Musk on possible SpaceX-Tesla merger; Meta to report - what’s moving markets
Investing.com - Futures connected to the S&P and Nasdaq edge up, as investors assess a raft of corporate earnings, as well as ongoing uncertainty around the artificial intelligence trade and the Middle East conflict. Elon Musk says committees have been formed to explore a possible blockbuster merger of SpaceX and Tesla. AI player Anthropic reportedly posts a surge in first-half revenue, but flags a range of risks ahead of its potential initial public offering. Meta Platforms is due to unveil earnings after the closing bell.
1. Futures broadly higher
U.S. stock futures pointed mostly higher on Wednesday. By 03:01 ET (07:01 GMT), the S&P 500 futures contract had risen by 13 points, or 0.2%, Nasdaq 100 futures had climbed by 148 points, or 0.5%, and Dow futures were broadly unchanged.
The main averages on Wall Street finished in mixed fashion on Tuesday, with the benchmark S&P 500 and blue-chip both notching gains, while the tech-heavy Nasdaq ended a touch lower.
Early in the session, unconfirmed reports that Qatar and Pakistan had put forward a proposal to revive talks to conclude the Iran war briefly sent oil prices down to $106 a barrel from $112 a barrels. The rumors bolstered equity-market sentiment, which has been dented in recent sessions by worries over the sustainability of debt-fueled AI infrastructure spending and elevated borrowing costs.
"The relief from energy that played out late in the European session meant equities rallied as investors overcame some of their earlier AI jitters," analysts at Deutsche Bank said in a note.
Yet benchmark Brent crude futures later moved higher, with traders reacting to a report that Iran’s president believes "the U.S. will attack again if we negotiate." Brent was last floating around $110 a barrel.
Meanwhile, tech-heavy indices were relative underperformers. A tracker of semiconductor stocks, in particular, inched down by 0.29%, although the index did pare back much of its initial losses. Neocloud CoreWeave, which has become a figurehead of the AI fears, also bounced.
2. Committees formed to explore SpaceX-Tesla merger - Musk
SpaceX and Tesla have formed committees to explore a potential merger, according to Elon Musk, lifting shares of both firms in extended hours trading.
Speaking in a call with investors after SpaceX unveiled its second quarterly earnings since a blockbuster initial public offering earlier this year, Musk said the committees have not reached an agreement on "the terms of any transaction."
Musk, who serves as CEO of both companies and is not on either committee, added that there is "no guarantee" a deal will eventually be reached, but stressed that he does believe there is "a lot of merit" to a tie-up.
Bringing together SpaceX and Tesla would see the world’s largest commercial rocket launcher and satellite operator join forces with the second-biggest electric car manufacturer.
In the third quarter, SpaceX notched revenue of $14.6 billion, a more than 160% surge from a year ago and above analysts’ estimates. Profit stood at $4.4 billion, while capital expenditures climbed to $19.6 billion. Tesla is slated to report after the closing bell later today.
3. Anthropic S-1 shows sharp revenue growth, looming risks - reports
Anthropic is raking in huge sales, yet faces a range of possible risks ahead of a much-anticipated IPO that could value the Claude-creator at $2 trillion, media reports said.
Citing new disclosures, the reports highlighted that it is unclear where Anthropic will obtain the massive computing capacity needed to underpin its popular AI models.
At the same time, the San Francisco-based group flagged that a "significant portion" of its revenue will come from only a "limited" number of customers for the foreseeable future. In the first six months of the year, Anthropic generated $16.3 billion -- and one-fifth of that derived from just two clients.
The company recorded a net loss of over $80 billion, up from a loss of $13 billion a year earlier, largely because of an accounting adjustment.
Anthropic, whose CEO Dario Amodei has publicly warned about the dangers posed by rapidly advancing AI, also noted uncertainty around how it would protect itself from possible liabilities, such as AI cyberattacks.
4. Meta to report
Highlighting the post-market earnings schedule on Wednesday will be Meta Platforms.
Over the last month, the Instagram-owner has taken large strides in the race to harness AI, thanks to the well-received release of its new Muse AI model.
Muse amassed millions of downloads after the product was launched in September, underlining demand for its various services, including assistance with travel booking and setting up small business tools. Meta has since moved to expand the reach of the technology, releasing an open-weight version of its Muse Spark model for coding.
Meta will be the first of the so-called AI “hyperscalers” to report quarterly earnings. These megacap companies have been pushing to quickly develop their AI capabilities, in part by accumulating high-end chips and constructing massive data centers. The spending has helped prop up the broader AI industry in the process.
5. Nvidia in talks to invest in Firmus Grid - The Information
Elsewhere, Nvidia is discussing an investment of hundreds of millions of dollars in Firmus Grid after the Australian AI cloud company scrapped its IPO plans, The Information reported.
Nvidia -- the world’s most valuable company -- already holds an investment stake in Firmus and several similar companies in the AI cloud sector.
This month, Firmus Grid scrapped plans for an Australia listing, citing recent market volatility that made going public against the best interests of its shareholders. The firm had announced plans for an IPO at a valuation of over $30 billion, which would have made it one of Australia’s biggest ever stock market listings.