Stock futures are sliding this morning after a three-day winning streak. Tech is leading the declines. Tesla beat on profits but shares are falling after lowering its long-term sales goal. Meta topped expectations but its stock is slipping. Brent crude is above $110 after reports of planned US and Israel strikes on Iran. Joining me is Michael Reinking, Senior Strategist at the New York Stock Exchange. Mike, thanks for being back.
Good morning. Thanks for having me.
Is the AI selloff over?
No — definitely not. Futures are down around 1%, giving back the week’s gains. The tech trade is clearly under pressure. We are seeing pretty broad-based weakness — part geopolitics and oil prices, part the ongoing concern around the longevity of AI spending. Companies that need to access capital have been under pressure.
How high can rates go before they really impact stocks?
The repricing from end of August to mid-October is part of why markets have been wobbling. This morning yields are pulling back — a flight to safety. That can soften the blow. But it is not happening because inflation expectations are moving lower — it is concern around geopolitics and the idea that if the capital spigot closes for AI, that impacts CapEx spending throughout the economy.
Oil is back above $100 — how big a risk is that for inflation?
We are hovering near recent highs. There is talk of escalation after midterms. If we see a Democratic sweep and escalation, oil could push higher from here — adding to inflationary pressure on a consumer already stretched from years of cumulative inflation, right ahead of the holiday season.
How will this impact holiday spending?
The consumer has been more resilient than expected. But the wealth effect has been a very big driver of that spending. If we start to see a more serious pullback in equity markets, that could bleed into consumer spending numbers as we get toward year end.
Tesla and Meta both beat but stocks fell. Why?
Investors look past the numbers and focus on forward guidance. Meta has been one of the few companies showing real AI monetisation through its ad business. But there is concern that Meta will need to do capital raising to finance all that CapEx. That goes back to the bigger overarching concern: bridging the gap between all the spending now and when we actually see the return on investment.
Mike, thanks so much for joining us.
Thanks for having me. We will see you again soon.
