Stocks Rally on Positive AI News, with SpaceX up +7%

The S&P 500 Index ($SPX) (SPY) rose +0.59% on Wednesday, the Dow Jones Industrial Average ($DOWI) (DIA) rose +0.69%, and the Nasdaq 100 Index ($IUXX) (QQQ) rose +1.13%.  December E-mini S&P futures (ESZ26) rose +0.62%, and December E-mini Nasdaq futures (NQZ26) rose +1.15%.

Stocks saw support Wednesday from improved AI sentiment after better-than-expected sales from SpaceX (SPCX) and server company Super Micro Computer (SMCI). SpaceX rallied more than +7% on Wednesday.

Meta (META) and Tesla (TSLA) rallied in after-market trading on Wednesday after their respective earnings reports topped expectations.

Stocks saw support during Wednesday’s session as crude oil prices traded lower most of the day.  However, stocks were undercut in the afternoon as oil prices rallied in post-close trading after a Reuters report said the US State Department is preparing to order the departure of some personnel and family members from US embassies across the Persian Gulf region.  US State Department spokesman Tommy Pigott later said the order applied only to non-emergency US government employees and their family members in Saudi Arabia due to Houthi threats to civilian targets in Saudi Arabia.  The warning raised some market suspicions that a US military attack on Houthi militia in Yemen could be in the works, since Saudi Arabia would be the focus of any Houthi counterattack. 

Stocks are supported by the prospect of solid quarterly earnings. According to data compiled by Bloomberg Intelligence, Q3 S&P 500 earnings are expected to climb by +25% from a year earlier, up from a July estimate of 22%.  As of Tuesday, 60 of the S&P 500 companies have reported results, with 83% beating estimates.

Markets are discounting a 15% chance of a +25 bp Fed rate hike at the next FOMC meeting on October 27-28.

Overseas stock markets closed mixed on Wednesday.  The Euro Stoxx 50 closed up +1.40%.  China's Shanghai Composite closed down -0.60%.  Japan's Nikkei-225 Stock Average closed up +0.85%.

Interest Rates

December 10-year T-notes (ZNZ6) on Wednesday fell -2.5 ticks.  The 10-year T-note yield rose by +1.1 bp to 5.119%.  T-note prices were undercut by the post-close rally in oil prices after the  Reuters report said the US State Department is preparing to evacuate US embassy personnel in the Persian Gulf region.  The 10-year break-even inflation expectations rate rose +1.1 bp to 2.369%.

European government bond yields were mixed.  The 10-year German bund yield rose +2.1 bp to 3.421%.  The 10-year UK gilt yield fell -3.3 bp to 5.378%.

Markets are discounting a 6% chance of a +25 bp ECB rate hike at the ECB’s next meeting on October 29.

US Stock Movers

The Magnificent Seven closed mixed on Wednesday.  Leaders were Tesla (TSLA) and Meta (META), while the laggard was Alphabet (GOOGL) with a decline of -1.5%.

SpaceX (SPCX) rallied +7.8% after reporting better-than-expected Q3 revenue Tuesday afternoon, driven by growth in its AI and Starlink segments.  That news followed Elon Musk’s statement Wednesday that the Tesla (SPCX) and SpaceX boards are considering a SpaceX-Tesla merger.

Chip stocks closed higher across the board, led by a gain of more than +3% in AMD (AMD), and gains of more than +2.5% in ASML (ASML), Arm Holdings (ARM), and Nvidia (NVDA).

Super Micro Computer (SMCI) rallied more than +9% after reporting stronger-than-expected preliminary Q2 server sales tied to AI-related demand.

Capital One (COF) rallied +2.5% after better-than-expected Q3 earnings due to higher revenue and stable expenses.

United Airlines (UAL) rallied nearly +4% despite forecasting weaker-than-expected earnings for calendar Q4 of $0.50-1.50 a share, below the consensus of $1.88.

AT&T (T) fell more than -6% after reporting disappointing wireless phone account growth.

Netflix (NFLX) fell more than -5% after a weaker-than-expected revenue forecast and the slowest sales growth in three years.

Abbott Labs (ABT) fell -1.9% after announcing that it plans to spin off its nutrition unit into a separate publicly traded company.  Abbott plans to focus on its healthcare units in medical devices, diagnostics, and established drugs, and offload its nutrition business, which has been hurt by various problems, including infant formula issues.  The spin-off, via a tax-free distribution to Abbott shareholders, is expected to be completed by the end of 2027.

Earnings Reports (10/22/2026)

MSC Industrial Direct Co Inc (MSM), PulteGroup Inc (PHM), Comcast Corp (CMCSA), Valero Energy Corp (VLO), Lazard Inc (LAZ), Carpenter Technology Corp (CRS), Lockheed Martin Corp (LMT), Popular Inc (BPOP), Roper Technologies Inc (ROP), Huntington Bancshares Inc/OH (HBAN), Spotify Technology SA (SPOT), Honeywell International Inc (HON), PG&E Corp (PCG), Blackstone Inc (BX), Quest Diagnostics Inc (DGX), Norfolk Southern Corp (NSC), Tractor Supply Co (TSCO), Old Republic International Cor (ORI), Snap-on Inc (SNA), Pool Corp (POOL), Allegion plc (ALLE), Dow Inc (DOW), American Airlines Group Inc (AAL), TTM Technologies Inc (TTMI), Procter & Gamble Co/The (PG), CBRE Group Inc (CBRE), NVR Inc (NVR), Viking Therapeutics Inc (VKTX), Nasdaq Inc (NDAQ), Dover Corp (DOV), Ryder System Inc (R), Union Pacific Corp (UNP), Boyd Gaming Corp (BYD), VeriSign Inc (VRSN), Robert Half Inc (RHI), Kinsale Capital Group Inc (KNSL), Newmont Corp (NEM), Kilroy Realty Corp (KRC), Columbia Banking System Inc (COLB), Rexford Industrial Realty Inc (REXR), Deckers Outdoor Corp (DECK), SS&C Technologies Holdings Inc (SSNC), SLM Corp (SLM), Western Digital Corp (WDC), RingCentral Inc (RNG), 

Appfolio Inc (APPF), Bloom Energy Corp (BE), Omnicom Group Inc (OMC), Comfort Systems USA Inc (FIX).

On the date of publication, Rich Asplund did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.