Futures contracts linked to major US stock indices rose broadly as traders awaited key inflation data and the latest batch of bank earnings reports. The upcoming consumer price index data could reveal the trajectory of US inflation and potentially influence the Federal Reserve's interest rate policy. Bank of America and Morgan Stanley are among the major banks scheduled to report their results before the market opens, while chip-making equipment giant ASML raised its annual forecast, and Anthropic, the developer of the artificial intelligence model Cloud, is set to release its latest revenue figures to investors.
Futures contracts are generally rising
U.S. stock futures were generally trading above the breakeven line on Wednesday. By 9:55 a.m., Dow Jones futures were up 121 points, or 0.2%, S&P 500 futures were up 13 points, or 0.2%, and Nasdaq 100 futures were largely flat.
Major Wall Street indexes closed lower in the previous session, weighed down in part by ongoing questions about the financial health of frontier AI labs like OpenAI and Anthropic. However, the largest AI companies outperformed, with analysts at Vital Knowledge suggesting that these tech giants are more likely to fund their ambitions through operating cash flow, which could alleviate concerns about debt-backed financing in the AI sector.
Vital Knowledge analysts wrote in a research note: “Our main problem with AI is not the viability of the technology or the growth prospects of the tokens, but rather specifically with OpenAI and Anthropic, and whether they will be able to go public on the timelines and at the valuations that optimists expect.”
Meanwhile, traders were digesting the first wave of bank earnings reports. Shares of JPMorgan Chase & Co., the largest U.S. bank, fell after an unexpected drop in fixed-income trading revenue, while Goldman Sachs Inc. shares also declined after its fixed-income revenue came in below expectations. Citigroup Inc. was the worst performer on the KBW Banking Index, with its shares plunging 5.6%.
Consumer price data on the front page
Markets are now turning their attention to the crucial monthly US Consumer Price Index, which could shed light on the Federal Reserve's monetary policy path for the rest of the year.
Consumer price growth is expected to have accelerated year-on-year to 3.6% through September, compared to 3.4% in the previous period. On a monthly basis, the figure is expected to rise to 0.6% from 0.4%.
The core consumer price index, which excludes volatile items such as food and fuel, is expected to reach 2.5%, slightly higher than the 2.4% recorded in August. On a monthly basis, it is expected to slow to 0.2% from 0.3%.
Alternative data source Truflation predicted that the gap between the headline and core indices is widening, as energy prices continue to rise due to escalating tensions in the Middle East and tough US trade policies, threatening a new wave of inflation in the commodities sector.
Truflation said: The main risk is that supply-cost pressures will translate into core inflation.
Last month, the Federal Reserve raised interest rates by a quarter of a percentage point, citing its desire to curb rising inflationary pressures. Bets have increased that the central bank will choose to leave borrowing costs unchanged at its next meeting in late October, although investors still expect another rate hike at the Fed's final meeting of the year in December.
advertisement
More Wall Street banks announce their results
On the earnings front, a new group of Wall Street banks is preparing to announce their quarterly results.
Bank of America, Morgan Stanley, and BlackRock Inc. are leading the pack, bringing the curtain down on the current US earnings season.
Analysts at Vital Knowledge noted that the third-quarter results for major banks were not necessarily bad, with most figures appearing satisfactory, except for weakness in fixed-income trading. However, they cautioned that the current situation may be the best it has been for the sector.
In this context, JPMorgan Chase & Co. CEO Jamie Dimon noted on Tuesday that client activity declined relatively during the quarter.
Dimon added that while the U.S. economy continues to benefit from strong business investment and sustained consumer spending, large fiscal deficits, persistent inflation, rising asset prices, escalating interest rates, and geopolitical conditions are shifting beneath the surface.
Damon said: These factors may be manageable, but we remain prepared for a wide range of scenarios.
ASML raises expectations
ASML raised its annual forecast for the third time this year, confirming its commitment to increasing production of chip manufacturing equipment to meet growing demand for artificial intelligence infrastructure.
The projected annual sales are now between 44 billion euros and 45 billion euros, compared to previous guidance of between 43 billion euros and 45 billion euros.
The gross profit margin, which investors use to measure ASML's profitability, is estimated at around 56%, compared to previous expectations ranging between 54% and 56%.
These improved forecasts appear to reinforce an emerging trend in the artificial intelligence sector, namely continued strong demand for advanced chips and data centers despite concerns about the future financing arrangements of many companies.
ASML CEO Christophe Fouquet said the company's customers, including major AI chip manufacturers such as Taiwan Semiconductor Manufacturing Co. and Samsung Electronics, continue to raise their short- and medium-term equipment demand forecasts, driven primarily by their estimates of the scale and duration of AI-related investments. Fouquet added that some customers are now placing orders with time horizons extending to 2029 and 2030.
ASML shares rose by more than 2% in European trading.
Anthropic is preparing to reveal its revenue figures - reports
In a separate development, Anthropic, the developer of the popular smart chatbot Claude, plans to release its third-quarter financial results for the first time later today, according to CNBC.
The news channel, which specializes in economic affairs, indicated that Anthropic will reveal these figures to a group of institutional investors, citing two sources familiar with the matter.
Bloomberg News was the first to report on the meeting, which comes as Anthropic prepares for what could be an exceptional initial public offering.
Last week, multiple reports about the revenue of its rival OpenAI sparked widespread controversy and uncertainty about the accounting methods of the ChatGPT developer, triggering a sell-off in chip stocks and the Nasdaq Composite Index more broadly.
