The global sell-off deepens: Nasdaq 100 futures fall 1.76% (526 points) to 29,296.20, S&P 500 1.05% to 7,676.20, and Dow Jones 0.71% to 52,480.60, while volatility indicators rise (VIX 18.78, +2.97%). European futures are down between 0.4% and 1.8%, and Asian futures are declining sharply, ahead of the Wall Street open. Meanwhile, JPMorgan believes the sell-off may be nearing its end as most long positions in chips have been unwound.
Futures contracts: The numbers
America: Nasdaq 100 -1.76% (29,296.20), S&P 500 -1.05% (7,676.20), Dow -0.71% (52,480.60), Russell 2000 -0.72% (2,761.10), VIX +2.97% (18.78).
Europe: DAX -0.96% (25,522), CAC 40 -1.40% (7,831), Euro Stoxx 50 -1.55% (6,124), FTSE MIB -1.81% (48,450), IBEX 35 -1.62% (18,959), FTSE 100 -0.40% (10,744.30), Swiss 20 -0.26% (14,508.50).
Asia: Nikkei down about -2.4%, Hang Seng down about -2.7%, Kospi down about -2.6%, and the CSI 300 is approaching bear market territory.
The region: TASI -1.9% (9,736), and EGX30 around -3% (a loss of EGP 111 billion in market capitalization).
Commodities and cryptocurrencies: Gold -1.3% (4,086), Brent +3% (around $112), and Bitcoin -3.4% in the morning.
Context: The Nasdaq 100 had risen 2.2% this week before today's losses threatened to wipe out most of it, and is now about 6.6% below its 52-week high of 31,363.7.
Earnings of the giants: Tesla cut its annual capital spending (-5.3% before the open), Meta (-1.9%) announced new non-voting shares to fund the AI race, and IBM fell 5.7% despite raising its software outlook and exceeding expectations with its results.
Chips: Lam Research fell more than 7% after a weaker-than-expected forecast, Intel -5.1%, AMD, Qualcomm, Broadcom, Micron and Marvel losses ranged between 2.9% and 5.3%, Nvidia -2.4% and Amazon -1.6%.
Profit-taking: SpaceX (-2.3%) and Super Micro (-4.7%) declined after Wednesday's jumps.
Oil: Brent crude rebounded to around $112, raising concerns about inflation and borrowing costs.
The focus has shifted: from profits to the cost of building and financing artificial intelligence, according to Reuters.
JP Morgan: Is the sale nearing its end?
The argument: The team of Nikolaos Panigirtzoglou (October 22) believes that the decline in the chip sector indicates that most long positions have been unwound, including momentum speculator positions, and that this adjustment may have limited the scope for further declines, although short-term headwinds remain.
Cloud computing financing: The team acknowledges funding pressures on some new companies, but believes that strong demand for computing allows them to pass on the increased cost of financing to customers, and that the time mismatch between spending and revenue will not disrupt the growth cycle. The team's own reservations: A few days ago (October 16), they stated that they do not expect a rapid rebound like the one in July, due to weak buying on dips, slower share buybacks, limited short positions, and high leverage in funds.
Matyjka’s reading (October 21): The recovery could extend into the end of the year if bond yields stabilize, with the S&P 500 at around 19.1 times expected earnings compared to 21.7 times at the start of the year, and the share of companies with accelerated earnings growth near its highest level.
Our reading: The message is not a buy call, but rather that the raised positions have been largely cleared; however, the current decline comes after the earnings, not before them, and the VIX is still below 20 (an orderly decline), and any rebound needs stable returns and oil.
