Dow Futures are edging upward, as traders brace for the upcoming release of crucial inflation data and anticipate another round of bank earnings. Upcoming consumer price data may provide insight into the current inflationary landscape in the U.S. and could influence the direction of Federal Reserve interest-rate policy. Bank of America and Morgan Stanley are among the major financial institutions scheduled to report prior to the market opening, while ASML, a leader in chipmaking equipment, has raised its annual forecast. Additionally, Anthropic, known for its Claude model, is expected to reveal new revenue figures to its investors.
Dow futures remained predominantly above the neutral mark on Wednesday. By 02:55, the Dow futures contract had increased by 121 points, or 0.2%, S&P 500 futures had advanced by 13 points, or 0.2%, while Nasdaq 100 futures remained largely stable. The primary indices on Wall Street concluded the previous session in the red, influenced in part by ongoing uncertainties regarding the financial health of emerging artificial intelligence laboratories such as OpenAI and Anthropic. However, major AI hyperscalers outperformed, with analysts emphasising that these substantial technology firms are more inclined to finance their aspirations through operating cash flow, a potentially reassuring idea as concerns loom over an excess of debt-driven financing arrangements within the AI sector. “Our main issue with AI isn’t the technology’s utility or the outlook for token growth but instead OpenAI and Anthropic specifically and whether they can come public on the timelines and at the valuations anticipated by bulls,” the analysts wrote in a note. Meanwhile, traders were analysing an initial set of bank returns. Shares of JPMorgan Chase, the largest U.S. bank, experienced a slight decline following an unforeseen decrease in fixed-income trading revenue. Similarly, Goldman Sachs saw a dip as its fixed-income revenue fell short of expectations. Citigroup exhibited the most significant decline within the sector-tracking KBW Banks Index, experiencing a drop of 5.6%.
Markets are currently focusing on the crucial monthly U.S. consumer price index, which may provide valuable insights into the trajectory of Federal Reserve monetary policy for the remainder of the year. In the year leading up to September, it is anticipated that consumer price growth has increased to 3.6%, up from the prior rate of 3.4%. Month-on-month, the figure is accelerating to 0.6% from 0.4%. Core CPI, which excludes volatile components such as food and fuel, is anticipated to be at 2.5%, a modest increase from 2.4% in August. On a monthly basis, the figure is anticipated to decelerate to 0.2% from 0.3%. Alternative data source Truflation predicted that the “gap between headline and core is widening,” as persistently high energy prices, driven by an escalating Middle East conflict and assertive U.S. trade policies, pose a risk of renewed goods inflation. “The key risk is supply costs spreading into core inflation,” Truflation said. Last month, the Fed increased interest rates by a quarter of a percentage point, citing a need to address rising inflationary pressures. Bets have increased that the central bank will opt to leave borrowing costs unchanged at its next meeting later in October, although investors continue to anticipate a new hike at the Fed’s final gathering of the year in December.
On the earnings front, a new group of Wall Street lenders is set to announce their quarterly results. Bank of America, Morgan Stanley, and BlackRock are poised to take center stage, concluding a series of earnings that have initiated the most recent U.S. corporate reporting cycle. The analysts indicated that third-quarter returns from major banks have not been categorically “bad,” as the figures seem to meet the majority of expectations, notwithstanding a decline in fixed-income trading. However, they flagged a “fear that conditions now are as good as they will get for the industry.” To that end, JPMorgan CEO Jamie Dimon remarked on Tuesday that client activity “did moderate somewhat during the quarter.” Dimon noted that although the U.S. economy remains supported by robust business investment and persistent consumer spending, “large fiscal deficits, sticky inflation, elevated asset prices, rising interest rates and geopolitical conditions” are changing “under the surface.” And “These forces may be manageable, but we remain prepared for a wide range of outcomes,” Dimon stated.
ASML has raised its annual forecast for the third time this year, with the Dutch semiconductor giant emphasising its efforts to boost production of chipmaking equipment in response to the surging demand for AI infrastructure. Full-year sales are now anticipated to range from 44 billion euros to 45 billion euros, compared to the previous guidance of 43 billion euros to 45 billion euros. Gross margin, a key metric for assessing ASML’s profitability, is projected to be approximately 56%, an adjustment from the earlier forecast range of 54% to 56%. The enhanced forecasts seem to highlight a developing pattern within the AI sector: sustained demand for advanced chips and data centers, notwithstanding concerns regarding future funding structures for numerous firms. ASML CEO Christophe Fouquet indicated that the company’s clientele, which encompasses significant AI chip manufacturers such as Taiwan Semiconductor Manufacturing Co. and Samsung Electronics, are persistently raising their short- and medium-term equipment demand projections, “driven primarily by their views on the size and duration of AI-related investments.” Some clients are even placing orders as far ahead as 2029 and 2030, Fouquet added. Shares of ASML experienced an increase of over 2% during trading in Europe.
Elsewhere, Anthropic, the company behind the popular AI chatbot Claude, is set to disclose its third-quarter financial results for the first time later today, according to a source. Anthropic will disclose the figures to a cohort of institutional investors, as reported by the business news channel, referencing two individuals acquainted with the situation. Last week, a series of reports regarding the revenue of rival OpenAI ignited intense discussions and widespread confusion concerning the accounting practices employed by the ChatGPT creator, resulting in a pullback among chipmakers and the broader Nasdaq Composite.
