By Shashwat Chauhan and Utkarsh Hathi
Oct 26 (Reuters) – US stock index futures were little changed on Monday as investors weighed a retreat in crude oil prices while bracing for a week dominated by corporate earnings and the Federal Reserve’s interest-rate decision.
About one-third of S&P 500 companies are scheduled to report earnings this week, including hyperscalers Alphabet, Microsoft and Amazon.com, whose results would be closely watched for signs that hefty AI investments are paying off.
The focus follows a muted reception to earnings from AI-linked megacaps last week. Meta disappointed investors after raising its annual AI spending forecast again and said it would sell new stock to help pay for it, while Tesla also came under pressure after its results.
“Strong AI demand alone may no longer be enough. Markets want evidence of monetization, margins and cash flow,” said Charu Chanana, chief investment strategist at Saxo.
Meta shares fell 1.4% in premarket trading after it launched a $35 billion stock offering.
The AI trade has come under pressure this month amid concerns that debt-funded spending may become harder to justify in the face of rising borrowing costs. Neocloud firms CoreWeave and Nebius have each lost more than 30% of their market value in October.
CoreWeave and Nebius slipped 5.4% and 3.9%, respectively, on Monday after Elon Musk said in an X post markets have “almost entirely shut off access to money” for companies without substantial revenue independent of AI data centers, and predicted neocloud consolidation.
Musk also said SpaceX would not buy any neocloud firms, calling that “pointless”. IREN and Applied Digital also dropped more than 3% each.
At 07:05 a.m. ET, Dow E-minis were up 193 points, or 0.37%, S&P 500 E-minis were up 5 points, or 0.07%, and Nasdaq 100 E-minis were down 18.75 points, or 0.06%.
Crude oil prices eased after hitting a near six-month high last week. On Sunday, Qatari mediators traveled to Tehran as part of an effort to de-escalate regional tensions in coordination with the United States.
While concerns over higher bond yields and energy costs linked to Middle East tensions have rattled markets in recent weeks, expectations remain high for a robust earnings season.
Most megacap and growth have stocks gained after the S&P 500 posted losses for the last two weeks. Tesla rose 1.9% after Barclays upgraded its rating on the stock to “overweight” from “equal-weight”.
EYES ON THE FED AND MIDTERMS
The Fed’s rate decision is due on Wednesday, with a pause widely expected after its September hike. Traders still see a December hike as firmly possible, and at least two 25-basis-point increases by mid-2027, according to LSEG data.
Both the Fed’s preferred inflation gauge, the Personal Consumption Expenditures index for September, and third-quarter GDP, expected to show 3.2% growth, are due on Thursday.
Investors are also monitoring the November 3 midterm elections, which will decide control of the US Congress.
Among other movers, US-listed shares of Brazilian companies tumbled after President Luiz Inacio Lula da Silva won a historic fourth term on Sunday, in a shock result that defied polls. The iShares Brazil ETF slumped almost 26%.
(Reporting by Shashwat Chauhan and Utkarsh Hathi in Bengaluru; Editing by Shilpi Majumdar)
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