Nasdaq Futures Fall and CoreWeave, Nebius Drop About 4% Premarket After Korean Data Center IPO Slides

Since Monday's AI relief bounce, in which the Nasdaq jumped 1.11% and the S&P 500 rose 0.41%, the trade has run into a new problem. South Korean cloud provider Elice fell more than 30% in its market debut overnight, and the damage has reached U.S. premarket screens.

Regular trading on the NYSE and Nasdaq has not opened yet. As of 8:00 a.m. ET, S&P 500 futures were down 0.2% and Nasdaq futures were down 0.7%. Dow futures were flat. A later reading showed Nasdaq 100 futures off 0.45%, S&P futures roughly unchanged and Dow futures up 0.25%. The pattern holds: tech is weak, the rest of the market is not.

Neoclouds take the hit

CoreWeave shares were down about 4% in premarket trading as of 9:03 a.m. ET. Nebius and Iren each lost about 4% as well. These are the U.S. companies investors compare to Elice, which sells AI-dedicated computing power.

CNBC reported that investors are increasingly wary of AI computing providers because of overcapacity concerns. That is a market-sentiment explanation, and it is the one on offer. Pre-open indications are not closing prices, and these moves could shrink or grow once trading starts at 9:30 a.m.

HSBC analyst Abhishek Shukla put the bear case on paper in a Monday note. "Debt market woes and moderating LLM revenues are exacerbating structural concerns for neoclouds," he wrote. Shukla rates CoreWeave a reduce with a $39 price target, which implies 36.5% downside from the level HSBC cited.

The pitch for these companies is simple: borrow heavily, buy chips and build capacity, then rent it out to AI developers. That model works only if the rent keeps coming. Elice's debut is one data point on whether public investors still want to pay for it.

The other side of the tape

Not everyone reads Tuesday as another leg down. Deutsche Bank strategist Jim Reid pointed to a technical positive. "On the bright side, the AI selloff began to stabilize, with the Philly semiconductor index SOXX finally breaking a run of 8 consecutive declines," he said. He added that "tech stocks in Asia have weakened again so the volatility continues."

That is the live argument this morning. One camp sees a bounce that has already failed. The other sees the first break in a long losing streak, still under threat from overseas.

Apple, OpenAI and the macro backdrop

Apple slipped about 1% in premarket trading after Loop Capital Markets downgraded the stock to hold, citing iPhone shipment reductions. Traders on StockTwits pushed back hard on the call, with several dismissing Loop as too small a firm to move the stock. The rest of the Magnificent Seven were mixed: Microsoft was up 0.4% while Nvidia and Meta were lower.

OpenAI is reportedly trying to lock in commitments for a roughly $30 billion private round, with SoftBank and MGX in talks, ahead of Anthropic's expected mid-November IPO. The raise could value OpenAI above $1.4 trillion. The company is reportedly pitching annualized revenue of $50 billion, which it expects to reach $70 billion by year-end. Those figures come from the reported pitch, not from audited results.

Elsewhere:

• Treasuries: the 10-year yield eased to about 5.12% to 5.13%, the 2-year to 4.78% and the 30-year to 5.46%.
• France: the gap between French and German 10-year yields widened to a 151 basis point peak, close to the 152 basis point high set just after the draft budget was presented.
• Commodities: Brent held above $110 a barrel, near a five-month high. Gold traded in a $4,116 to $4,147 range and copper hovered around $14,400 a ton.
• Crypto: Bitcoin was choppy around $81,000 to $82,000.

The Fed is in its blackout period, so no Fed speakers are scheduled. The U.S. data slate includes ADP weekly employment at 8:15 a.m., housing starts and building permits at 8:30 a.m., and September pending home sales at 10 a.m.

What comes next

The Fed's FOMC meeting concludes Oct. 28. Until then, earnings are the main source of new information. SpaceX, Netflix, General Motors, RTX and Northrop Grumman are all due to report, with SpaceX set to report after the close today.

The open question is whether AI infrastructure spending can show a return before debt costs catch up. With the 10-year Treasury yielding more than 5%, borrowed money is not cheap, and the neocloud business model depends on it.