Global stock markets edged higher on Friday while oil prices retreated. Earlier, U.S. President Donald Trump stated that the United States would not launch an attack on Iran before next month's midterm elections, easing some market concerns about short-term energy supply risks. With oil prices declining and worries about the sustainability of the artificial intelligence (AI) investment boom somewhat abating, the S&P 500 is poised to end a two-day losing streak and stage a rebound. As of press time, Dow futures were up 0.14%, S&P 500 futures were up 0.42%, and Nasdaq futures were up 0.88%. The pan-European STOXX 600 rose 1%, erasing a weekly decline that had reached as much as 1.3% at one point. In Asia, the MSCI Asia Pacific ex-Japan stock index gained 0.5%, though it could still post a weekly decline of about 0.7%. Japan's Nikkei 225 was roughly flat.

OpenAI News Eases Concerns

On Thursday, concerns surrounding OpenAI weighed on chip stocks, and related shares remained in the market spotlight on Friday. ChatGPT developer OpenAI disclosed to investors that its annualized revenue for September was close to $50 billion, below previously communicated expectations. However, the company's annualized revenue by year-end could reach or exceed $70 billion, easing market worries that its sales revenue would fall short of prior expectations. In U.S. premarket trading, an exchange-traded fund tracking semiconductor manufacturers rebounded 1.7%. Florian Ielpo, head of macro research at Lombard Odier, said: "Investors are becoming more selective when assessing AI company valuations. At the same time, as Treasury yields rise to higher levels, demand for government bonds has re-emerged."

French Bonds Hit Particularly Hard

U.S. Treasury prices resumed their decline. This followed a turbulent round of trading in the bond market that ultimately saw yields pull back from multi-decade highs. On Friday, the 10-year U.S. Treasury yield rose 2 basis points to 5.25%. European bond markets advanced, following the rebound in U.S. Treasuries late in the previous session, with French government bonds leading the gains. Earlier this week, France briefly became the focus of global investors as fiscal pressures and political deadlock sparked concerns. The yield spread between French and German government bonds narrowed after a record weekly widening. The extra yield investors demand to hold French 10-year bonds rather than German equivalents was about 136 basis points, and the spread was on track to narrow by nearly 5 basis points this week. France was hit especially hard in this round of global bond selling. With the 2027 presidential election approaching, investors are closely scrutinizing France's debt burden, fiscal deficit, and political outlook.

Trump Pledges No Attack on Iran

Brent crude fell below $103 per barrel. Earlier, U.S. President Donald Trump said the United States would not attack Iran before the midterm elections and stated that the U.S. and Tehran were engaged in "productive discussions." In the previous session, Brent crude briefly touched a two-week high amid concerns that Middle East tensions could escalate imminently. Rising oil prices have been a significant drag on stock market performance, as elevated energy prices keep concerns about the interest rate outlook alive, partially offsetting support from strong corporate earnings. Previously, solid corporate profits helped push the S&P 500 to a record high. Meanwhile, although optimism about AI persists, there remains significant uncertainty over which companies will ultimately reap substantial profits, especially against the backdrop of rising borrowing costs. Francisco Simon of Santander Asset Management said: "The main risk facing the AI trade is not necessarily a collapse in demand, but rather a gradual slowdown in growth or commercialization ability that ultimately fails to meet increasingly ambitious market expectations." He added: "Even incremental information could trigger an outsized market reaction."

Earnings Season in Focus Next Week

Santiago Mateo Yanguas of CaixaBank Asset Management said that as major U.S. banks unofficially kick off the third-quarter earnings season next week, corporate earnings performance will increasingly become the main driver of stock market moves rather than macroeconomic uncertainty. He said corporate earnings "will ultimately determine whether strong fundamentals can continue to support current equity valuations." Mary-Sol Michel of Swiss Life Banque Privée noted that a modest correction in September has already brought stock valuations back to relatively reasonable levels, suggesting the upcoming earnings season could provide support for the market. She said: "We expect the AI trade to remain the main market driver, as illustrated by the impact of OpenAI's latest revenue data. Of course, rising oil prices are intensifying inflationary pressures and pushing bond yields higher, but as the U.S. midterm elections approach, this situation is expected to ease to some extent."

