Reports of a U.S.-Iran ceasefire keep swinging back and forth, oil prices are on a roller-coaster ride, and risk-aversion is spreading. U.S. small-cap stocks are bucking the trend and leading the pack, the AI infrastructure frenzy is hitting physical bottlenecks, and on the eve of earnings storms from SpaceX and Meta, the market's rotation into defensive sectors faces a critical juncture.
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On Tuesday, U.S. stocks were repeatedly whipsawed between rumors of a "U.S.-Iran compromise plan" and denials, with the Dow up 1.02%, the S&P 500 up 0.28% (more than 400 constituents advancing and reclaiming the 50-day moving average), Russell 2000 small caps leading with a 1.66% surge, while the Nasdaq Composite edged down only 0.02%. Nine of the S&P's 11 sectors rose and two fell, with health care up 2.34% and real estate up 1.69% leading, while communication services fell 0.89% and technology fell 0.34%, lagging at the bottom.
In the previous session's early trading, Qatari media reported that the U.S. and Iran had preliminarily accepted Pakistan's mediation proposal and could reach a ceasefire agreement as soon as this week. The news instantly triggered a wave of short selling, with Brent crude touching a five-month high of $111.99 before plunging more than 3.3% in a straight line, briefly breaking below $106; however, shortly afterward, diplomats involved in the negotiations urgently denied the report, saying the claim that a deal was near was seriously inaccurate, and Tehran more forcefully reiterated that it would never compromise until the U.S. met the "seven conditions," including lifting sanctions and the blockade, and that "not a single particle of enriched nuclear material will leave Iran." Oil prices then sharply narrowed their losses from the lows, with Brent ultimately closing down 0.69% at $108.79 and the November U.S. crude contract closing down 1.80% at $101.79..
In Europe, the energy crisis cloud persisted, with the Dutch TTF benchmark natural gas briefly breaking above €90/MWh intraday. Rabobank strategists expect that, because Asian LNG storage is at its lowest level for the same period since 2009, a winter energy buying spree may be triggered. Meanwhile, France's sovereign debt and fiscal deficit crisis continued to fester; although U.S. Treasury Secretary Bessent publicly played down spillover risks, the France-Germany bond spread still widened to a high of 153 basis points, with safe-haven funds accelerating into short-term German bunds and the Swiss franc. In addition, the U.S., Ukraine, and Europe reached a consensus on a peace framework, but the U.S. government fell into chaos internally because speed limits on Musk's "Starshield" system paralyzed Ukrainian drones, further intensifying U.S.-Ukraine disagreements over attacks on Russian refineries.
At the same time, the dollar index weakened to the 101.7 area, a three-week low, with spot gold under pressure in late New York trading, falling 0.45% to $4,122.38, while spot silver, supported by industrial demand and catch-up properties, rebounded for a consecutive session, closing up 1.32% at $57.66. Gold's underlying support remained solid: Swiss gold exports rose 6% month-on-month in September to 165.2 tonnes, of which exports to the UK surged 24% to 126.2 tonnes, a record high since 2012. World Gold Council data showed that global physical gold ETF net inflows hit a record $31 billion in Q3 (the UK accounted for $7.5 billion). On the industrial metals side, former JPMorgan and Mercuria star aluminum trader Sonny McNess was aggressively going long LME October copper and short November copper through Hartree Partners, pushing the nearby cash premium to as much as $91.99/tonne.
Over the past week, the "AI capex phobia" hanging over Wall Street saw a turning point. Goldman Sachs' risk appetite indicator turned negative for the first time since March, and the bank's London-based head of asset allocation, Christian Mueller-Glissmann, immediately announced a tactical upgrade of equity allocation to "overweight" for the next three months, noting that earnings support, light positioning, and lower valuations would help drive a year-end rally. Meanwhile, Wells Fargo's buying/selling sentiment indicator also fell below -1 for the first time since June 2025, triggering a "buy" signal (historical data show the S&P gained an average of 6.5% over the following three months, with an 89% hit rate). Chief strategist Ohsung Kwon said outright that the market had become overly pessimistic about AI financing and the Iran situation, and expected capital discipline to make hyperscale cloud providers replace chip stocks that rely purely on cash-burning to become the new leaders, with the bullish logic for AI infrastructure now extending all the way to 2027.
Before the after-hours earnings bombshell exploded, intraday traders were still voting with their feet to flee highly leveraged AI assets and rotate into defensive sectors such as health care (up 2.34%) and real estate (up 1.69%). Plante Moran chief investment officer Jim Baird said the market had doubts about whether AI investment could be monetized, prompting a rotation into small caps and health care stocks.
