Futures Mixed as Warsh Holds Fire; Tesla Jumps, AI Still Wobbly

Good morning. This is Trade and Ticker. Friday, October sixteenth, twenty twenty-six. Let's get ready for the opening bell — everything you need before U.S. stocks start trading.

Daily Catalysts. Four things to watch today. First, Fed Chair Kevin Warsh overnight, where he gave no hint on rates and traders cut the odds of a hike this month. Second, the A-I trade, which is still shaky after a rough week, with Nasdaq futures barely holding even. Third, Tesla, jumping in early trading after it showed off a redesigned Roadster. Fourth, more earnings from the banks and insurers, including Truist, M-and-T Bank, and Travelers. We'll get into each of these as we go.

Let's start with U.S. futures. The board is mixed, and tech is still the laggard. As of about six-twenty Eastern, Dow futures are up about four-tenths of a percent, roughly two hundred points. S-and-P futures are up about two-tenths of a percent. And Nasdaq futures are roughly flat, down less than a tenth of a percent. The Dow is carrying the open, while growth is still catching its breath.

That follows a comeback Thursday. The Dow jumped about one-point-one percent, more than five hundred fifty points, as money rotated into healthcare and other defensive names. The S-and-P rose about a third of a percent. The Nasdaq barely finished higher, up less than a tenth of a percent, after being down more than one percent earlier in the day. That small gain kept the Nasdaq from a fourth straight loss. For the week, the S-and-P is on track to fall about one percent, and the Nasdaq more than two percent, while the Dow is still up about one percent. Chip stocks slipped again Thursday, extending a long losing streak even as the broader market bounced.

Oil is a little lower this morning, after a choppy week for energy. Brent crude is around one hundred five dollars a barrel. The ten-year yield is near five-point-one percent, little changed after Thursday's flight into Treasuries.

In early trading, Tesla is the big mover, up about four and a half percent after it unveiled a redesigned Roadster with rocket-style thrusters developed with SpaceX. Chief Executive Elon Musk said production is set to begin in twenty twenty-eight. SpaceX shares are up about two percent. On the other side, CoreWeave is down about four percent again, after bouncing Thursday, as investors keep worrying about its heavy debt load. Micron is down about one and a half percent. Nebius is down about two percent. Broadcom is a touch lower.

Now let's get into those four things to watch.

First, Fed Chair Kevin Warsh. Speaking overnight in Bangkok at the I-M-F meetings, in a conversation with the Fund's managing director, he refused to preview what the Fed might do at its meeting at the end of this month, or later this year. He said he does not prejudge meetings, and that it's a new chapter at the Fed where the central bank is not in the business of telling markets what it will do next. He talked up A-I as a hugely consequential long-term force for growth and productivity, while warning the road will be very bumpy and that the near-term effect on jobs is still uncertain. He also said the A-I investment boom is helping the economy but feeding into inflation. That lands after this week's hot consumer and producer price reports, which had pushed traders to price in a higher chance of another rate hike. Overnight, they pulled some of that back. Odds of a rate increase at the late-October meeting fell to about fifteen percent, from nearly thirty percent on Thursday. Most still expect a hike by the December meeting. Goldman Sachs said the comments point to a pause in October, with a hike still possible in December.

Second, the A-I trade into the weekend. The worry has not gone away. Investors are still asking whether the companies building data centers can turn cash fast enough to pay for all that borrowing, especially with rates high and possibly headed higher. CoreWeave is back under pressure this morning after its bonds flashed stress earlier in the week and Nvidia's chief executive tried to calm nerves on Thursday. Chip stocks had another down day Thursday even after record results from Taiwan Semiconductor, which raised its outlook but sounded careful about twenty twenty-seven. The Nasdaq and the S-and-P are still looking at weekly losses after the A-I-led selling earlier in the week. A bounce in Tesla helps the mood on a Friday, but it does not settle the bigger question about A-I spending, debt, and what these companies are worth when money is no longer free.

Third, Tesla. The company finally showed the long-awaited next Roadster in a live demo, and the stock is responding with a jump of about four and a half percent. The story for today is less about delivery numbers and more about whether that product bounce can spill into the broader growth trade on a Friday when tech still looks tired and the Nasdaq is trying to avoid a weekly loss of more than two percent.

Fourth, earnings. Truist reported adjusted earnings of a dollar sixteen a share, a little above forecasts, but adjusted revenue of about five-point-three billion dollars missed forecasts of about five-point-three-six billion, and the stock is down about two and a half percent in early trading. The bank also pointed to losses tied to selling securities and a loan portfolio, which weighed on the reported top line. M-and-T Bank earned five dollars and four cents a share, up from four dollars and eighty-two cents a year ago, with net income of seven hundred seventy-five million dollars. It highlighted loan and deposit growth and a solid capital position. Travelers, the big insurer in the Dow, posted core earnings of nine dollars and eighteen cents a share, up from eight dollars and fourteen cents a year ago, on net income of about one-point-nine billion dollars. The combined ratio improved, and the company returned a lot of capital to shareholders in the quarter. Citizens and Regions are also on the morning slate as bank earnings season keeps rolling.

Here's what would make a lower open worse. Watch three things. First, if A-I names keep sliding and drag Nasdaq futures back into a clear loss. Second, if Warsh's quiet tone on rates fades and this week's hot inflation pushes yields higher again into the weekend. Third, if the bank and insurance reports fail to support the Dow's relative strength after Thursday's rotation.

So here's the picture heading into the open. Dow and S-and-P futures are a little higher. Nasdaq futures are roughly flat. Warsh offered no rate roadmap, and traders cut the odds of a hike this month. Tesla is jumping on the Roadster reveal, while CoreWeave is lower again. And the banks and Travelers are filling out the morning earnings list as Wall Street tries to close a choppy week for tech and a better week for the Dow.

Quickly overseas. Asia bounced after Thursday's chip rout, with South Korea up about two percent and Tokyo up about one and seven-tenths percent. Europe is firmer too.

We'll be back at lunch with how stocks are trading after the open and what still matters into the afternoon. Thanks for listening. I'm Trade and Ticker.