AI Companies Launch New Wave of Debt Financing

Investors are also assessing a new round of financing plans in the technology sector. SpaceX, Broadcom, and Oracle are all expected to raise billions of dollars to purchase advanced AI chips. Nvidia-backed Australian data center operator Firmus shelved a planned $5 billion initial public offering (IPO) citing market volatility and said it would seek private financing instead. Rising energy costs, expectations of further central bank rate hikes, and concerns over growing government debt have combined to drive a months-long selloff in global bond markets, pushing borrowing costs ever higher. Charu Chanana, chief investment strategist at Saxo Bank, said: "With long-term government bond yields returning to near multi-decade highs, investors can no longer value AI companies' growth prospects using the logic of an era when capital costs were low." Chanana noted that rising sovereign bond yields, combined with increased debt financing by companies building AI infrastructure, mean capital is becoming "more expensive and more selective." This makes the robustness of corporate balance sheets and the quality of future earnings central to investor concerns.

The dollar was relatively stable but still on track for a fourth consecutive weekly gain. The euro was headed for a fifth straight weekly decline. EUR/USD traded near 1.123, close to a 17-month low touched earlier this week, as concerns over French debt continued to weigh on the euro. Gold prices rose more than 1% to around $4,191, briefly breaking above $4,200 during the session, supported by a slightly weaker dollar and retreating oil prices.

Waller's Hawkish Remarks Prompt Goldman to Raise Rate Hike Forecast: Possibly Two More, 25 Basis Points in December

After Federal Reserve Governor Christopher Waller delivered hawkish remarks at a central bank forum in Istanbul, Goldman Sachs chief economist Jan Hatzius said the Fed may choose to hike rates two more times rather than just once in December. Hatzius said in a report that two more hikes may be more appropriate, and the probability of only a December hike has declined. The analyst said Waller's speech marked a shift in his stance from previously emphasizing the three-month annualized core PCE inflation rate toward hawkishness, though Goldman still expects the Fed to hike another 25 basis points in December.

Bank of America: Investor Funds Flooding into Cash Assets, Trend Unlikely to Change Short-Term

Bank of America strategist Michael Hartnett said investors are pouring money into cash-like funds at the fastest pace since the COVID-19 pandemic, and this allocation trend is unlikely to change in the short term. In a Friday report, Hartnett noted that unless the Fed implements "massive monetary easing" and continues cutting rates, the large pool of sideline cash is expected to remain in money market funds. In the week through October 7, money market funds saw net inflows of $166.4 billion, the highest level since April 2020.

Featured Stocks

SpaceX rose 4% after announcing a deal to acquire an 800 MHz spectrum portfolio across the United States. The transaction is expected to enhance the capabilities of its Starlink Mobile business. Following SpaceX's spectrum acquisition announcement, telecom carrier stocks broadly declined in Friday premarket trading on concerns of intensified industry competition. T-Mobile US (TMUS) fell 7%, AT&T Inc (T) dropped nearly 6%, and Verizon (VZ) declined more than 5%. In contrast, tower operator stocks moved higher: American Tower (AMT) rose 6%, and Crown Castle (CCI) gained nearly 8%.

Airline operator Delta Air Lines (DAL) reported third-quarter earnings and saw its shares fall 4%. The company posted adjusted earnings per share of $1.72 and revenue of $17.59 billion. Analysts surveyed by LSEG expected EPS of $1.75 and revenue of $17.67 billion. The company said elevated fuel costs continued to weigh on its business outlook and lowered its full-year profit guidance.

In Friday premarket trading, a large group of AI supply chain-related companies saw their shares rise. This followed broad declines in the sector on Thursday after news that OpenAI's annualized revenue was below earlier reports. CoreWeave rose 2.5%, while Oracle (ORCL) and Broadcom (AVGO) each gained 1.5%. Lumentum jumped 6% after news that its optical component capacity is fully booked through 2029. An executive said that for some products, as much as 70% of market demand will go unmet by next year.

Insurance stocks swung sharply after the Centers for Medicare & Medicaid Services (CMS) released federal Medicare plan quality ratings for this fall's open enrollment season. Humana's largest Medicare Advantage contract received a ratings upgrade, sending its shares surging 14%, while Alignment Healthcare (ALHC) plunged 23%.

Apple (AAPL) fell more than 2% after cutting component orders for the iPhone 18 Pro due to weaker-than-expected demand. Nikkei reported that October production orders for the model and the iPhone 18 Pro Max were cut by 15% from the original plan.

Aerospace composite manufacturer Park Aerospace Corp (PKE) gave back earlier gains and fell 2.5%. It reported second-quarter EPS of $0.21 and revenue of $20.8 million, compared with EPS of $0.12 and revenue of $16.4 million in the same period last year.

Gold prices were poised for their first weekly gain in three weeks, lifting mining company Freeport-McMoRan (FCX) by 2.5%. Gold futures rose 1% on Friday.