohort is being punished, a pattern typical of the opening week of earnings season when positioning is concentrated and the bar for the heavily owned names is highest. The geopolitical thread, an ordered embassy departure narrowed after the fact to Saudi Arabia plus unconfirmed strikes on Saudi facilities, follows the established script for Middle East risk headlines: an initial knee-jerk bid in crude, gold and at the long end, partial reversal once the scope is clarified, and residual premium only where physical supply disruption is actually confirmed, which Saudi statements here deny. The long-duration auction tailing, albeit less than the prior one, extends a recurring theme of weak sponsorship at the back of the curve even as indirect demand recovers. In FX, the Antipodean outperformance on hawkish RBA commentary and EUR's drag from French fiscal politics are both well-worn drivers, and the session fits the common pre-event pattern where markets hold ranges ahead of a dense run of central bank decisions and megacap reports. Worth noting in sessions of this kind is whether the geopolitical premium survives the clarification cycle into the next day and whether the early earnings dispersion broadens or resolves as the heavier reporters land.