Other companies reporting earnings are Abbott Laboratories, Prologis, US Bancorp, Synchrony Financial, and Citizens Financial Group. Later, CSX, Kinder Morgan, Crown Castle, and PPG Industries will release their results post-market. In the days ahead, Netflix, Procter & Gamble, and American Express will also unveil their financial performance.

Investors are eagerly awaiting Thursday's retail sales data for September, hoping to get some clues about the Fed's monetary policy. Traders are giving a 93% chance that the Federal Reserve will cut interest rates by 25 bps in November, according to CME Group's FedWatch tool.

The semiconductor sector is trying to bounce back after a sharp decline due to ASML's warning. Yesterday's session highlighted the increasing importance of quarterly corporate results in mid-October. Initially, things looked promising as U.S. investment banks, which typically kick off the earnings season, delivered some pleasant surprises. Analysts hadn't fully anticipated the gains made by financial intermediaries amid summer's market volatility, which led to numerous billable transactions. Goldman Sachs, Bank of America, JPMorgan Chase, and Citigroup all benefited.

But then came the twist. ASML's press release caught the market off guard. The Dutch company, which controls 90% of the world's advanced chip production machines, is a key indicator of the semiconductor industry's health. It's also Europe's second-largest company by market capitalization, trailing Novo Nordisk and ahead of LVMH. Well, it was second until its stock plummeted 16% yesterday, falling behind the French luxury giant. ASML announced that its 2025 sales would be significantly lower than expected. This was a shock for an industry whose high valuation hinges on perpetual growth. Moreover, the timing was unusual, as the announcement was made during trading hours, contrary to the norm of releasing major news outside market hours. This technical mishap led to a premature disclosure.

The Nasdaq's reaction was swift, with the semiconductor sector taking a hit, as seen with Nvidia's -4.7% and AMD's -5%. ASML's announcement gave ammunition to those who believe the chip and AI hype is fading. However, critics argue that the chip boom isn't over, attributing the issue to production overcapacity from foundries rushing to avoid shortages. The truth likely lies somewhere between these opposing views. The decline of Europe's second (or third, depending on the day) largest company is a negative signal for the market. Especially if the third (or second, again depending on the day) is also struggling.

Enter LVMH, which released disappointing quarterly figures last night. Sales are declining, which is rare, and key markets like Japan are weakening. LVMH shares, traded in New York when Paris is closed, dropped 7.6% yesterday. Overall, major Western indices lost ground yesterday: the Euro Stoxx 50 fell by 1.9%.

On the macroeconomic front, Donald Trump gave an extensive interview to Bloomberg. Markets noted the former president's firm stance on imposing hefty tariffs, which strengthened the dollar and lowered Treasury yields. This rigidity also pressured Chinese indices this morning. In China, the announcement race continues, contrasting with the authorities' silence over the past two years. After the finance minister's appearance on Saturday, Beijing is now sending its housing minister to the forefront. Rumor has it he will announce details of a real estate support plan tomorrow.

In Asia Pacific, tech-heavy markets like Taiwan, South Korea, and Japan fell over 1% following ASML's news. China initially dipped but recovered slightly due to the promise of more details on the real estate support plan tomorrow. Hong Kong's Hang Seng edged down 0.1%. India and Australia ended in the red. European indices are bearish, and Wall Street futures are hovering near zero.

Today's economic highlights:

Few indicators today, apart from UK September inflation. The full agenda is here.

The dollar is worth EUR 0.9185 and GBP 0.7685. The ounce of gold is up to USD 2,681. Oil fell, with North Sea Brent at USD 74.23 a barrel and US light crude WTI at USD 70.07. The yield on 10-year US debt is down to 4.01%. Bitcoin is rising to USD 67,900.

In corporate news :

  • United Airlines posted better-than-expected third-quarter earnings, with revenue growth of 2.5%.
  • Omnicom Group's stock dropped after reporting its third-quarter results.
  • JB Hunt Transport Services posted better-than-expected earnings.
  • Morgan Stanley topped expectations in third quarter. Net income soared by 34% to $3.03 billion.
  • Interactive Brokers lost 4% after its quarterly results.
  • Qualcomm may wait until after the US presidential election to make a bid for Intel, according to rumors quoted by Bloomberg.
  • Boeing raises $35 billion in funds, while the strike affects its finances.
  • Intel and AMD join forces to face growing challenge from ARM Holdings.
  • Meta faces lawsuits from U.S. states accusing it of encouraging social media addiction among teens, a California federal judge ruled Tuesday.
  • Walgreens will close 1,200 stores as part of its turnaround efforts.
  • KKR is set to launch the sale of Goodpack, valued at around $1.8 billion.

Today's main earnings reports: Abbott, Morgan Stanley, Prologis, US Bancorp, CSX Corporation, Kinder Morgan, Crown Castle, Equifax, Barrick Gold Corporation, Discover Financial Services, PPG Industries, Las Vegas Sands...

Analyst recommendations:

  • Cisco Systems, Inc.: Citi upgrades to buy from neutral with a price target raised from USD 52 to USD 62.
  • Enphase Energy, Inc.: Truist Securities downgrades to hold from buy with a price target reduced from USD 130 to USD 110.
  • Masimo Corporation: Baptista Research downgrades to hold from outperform with a target price of USD 158.40.
  • Omnicom Group., Inc.: Wells Fargo downgrades to equalweight from overweight with a price target raised from USD 106 to USD 110.
  • Philip Morris International, Inc.: SBG Securities (Pty) Ltd drops coverage on the stock.
  • Universal Health Services, Inc.: TD Cowen upgrades to buy from hold with a price target raised from USD 220 to USD 283.
  • W.W. Grainger, Inc.: Baird upgrades to outperform from neutral with a price target raised from USD 975 to USD 1230.
  • Wesco International, Inc.: Baird upgrades to outperform from neutral with a price target raised from USD 172 to USD 215.
  • Yum! Brands, Inc.: TD Cowen downgrades to hold from buy with a target price reduced from USD 156 to USD 145.
  • 3M Company: Mizuho Securities maintains a neutral recommendation with a price target raised from 105 to USD 146.
  • Fiserv, Inc.: Jefferies remains at hold with a price target raised from USD 160 to USD 195.
  • Generac Holdings, Inc.: Truist Securities maintains its buy recommendation and raises the target price from USD 170 to USD 210.
  • Gilead Sciences, Inc.: DBS Bank maintains its buy recommendation and raises the target price from USD 74 to USD 100.
  • Nextracker Inc.: Truist Securities maintains its buy recommendation and reduces the target price from USD 65 to USD 50.
  • Penumbra, Inc.: Canaccord Genuity maintains a buy recommendation and raises the target price from USD 176 to USD 235.
  • Rivian Automotive, Inc.: Truist Securities maintains its hold recommendation with a price target reduced from USD 16 to USD 12.
  • Servicenow, Inc.: Jefferies maintains its buy recommendation and raises the target price from USD 900 to USD 1100.
  • The Ensign Group, Inc.: Baptista Research maintains its hold recommendation with a price target raised from 129 to USD 158.40.
  • United Airlines Holdings, Inc.: Redburn Atlantic maintains its buy recommendation and raises the target price from 70 to USD 85.
  • WEC Energy Group, Inc.: Mizuho Securities maintains its outperform recommendation and raises the target price from USD 86 to USD 105.
  • Moonpig Group Plc: Panmure Liberum upgrades to buy from hold with a price target raised from GBX 170 to GBX 390.
  • Wise Plc: AlphaValue/Baader Europe downgrades to add from buy with a target price reduced from GBX 975 to GBX 790.