Morning Bid: Tech or treat

This transcript was produced with AI technology that converts speech to text. The text is not always reviewed or edited by Reuters journalists and some errors may occur. Today, tech stocks try to find their feet after a bruising October, with Apple reporting later. Speaker 2: Plus, Americans go to the polls tomorrow with energy markets wary about what happens after the midterms. Speaker 1: And as Fed officials signal more rate rises to come, an update on the US labor market is due this week. This is Reuters Morning Bid, bringing you unfiltered market news and analysis straight from the Reuters newsroom. I'm Anna Szymanski in London. Speaker 2: And I'm Mike Dolan. It's Monday, November 2. Speaker 1: Well, Mike, last week was a doozy, and this week looks like yet another one. We have so much on the docket. We have another spate of tech earnings. Again, we have Apple reporting today after, as we said up top, really, really bruising October, especially the end of the month. And obviously, we have midterm elections. I think, that's going to really be dominating everything. Yet, at the same time, we also have more economic data coming in that the Fed's going to be needing to chew on. So where do you want to start? Speaker 2: Well, it has to be said for a start that we have found some level first thing this morning. At least, Nasdaq futures are up a little bit. But look at what happened on Friday. It was extraordinary. That was the worst day for the Nasdaq since June. And within that, it came from the reports or the updates from Amazon and Intel on Thursday night. Intel fell almost 30%. Now, remember, Intel is partly owned by the government and is one of the key chipmaker stocks on the street. And that's a huge drop. And now, we have to look through this week, not just to Apple. But to AMD and other chipmakers to see whether that sort of chimes with what's going on. But let's just finish out October. October was an extraordinary month, not just for what happened on Friday, but for the whole series of rolling sell-offs we got in the AI space. And the Nasdaq, its entire loss for the month was the worst since March 2025. So, it tells you just the scale of what was going on. But at the same time, and this is really interesting because it's very concentrated, that sell-off in the tech space, that the equal-weighted S&P 500, which is where you adjust for the huge weights and market cap of those big tech firms, that actually was up 5% in October. So, you could see that sectors like healthcare, sectors certainly like energy, which we know for obvious reasons did very well in the last quarter, have really offset that big sell-off in tech. Now, to what degree can an ongoing sell-off in tech, if that's what we do see, stay isolated within that sector? Or to what extent does it affect the rest of the market and, of course, the rest of the economy? Now, they are the big questions for everybody, all investors going into the final quarter of the year, the final two months of the year. Speaker 1: And other questions, obviously, this week are going to be the outcome of the midterms. We've been talking about this for, it seems, practically two years at this point. And it really will be quite impactful for markets moving forward, because if the Democrats do take over the House and the Senate, we should say at this point the House looks much more likely than the Senate, it will have a significant impact on what President Trump can do moving forward. Speaker 2: There are a whole series of issues, not least regional and local issues that inevitably will now get decided over the next, well, tomorrow. But clearly the results of those elections probably will take two or three days to get final. And if the Senate, as you say, goes right to the wire, we could be waiting for a few days at least until we see whether there is a clean sweep of Congress as the betting markets and the polls are leaning towards right now. But as you say, that Senate race could go to the wire. Now will it make a difference for the bigger macro markets most people say for things like fiscal policy or overall certainly not foreign policy or indeed military policy then it's not going to shift the dial that very much but I think there's also a sense that this is the beginning of of a clock that goes all the way to 28, and while that is a long way out at this stage, what you have to consider is there are shifting political sands. And whether that is in terms of the debt ceiling issue that's coming up, for example, that's going to be interesting, to what extent does this push back against data centers is another issue. The whole heap of issues related to healthcare that will come back top of top of mind but the one most immediate issue for world markets I think is what President Trump has been saying for the last several weeks, that he will resume attacking Iran once the polls are over. Now, there have been reports overnight that said that he wants to wait a little bit longer. Axios is reporting this. He wants to wait a little bit longer to see if there is some mediation efforts that gain traction. He's communicated that to the Israelis, who, by all accounts, according to that report, don't seem very happy with that idea. But oil is down about 3% or 4%. Now, there's a rolling month from the futures that we have to be careful about reading from Friday to Monday on this score. But it is at least a sign that that real worry that there was an immediate attack after the polls tomorrow maybe is slightly less worrisome this morning. But we'll have to wait and see. That's a wild card. Speaker 1: And then finally, we're going to be getting jobs numbers this week. We're also going to be getting JOLTS data. So this will be more for the Fed to chew on as we look to a potential rate hike next month. Speaker 2: Well, as we said, one of the interesting things about the very big run-up in oil prices last week or so is that the bond market has shifted its attention. The bond market is now more concerned about whether a rollover in the AI story and the big tech sector will be damaging for the economy, and therefore yields have come down, even though oil prices are very high. So, that's an interesting dynamic and so that's where the payrolls number will come in very clearly as an input. But at the end of last week, we got several Fed officials on the speech circuit, making it very clear the Fed is set to hike again by the end of the year. By December, we are almost certain going to get another quarter point. And of course, this week alone, we will get more interest rate rises around the world. Certainly, the markets expect the Bank of England to raise interest rates on Thursday. And there are several other central banks meets as well. The Nordics, The Reserve Bank of Australia. So, that tightening idea, the idea of the cost of capital is going up. One of the things that's worrying the tech sector very much, not least the very high-risk part of the bond market, the junk bond market in particular, is under considerable stress through October. So, interest rate rises still are impactful, and they are still coming. And I think the payrolls number would have to be extremely weak to change that picture. Speaker 1: For today's recommended read, check out Ron Bousso's column on how Big Oil's spending caution speaks louder than its profits. The link is in the show notes. Speaker 2: For more of any of today's stories, head to Reuters.com or the Reuters app. Follow us on your favorite podcast player. And if you're on a smart speaker, just ask for the latest market news from Reuters. [This transcript was produced with AI technology that converts speech to text. The text is not reviewed or edited by Reuters journalists and some errors may occur.]

Morning Bid: Tech or treat

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