The trigger for panic came from two sides: first, South Korea's rare profitable "neocloud" data center Elice plunged 32% on its October 20 debut; second, The Wall Street Journal exposed a draft Anthropic IPO prospectus showing that although revenue soared to $16.3 billion in the first half (Q3 rose another 45% quarter-on-quarter to $16.8 billion and was adjusted profitable), net loss reached a massive $80.7 billion (including $72 billion in accounting charges from changes in the valuation of financing instruments), and future compute commitment spending could reach an astonishing $750 billion at most, directly leading investors to cut its valuation expectation from $2 trillion to $1.5 trillion.
In addition, the physical bottlenecks to AI expansion are becoming more glaring. U.S. research group Center for Western Priorities revealed that there are already 35 data center and supporting applications on public lands in six western states (covering more than 24,000 acres, with one Utah project even proposing to use not-yet-commercialized SMR nuclear power). Although the Trump administration regards data center expansion as a national priority, public opposition to these projects is growing, mainly over concerns about power demand, water consumption, wildlife impacts, and public land use rights.
Eli Lilly bucked the trend on Tuesday, surging 3.49% to a new all-time high: the company announced that its Omvoh injection for pediatric ulcerative colitis patients achieved major success in late-stage clinical trials and plans to seek regulatory approval to expand the indication for the bowel disease therapy, which, combined with intraday capital rotating out of tech stocks in search of safe havens, pushed the stock to a record high.
The health care sector jumped 2.34% to lead the market: weight-loss drug and biopharma names rallied across the board, with Kailera Therapeutics soaring 12.77%, Viking Therapeutics surging 6.63%, Moderna jumping more than 6% to a new high since 2022 (up more than 720% year to date), Amgen up 3.29%, UnitedHealth up 3.04%, and Novo Nordisk up 2.42%.
SpaceX edged down 0.11%, then surged more than 8% in overnight trading: third-quarter results crushed Wall Street across the board, with net profit of $4.4 billion far exceeding the expected $1.88 billion, and AI superintelligence (SI) revenue surging 830% to $7.56 billion while achieving operating profitability for the first time. Musk confirmed on the conference call that SpaceX and Tesla had each set up special committees to discuss a merger of the two giants, and boldly stated that annual recurring revenue was targeting $1 trillion and the compute payback period had shortened to six months, dispelling market doubts that infrastructure investment would be difficult to realize.
Super Micro closed up 1.15%, then soared more than 15% after hours: the company preliminarily estimated quarterly revenue of $18.5 billion-$19.5 billion (far above the midpoint of its original guidance by 26.7% and analysts' expectation of $15.2 billion), with gross margin jumping to 12.0%-12.5%. Evercore ISI analyst Amit Daryanani noted that the combination of better-than-expected revenue and profitability was impressive, directly driving Dell Technologies up 6% overnight, Hewlett Packard Enterprise up nearly 5% overnight, and compute cloud company CoreWeave up more than 4%.
Netflix closed down 1.66%, then tumbled nearly 6% after hours: fourth-quarter revenue growth was expected to slow to 11.5% (slowing for a fourth consecutive quarter), net profit guidance missed expectations, and the full-year advertising revenue forecast was cut to $2.7 billion from $3 billion; although third-quarter EPS beat expectations, management turmoil, restructuring costs, and the struggle of losing user time to YouTube sent investors rushing for the exits.
CoreWeave & Nebius both surged more than 4% after hours: boosted by Musk's massive GPU order and the AI infrastructure boom, U.S. cloud services and compute leasing stocks staged a dramatic comeback. CoreWeave, which had fallen as much as 6% intraday to a record low since listing, closed up 1.65% on Goldman Sachs' rating upgrade and then surged more than 4% after hours with the sector; Nebius rose 0.71% intraday and jumped more than 4% after hours; only data center operator IREN closed down 4.00% intraday.
The Philadelphia Semiconductor Index edged down 0.29%: Lam Research fell 3.21%, ARM fell 3.07%, ASML fell 0.99%, AMD fell 0.62%, Intel fell 0.37%, and Broadcom fell 0.07%.
Memory stocks diverged: Western Digital rose 3.44%, Seagate Technology rose 2.17%, SanDisk fell 0.42%, SK Hynix fell 2.16%, and Micron Technology fell 0.98% intraday (although the company announced an investment in Indium Corporation in New York State to strengthen its high-purity minerals supply chain, workers at its Taoyuan plant in Taiwan plan to strike this Thursday in support of the Taichung union's push for profit sharing, which could severely disrupt chip production);Optical communications sector broadly declines: AAOI down 1.87%, Lumentum down 1.44%, CRDO down 0.75%, Coherent down 0.09%, with only Marvell Technology up 1.4%.
