Today
North American markets are looking to recover some of Friday’s losses, with futures pointing higher across the Nasdaq, S&P 500 and TSX. Friday’s selloff was led by the Nasdaq, which fell -2.9%, followed by the S&P 500 at -1.8% and TSX at -1.7%. The decline capped a difficult month for tech stocks, with Nasdaq losing -5.3%, its worst monthly performance since March 2025. Investors will have more earnings to digest this week, including results from Apple and Palantir after the close today, with AI spending and returns likely to remain in focus. Beyond earnings, it’s a busy week for economic data and politics, headlined by tomorrow’s U.S. midterm elections. Trump is scheduled to deliver his final remarks at the Lincoln Memorial at 2 p.m. ET today. A recent Marist poll gives Democrats an eight-point lead among likely voters, although past elections have exposed the limitations of polling, especially when it comes to measuring Trump’s support. Turnout among his loyal base and redistricting could potentially add to the uncertainty. According to Gallup, the economy, healthcare and the war with Iran rank among voters’ top concerns, while dissatisfaction with government is another source of frustration. For investors, the key question is whether Republicans retain control of Congress or face a divided government, potentially limiting Trump’s legislative agenda.
The recent selloff in AI and semiconductor stocks has erased $5 tln in market cap since October 6, with Nvidia and Alphabet each losing over $800 bln, although the broader market has shown resilience as other large U.S. companies collectively gained $1.3 tln. Despite the tech sector’s weakness, market breadth has improved, with nine of the S&P 500’s 11 sectors advancing at least 1% during the final week of October, suggesting investors are rotating into other areas rather than abandoning equities altogether. Historical seasonal trends provide a potentially encouraging outlook, as the S&P 500 has risen in all 19 periods from the end of October in a midterm election year through the following June since 1950, generating a median return of 15%, while semiconductor stocks have posted a median gain of 22% across eight comparable periods since 1994.
Mark Carney and Donald Trump have renewed discussions on a potential trade agreement, with both governments indicating that negotiations will continue over the coming weeks. Carney described recent conversations as constructive while emphasizing that any agreement should support job creation, improve affordability, and respect Canada’s sovereignty. The White House also showed some support for continued engagement, suggesting that both sides are interested in reaching an agreement despite the breakdown of negotiations in August. The renewed discussions come just ahead of the U.S. midterm elections, although Carney has suggested that the results are unlikely to change Trump’s trade policy approach. This comes as Canada continues to pursue trade diversification, including strengthening economic ties with the EU to help reduce dependence on the U.S.
Investor sentiment toward AI and tech stocks has fallen following disappointing earnings from major tech companies. Despite continued strength in cloud computing demand, investors seem more focused on deteriorating free cash flow, with Amazon reporting a $35 bln quarterly deficit, while Alphabet and Meta also generated negative free cash flow as capital expenditures grew. Alphabet shares declined -13% following weaker-than-expected search advertising revenue and a second consecutive quarter of negative free cash flow, raising concerns that AI-powered search could undermine the profitability of its advertising business. Meta has also faced pressure following increased spending commitments, with its shares declining -12% since its October 21 earnings report. Weakness has also spread into the software sector, where investors are questioning the long-term pricing power and competitive positioning of established companies as AI alternatives pop up, contributing to selloffs in ServiceNow, Fortinet, and Twilio. With $800 bln in AI-related capital spending this year and massive future commitments, investors want evidence that these investments can generate sustainable revenue growth, attractive returns on invested capital, and positive cash flow.
The world’s five largest publicly traded oil companies, ExxonMobil, Chevron, BP, Shell, and TotalEnergies, reported combined adjusted Q3 earnings of $56.3 bln, their third-highest quarterly total on record, as geopolitical conflicts in the Middle East and Russia drove energy prices higher and refining margins to new levels. International oil prices have risen nearly 60% since the U.S. and Israel launched military strikes on Iran in February, while disruptions affecting 10% of global refining capacity have created profitability gains for companies with operational facilities. ExxonMobil’s refining division generated a record $9.05 bln in quarterly profit, nearly five times the prior-year level, while Chevron’s refining earnings reached a record $4.93 bln, about four times higher than last year, helping both companies exceed analysts’ earnings expectations. Despite the huge windfall, management teams have maintained disciplined capital allocation strategies, with ExxonMobil preserving its $20 bln annual share repurchase program and increasing its dividend for the 44th consecutive year, while Chevron prioritized debt reduction rather than fast-tracking buybacks. The companies are also pursuing longer-term production and infrastructure investments, including Chevron’s expansion in Venezuela and BP’s exploration opportunities in Brazil and West Africa.
Dan vs Dan. A federal judge has dismissed the U.S. Department of Justice’s lawsuit that would look to delay certification of Alaska’s Senate election. The dispute began when an independent candidate decided to run for senate, who just so happens to have the same name as the incumbent Republican Senator, Dan Sullivan. Republicans alleged that the Democratic nominee Mary Peltola’s campaign helped recruit the new Dan Sullivan to divert votes from the incumbent, although those allegations have been denied. The Justice Department was looking to prevent certification if the incumbent lost and if votes cast for the other Dan Sullivan had the power to change the election outcome. The ruling came just two days before the midterm elections, with Alaska’s competitive Senate race potentially playing an important role in determining which party controls the Senate.
Diversion:
Easy does it
