Mid-Morning Look: October 22, 2026

Mid-Morning Look

Thursday, October 22, 2026

Stock markets are under pressure this morning as a fresh escalation in Middle East tensions sent oil surging, reviving inflation and growth concerns just as investors digested another heavy round of earnings. But the weakness is mostly relegated to technology (XLK) and communications (XLC) seeing the brunt of selling pressure after mixed commentary in the tech space overnight following mostly better earnings for the likes of META, TSLA, IBM, TXN and LRCX. Industrials (XLI) are also lower, a group that has benefitted from the AI trade over the last year, now falling with tech. Interest rate sensitive names like homebuilders, mortgage stocks, small caps that benefit from lower borrowing costs are seeing early strength as Treasury yields surprisingly tumble ahead of next week’s FOMC meeting with more than 10bps declines for 2s and 10s. More earnings tonight as the busy week continues.

U.S. stocks under pressure as three worries are dominating the market tone: AI, the Middle East/oil prices and European sovereigns. 1) The AI trade is under renewed pressure after mixed megacap signals as Meta announced they are spending more (capex to $135B-$145B vs. prior $130B-$145B), while Tesla is spending less (capex down to $20B from $25B). Nasdaq futures fell almost 2% overnight while Asian markets were broadly lower all night. 2) Middle East risk is feeding directly into the macro picture. Brent is around $112/bbl, European NatGas is firmer and fresh attacks on Saudi infrastructure keep the inflation/stagflation risk alive. 3) In Europe, France remains the fixed-income stress point as a stronger INSEE manufacturing survey could not help French bonds, with 10yr yields now around 5.10%. Overall, the risk-off mood boosted havens, with Treasuries, the Yen and Swiss franc gaining. The 30-year US yield touched its lowest since Sept. 23, and the 10-year yield falls as well.

Brent Crude and WTI are driving higher in early trading as WTI touched $100 and Brent crude climbed to its highest since May (high above $112 per barrel), after deadly attacks in Saudi Arabia and reports that the US and Israel are drawing up plans for renewed strikes on Iran. Here are the latest geopolitical developments fueling the moves: 1) A New York Times report outlined how the U.S. and Israeli militaries have developed plans to renew strikes on Iran after the midterm elections. The Times, citing unnamed U.S. officials, said this would be a “short but intensive” operation. 2) Overnight, the State Department announced it was ordering non-emergency government employees to leave Saudi Arabia amid the Houthi attacks on the kingdom. 3) Iran’s IRGC threatened US bases in the region if Washington keeps escorting ships through what it calls an “illegal” Hormuz route, per Bloomberg.

• Transport sector: in airlines, AAL reported a Q3 EPS loss of (-$0.41) vs. loss of (-$0.17) y/y while forecasts 4Q adj loss per share of (-$1.10–$0.50) and FY 2026 adj loss of (-$1.60–$1.00) as anticipates an ​average fuel price ​of ​approximately $4.70 ​per gallon in Q4, nearly double the price paid in ​the fourth ​quarter of ​2025. In railroads, CSX Q3 revenue rose 12% y/y, beating analyst expectations driven by higher fuel surcharges, volume, and pricing across segments while reported total volume up 5% y/y in Q3; UNP Q3 EPS and revs topped consensus citing 6% volume growth, pricing gains, and operational execution for record results and said expects reported EPS growth of high-single digit, in line with 3-year CAGR target; NSC also reported results this morning in rails. In trucking/freight, KNX q3 EPS $0.83 tops est $0.76, driven primarily by the Truckload segment, consistent with our expectations heading into the quarter/mgmt guided 4Q EPS to $0.78-$0.84
• Homebuilding sector: the group (LEN, TOL, PHM, KBH) advanced along with home related names (RH) and mortgage stocks (RKT, COMP, ZG) after Treasury yields tumbled, taking some pressure off mortgage rates for the time being ahead of the FOMC meeting next week. PHM Q3 EPS and revs missed consensus as revs fell -11% y/y to $3.97B vs. the consensus $4.15B; Home sales revenue fell to $3.9B; said closing volumes declined 9% to 6,876 homes, while the average sales price slipped 1% to $561,000. Pulte received new orders for 6,208 homes during the quarter.
• Semiconductor Equipment & Memory sector: LRCX shares tumble after its December-quarter guide missed Street expectations on industry-wide supply-chain constraints in gas delivery subsystems, even as management reiterated a $200B+ 2027 WFE outlook (shares of equipment names AEIS, AMAT, ASML, KLAC, ONTO, MKSI, ENTG all falling sharply); BofA cut its PT to $345 from $385 and Needham to $290 from $385, both staying Buy, while Texas Instruments (TXN) is a relative bright spot, up slightly after a Q3 beat-and-raise on Data Center and Industrial strength.

• BHVN +38%; as the FDA accepts Biohaven’s resubmitted new drug application for Vyglxia for review. Resubmission includes new positive supportive analyses for treating spinocerebellar ataxia. Last year, the FDA declined to approve the treatment.
• CSX +5%; Q3 revenue rose 12% y/y, beating analyst expectations driven by higher fuel surcharges, volume, and pricing across segments while reported total volume up 5% y/y in Q3.
• LMT +8%; posted Q3 EPS and sales above consensus, said backlog rises 27% sequentially to record $292B, boosted by $52.5B multi-year PAC-3 MSE award, and raised its FY EPS and sales outlook.
• NDAQ +5%; Q3 EPS beat and revs rose 13% y/y to $1.48B as record net inflows and new product launches contributed to 39% index revenue growth.
• PG +5%; beats estimates for Q1 revenue on the back of demand for its beauty and home care products, rising 4% y/y to $23.28B vs. estimates of $22.80B on better core EPS while sticks to FY27 targets for organic sales growth 1%-3% and core earnings of $7 per share.
• SPOT +8%; posted Q3 EPS of €2.48 on revenue of €4.97B, just shy of the €4.98B estimate, with monthly active users of 788M beating the 758.12M consensus and premium subscribers at 306M; Q4 revs seen €5.2B versus €5.23B estimated, operating income of €820M versus €813.36M.

• CRS -19%; shares declined after Q1 sales $798M fell short of consensus $830M while saying is well positioned for continued growth beyond FY27.
• HXL -10%; reported in-line Q3 EPS, but sales of $496M missed the $502M consensus and EBITDA $84M missed the $90M est. as Commercial Aerospace sales increased >20% Y/y above views but Defense Space, and other revenue missed expectations.
• KALU -19%; shares fall after reported adjusted Q3 EBITDA of ~$84M vs. ~$99M estimate and EPS miss while EBITDA margin (as a % of conversion revenue) was 19.1%, missing estimates.
• LRCX -7%; shares tumbled as Q1 (Sept) results essentially in line, underscored by +35% sequential system revenue growth, while guidance for Q2 fell short of consensus expectations, with the revenue mid-pt +5% QQ (vs consensus +6% QQ) amid supply chain constraints.
• LVS -2%; Q3 misses in Macau and Singapore on high end softness, while analysts note absence of key customer visits during the quarter, coupled with the ongoing mix shift in Macau, continues to pressure results; Q3 revenue declined y/y and missed ests.
• META -6%; reported strong Q3 results with revenue ~2% above consensus and ahead of the high end of guidance, and profitability excluding the legal charge solidly ahead of expectations; shares fell on higher capex spending and higher CDS debt.
• TSLA ; posted flat Q3 revenue of $28B y/y as auto sales fell -3%, with net income down -43% to $787M, operating margin contracting to 2.6% from 5.8%, and FCF -62% to $1.5B as capex surged 110% to $4.7B; also lowered its 2026 capital spending forecast to about $20B from over $25B.