Tesla closed up 1.54% (extending gains over 1.5% in overnight trading): Ferrari's CEO publicly praised the new Roadster sports car's design as showcasing bold innovation, compounded by Musk confirming after hours the formation of a special committee with SpaceX to explore a once-in-a-century merger, sending bullish sentiment into a frenzy; focus on the earnings release after the close on Wednesday.
Amazon edged up 0.07%: The company announced an investment of more than €16 billion in Germany by 2027 to ramp up AI and cloud infrastructure (total capital expenditure for the year is expected to reach $220 billion, with free cash flow having turned negative last quarter); however, internal emails revealed that AWS has activated an early receipt process, taking initial delivery of $5 billion (then $3 billion per month) of Nvidia GB300 racks, but due to power shortages at some sites, the hardware can only be temporarily stored in transit warehouses awaiting deployment.
Nvidia closed down 0.29% (turning to gains of over 2.2% after hours): Jensen Huang at the Berlin summit reached AI factory and startup investment cooperation with the German government and Siemens, emphasizing that AI is a new tool to augment humanity, while after hours Musk announced a ferocious order of 200,000 GB300 units coming online per month and 440,000 Vera Rubin units to be deployed in Q2 next year, directly injecting a shot in the arm.
Microsoft edged down 0.31%: The company confirmed that Windows Server 2025 officially supports the Fast Machine Recovery feature after installing the October security update.
Apple closed down 1.00%: Although the company, in support of the $600 billion "American Manufacturing Program," invested $100 million in Perryman, Pennsylvania to procure recycled titanium metal and expanded its partnership with Qnity to produce variable aperture film for the iPhone 18 Pro, the first foldable phone iPhone Duo, going on sale this Friday, has encountered severe supply bottlenecks; Morgan Stanley noted that its online delivery wait time has reached 14 weeks, the longest in a decade, and JPMorgan also cut its full-year shipment forecast from 10 million units to 8-9 million units due to capacity constraints.
Google fell 1.13%: Although its Waymo unit plans to use the recently borrowed $5 billion to double its autonomous driving fleet from 4,000 vehicles to 8,000 by the end of this year and expand to 20,000 by the end of next year, the stock was still dragged down during the day by selling pressure in the communication services sector.
Meta closed down 1.59%: As the first AI hyperscaler to face earnings scrutiny after the close on Wednesday, funds chose to de-risk and front-run ahead of the report on concerns over its massive capital expenditure guidance.
Other U.S. stock moves: Braze surged 51.70% (Salesforce announced the acquisition of customer engagement platform Braze for $5.66 billion); Hasbro jumped 11.2%, hitting a one-year high (raising full-year revenue and digital gaming guidance); 3M rose 5.8% (announced expansion of its data center partnership with Amazon and raised profit forecasts); General Motors plunged 6.8% (warning of rising commodity costs and declining truck sales).
October 21 (Wednesday)
17:00 Jensen Huang GTC keynote: European sovereign AI, inference demand, new architectures, and the scale of partnerships are the focus; the market needs clear orders, not just long-term vision.
The World Intelligent Connected Vehicles Conference convenes; the China-EU Investment, Trade and Technology Cooperation Fair runs through the 23rd: focus on autonomous driving, vehicle-road-cloud standards, and cross-border industrial cooperation.
Bessent and Druckenmiller attend the JPMorgan-Robinhood investor conference: the meeting is closed to the media; if there is public information, focus on fiscal financing, interest rates, and market risk assessments.
U.S. earnings: IBM and AT&T pre-market; Meta, Tesla, Lam Research, and Texas Instruments after the close.
October 22 (Thursday)
Second round of negotiations between the Micron Taoyuan plant strike and the Taichung union: Workers at Micron's Taoyuan plant are set to strike on Thursday in support of the Taichung union's push for profit sharing; if negotiations break down and the strike is prolonged, it could directly cut off key capacity supply of global DRAM and HBM chips, triggering sharp moves in memory chip prices and related stock prices.
04:30 Meta earnings call; 05:30 Tesla Q&A livestream: For Meta, the focus is on whether AI spending can be covered by advertising growth; market expectations are revenue of $63.29 billion, capital expenditure of $40.97 billion, and free cash flow of negative $9.14 billion; for Tesla, the focus is on how more than 486,000 deliveries and 13.7 GWh of energy storage deployment translate into profit.
Bank of Korea rate decision: expected to pause after consecutive hikes; if tightening continues, the won may find support, but chip stocks and companies with large financing needs would come under pressure.
U.S. 20-year Treasury auction: focus on the strength of demand and whether the final yield is higher than expected, testing whether this round of U.S. Treasury rebound can continue and transmit to gold and tech stocks.
Earnings: Nokia, Spotify, American Airlines, Procter & Gamble; after the close, focus on Bloom Energy, Western Digital, and Newmont Mining.