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US stock futures retreated on Tuesday amid a revival in AI worries, slipping back from a rally fueled by optimism that Washington may soon end the record-breaking government shutdown.
S&P 500 futures (ES=F) edged down 0.2%, while those on the Dow Jones Industrial Average (YM=F) wavered along the flat line. Contracts on the Nasdaq 100 (NQ=F) slipped roughly 0.5% on the heels of a roaring start to the week for stocks, which saw the tech-heavy benchmark surge as hopes for the AI trade revived.
Testing that faith, SoftBank Group said Tuesday it sold its entire stake in chipmaker Nvidia (NVDA) to fund its own investments in AI development. The move comes at a time that Wall Street is questioning whether the AI boom will deliver a payoff to justify lofty valuations for related stocks. Shares of Nvidia dropped about 2% in premarket.
Elsewhere in tech, CoreWeave (CRWV) trimmed its full-year revenue forecast after market close, taking the shine off its strong quarterly earnings. Its stock fell over 8% after the Nvidia (NVDA)-backed AI infrastructure provider flagged a delay by a data center partner.
Those concerns weighed on markets, despite growing hopes that the 41-day US shutdown could soon end. The push to reopen government took another step forward as the Senate on Monday evening passed a funding measure, advancing it to the House for a vote.
A reopening would lead to the release of economic data delayed by the stoppage, giving markets better insight into the likely path of interest rates. But fresh data could take a while to arrive, even if the shutdown ends this week.
US companies shed 11,250 jobs a week during October, ADP’s private-sector payrolls report out Tuesday showed — an example of the private data filling the public vacuum. Its figures suggest a slowing in the labor market.
On the trade front, doubts about the lasting power of the US-China tariff truce resurfaced around the crucial issue of rare-earth supplies. The Wall Street Journal reported that Beijing plans to keep its exports of the minerals out of US military hands, even as it speeds up flows to other American buyers.
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AI fueled the stock market rally. Earnings are now giving it staying power.
Yahoo Finance’s Allie Canal reports:
After a year dominated by artificial intelligence headlines, Wall Street’s bull case is shifting toward something more fundamental to stocks: earnings power that’s beginning to broaden beyond Big Tech.
Morgan Stanley, UBS, and other major firms are pointing to a clear throughline this earnings season: Profits are strong, margins are stabilizing, and growth, while still concentrated in AI-heavy tech, is beginning to spread.
“There are clear signs that the earnings recovery is underway and pricing power is firming,” Morgan Stanley equity strategist Mike Wilson wrote in a client note on Monday. …
FactSet’s latest data backs that up. With more than 90% of S&P 500 (^GSPC) companies reporting, 82% have beaten earnings estimates, while overall profits rose 13.1% year over year. That marks the fourth straight quarter of double-digit growth. …
Still, some strategists warn that the trend will need to continue from here.
“Earnings sentiment staged a partial comeback,” RBC Capital Markets strategist Lori Calvasina wrote in a note to clients, adding that while revisions have improved for two straight weeks, they remain “well below” summer highs.
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The bowl crisis indicator flashes red
Yahoo Finance’s Hamza Shaban reports:
Read more here in the takeaway from today’s Morning Brief.
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Good morning. Here’s what’s happening today.
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Premarket trending tickers: Meta, Beyond Meat and Sony
Meta (META) stock fell 1% before the bell on Tuesday. The drop in share price follows the news that Meta’s chief artificial intelligence scientist Yann LeCun is planning to leave the social media giant to found his own start-up.
Beyond Meat (BYND) stock fell 5% in premarket trading on Tuesday after releasing its delayed earnings report Monday’s closing bell.
Sony (SONY) shares rose 5% before the bell after raising its earnings forecast after a stronger than expected second quarter.
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Paramount Skydance stock pops as investors weigh its cost-cut plans
Paramount Skydance (PSKY) shares rose about 5% in premarket trading on Tuesday as investors digested its third quarter earnings.
Quarterly revenue came in just below Wall Street expectations in the results, released in after hours on Monday. But the company struck an upbeat tone for what lies ahead, raising its cost-savings target, projecting stronger streaming profits, and signaling upcoming price hikes for Paramount+.
Revenue totaled $6.7 billion for the quarter ended in September, slightly shy of analysts’ $7 billion estimate, in the company’s first earnings release since completing its merger with Skydance in August.
Paramount Skydance CEO David Ellison said the company now expects $30 billion in total revenue and $3.5 billion in adjusted OIBDA for 2026, driven by a “healthy acceleration” in streaming. The company also expects Paramount+ to be profitable this year and to grow that profitability in 2026.
Direct-to-consumer revenue jumped 17% year over year, while weakness in TV Media offset those gains. Paramount+ revenue climbed 24%, with total subscribers reaching 79.1 million.
Across the full quarter, Paramount reported $324 million in operating income and a net loss of about $257 million, though pre- and post-merger results aren’t directly comparable.
Ellison said the newly combined company has taken “meaningful steps” to streamline operations, including a reduction of 1,000 employees from its workforce and plans to cut an additional 1,600 employees.
Paramount also raised its efficiency-savings target to $3 billion, up from $2 billion previously.
On top of its efficiency goals, the company also plans to raise prices for Paramount+ early next year in the US, part of a broader push to boost profitability and fund new content and technology investments.
The company recently announced upcoming price increases in both Canada and Australia.
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SoftBank unloads Nvidia stake for $5.8 billion in surprise move
Shares of Nvidia (NVDA) fell around 1.5% in early trading after SoftBank (SFTBY, 9984.T) offloaded its entire holding in the AI chip giant.
Bloomberg reports:
SoftBank Group Corp. sold its entire stake in Nvidia Corp, pocketing $5.8 billion ahead of a rash of planned investments by founder Masayoshi Son to build his own sphere of influence supporting artificial intelligence.
The Tokyo-based company had raised its stake in Nvidia to about $3 billion by the end of March. That stake and a windfall at the Vision Fund startup investment unit helped SoftBank report a surprise net income of ¥2.5 trillion ($16.2 billion) in its fiscal second quarter, far outrunning the average of analyst estimates of ¥418.2 billion. …
Son’s company now boasts a portfolio that includes some of the world’s most sought-after names in AI: OpenAI (OPAI.PVT) and Oracle Corp. (ORCL). Those stakes boosted SoftBank’s paper gains and helped drive a 78% surge in its share price over the three months ending in September — its best such performance since the December quarter of 2005.
The number of bets from which SoftBank is successfully recouping its investment has increased, “so we raise our forecasts,” Citigroup analyst Keiichi Yoneshima wrote in a note ahead of the earnings release. The analyst set his target price for SoftBank’s stock at ¥27,100, linking his calculations with OpenAI’s valuation and assuming a future valuation range of $500 billion to $1 trillion for the ChatGPT operator.
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TSMC growth slows in warning sign of AI bubble
Bloomberg reports:
