Mixed Megacap Earnings Drag Wall Street Lower as Brent Nears $112 and AI Spending Divides the Market

Wall Street got a lesson in gratitude on Thursday: three earnings beats, and the market fell anyway. By 8:34 a.m. New York time, Nasdaq 100 futures were down 1.6% — threatening to erase most of the index’s 2.2% weekly gain — while S&P 500 contracts lost 0.9% and Dow futures fell 0.6%. The damage spread fast. Chip-equipment maker Lam Research dropped more than 8% after a weak outlook, Tesla slid 3.7% — nearly 5% in premarket trading — after trimming its spending plans, and the rest of global equities followed: the Stoxx Europe 600 fell 0.7%, Asian markets opened to red futures, and Bitcoin recorded its biggest drop in two weeks, down 3.5% to $81,636.

The irony is that the results were good — just not good enough. Meta’s third-quarter revenue rose 26% year over year to $64.6 billion, beating expectations on stronger advertising, with ad prices up 14% and its Muse AI assistant showing early commercial promise. The headline profit looked weak only because of a one-time $9.89 billion legal-settlement charge: GAAP earnings were $3.83 a share, but excluding the charge, adjusted earnings hit $7.40, well above forecasts. The company even announced a two-for-one stock split and guided fourth-quarter revenue to a $74.5 billion midpoint, above the Street’s $73.7 billion. But in the same report Meta disclosed future lease and contract commitments of about $825 billion, much of it tied to AI computing — and the market chose to price the bill, not the beat. Tesla’s math was harsher: revenue was roughly flat at $28.05 billion and adjusted earnings of $0.48 topped the $0.44 consensus, yet net profit plunged 43% to $787 million as operating expenses jumped 39% on AI, robotics and R&D, with free cash flow roughly halving. IBM, the night’s clean winner, delivered a double beat — $2.95 in adjusted earnings on $17.1 billion of revenue.

Tim Waterer of KCM Trade summed up the market’s mood: it frets when companies ramp spending, and frets when they pull it back — “in this environment, it’s almost impossible to get the balance right.” Tesla is living that line: it cut its capital-spending forecast, yet investors sold it for planning heavier 2027–2028 investments in robotics, the Cybercab and its Terafab project. Santiago Mateo, head of equity at CaixaBank AM, put it more pointedly: the market is still willing to reward heavy AI investment but is becoming “much more demanding about returns.” The proof is in who rallied: Super Micro jumped 9.6% after raising guidance, SpaceX climbed 3–4% on a 161% revenue surge — growth with receipts gets paid; growth with promises gets questioned. Singular Bank’s Roberto Scholtes says hedge funds have been unwinding AI positions for weeks, a dynamic he expects to persist unless bond yields drop hard or geopolitics intervene.

The equity selloff was only half the story. Brent crude pushed toward $112 a barrel — up 2.7% to $111.75, with WTI above $99 — after The New York Times reported that the US and Israel had drawn up plans for renewed strikes on Iran after November’s midterms, and Washington ordered some diplomats out of Saudi Arabia amid the Houthi threat. China’s CSI 300 slid into bear market, closing down 1.8% to sit 20% below its June high. France’s fiscal stress deepened: the spread of French 10-year yields over Germany’s hit 175 basis points, the widest since 2011. In Asia, the Kospi lost 0.47% and the Nikkei 0.17%, while India braced for day two of the Jio Platforms IPO — ₹70,000 crore of bids on day one — and RBI minutes showed policymakers warning that accelerating inflation “demands continued vigilance” after their first rate hike in nearly four years to 5.5%.

What to watch next: CNBC reports Anthropic could file for an IPO as early as Friday — another test of AI appetite — alongside weekly jobless claims and earnings from Procter & Gamble, Lockheed Martin, Valero and Honeywell. No megacap tech reports for another week, so the tape belongs to macro: the Fed meets October 27–28, where traders price an 83% chance of a hold, with Reuters’ poll of 100 economists pointing to the next move — a hike — in December. Treasuries are already sniffing risk: the 10-year yield fell nine basis points to 5.03% as investors sought safety, and the yen touched its strongest level against the dollar this month. Big beats, rising rates, oil at the edge — in weeks like this, position sizing matters more than predictions, which is why our forex tools page includes calculators for planning risk, and the lessons in our free forex course apply to any market. (Not financial advice.)