Good morning. SpaceX said after Tuesday's close that its third-quarter revenue rose 161%, then Elon Musk said Tesla and SpaceX have formed committees to discuss a merger; SpaceX shares rose 8.1% after hours (CNBC). Nasdaq-100 futures are up 0.7%, Seoul's Kospi closed up 3.3% as Asian chip stocks rebounded, and contracts to buy existing homes fell to their lowest level on record.
📊 The Overnight Snapshot
Stocks, VIX and yields are Tuesday's close. Futures, oil and gold as of ~3:41 AM ET Wednesday vs. Tuesday's settle (WTI is now the December contract; November expired Tuesday). Dollar index as of ~3:51 AM ET. Crypto as of ~3:51 AM ET, vs. its 24-hour open. Nikkei and Kospi are Wednesday's close. Stoxx 600 is Wednesday's session, live, as of ~3:36 AM ET.
Market | Last | Change |
|---|---|---|
S&P 500 futures | 7,774.25 | ▲ 19.00 pts (+0.24%) |
Nasdaq-100 futures | 29,894.75 | ▲ 219.50 pts (+0.74%) |
Dow futures | 52,719 | Unchanged (0.00%) |
S&P 500 | 7,712.57 | ▲ 0.28% (+21.84) |
Nasdaq Composite | 26,424.82 | ▼ 0.02% (−6.07) |
Dow | 52,495.88 | ▲ 1.02% (+529.85) |
Russell 2000 | 2,773.42 | ▲ 1.65% (+45.12) |
VIX | 17.31 | ▼ 1.13 pts |
US 10Y yield | 5.12% | ▼ 3 bp |
US 2Y yield | 4.79% | ▲ 2 bp |
WTI oil (Dec) | $98.65 | ▲ 0.8% (vs. $97.82 Tue settle) |
Brent oil | $109.77 | ▲ 0.9% (vs. $108.79 Tue settle) |
Gold | $4,139.50 | ▼ 0.1% (vs. $4,142.60 Tue settle) |
Dollar index (DXY) | 101.75 | ▲ 0.05% |
Bitcoin | $83,064 | ▲ 2.0% |
Ether | $2,451 | ▲ 2.7% |
Nikkei 225 (Wed close) | 64,621.24 | ▲ 0.9% (+546) |
Kospi (Wed close) | 5,735.66 | ▲ 3.3% (+183) |
Stoxx 600 (Wed, live) | 639.60 | ▲ 0.2% |
One-line read: SpaceX lit up the AI trade after hours, and the bid traveled to Seoul and Tokyo.
🌙 What Happened While You Slept
SpaceX Beat, Then Floated a Tesla Merger
SpaceX's third-quarter revenue rose 161% from a year earlier to $14.58 billion, beating the $12.72 billion analysts expected (SpaceX; LSEG via CNBC). It earned $4.4 billion, after losing $1.05 billion a year ago. Its shares rose 8.1% to $159.70 in after-hours trading, after closing down 0.1% at $147.79 (CNBC). Then came the call. Musk said the boards of SpaceX and Tesla have formed special committees of independent directors to discuss a merger. "Do I think it would be a good idea? Yes," he said, adding that shareholders "have to be supportive" (CNBC). Most earnings calls end with guidance. This one also ended with a proposal.
The numbers: SpaceX's AI unit, which it calls Super Intelligence, brought in $7.56 billion, up from $813 million a year earlier and now more than half of total revenue (SpaceX; our math). Starlink's connectivity revenue rose 69% to $5.25 billion, and launches brought in $1.77 billion (SpaceX). Capital spending was $19.6 billion in the quarter, more than $16.4 billion of it for AI (CNBC). The CFO guided first-quarter 2027 revenue to $33 billion to $37 billion; analysts had expected about $22.2 billion (LSEG via CNBC). Tesla rose 1.8% to $380.45 after hours, and AI-adjacent names followed: CoreWeave +4.6%, Intel +3.2%, Nvidia +2.1% and Micron +2.1% (CNBC). Musk said AI chips being developed with Tesla and Intel are targeted for volume production in the third quarter of 2028 (CNBC).
Why it matters: CNBC puts SpaceX's market value at about $2 trillion and Tesla's at almost $1.5 trillion, so a combination would join two of the largest US-listed companies. Tesla sits in S&P 500 and Nasdaq-100 index funds, which means most 401(k)s already own a piece of this conversation. Nothing has been agreed. Musk said that on Tesla's side a deal would need the votes of 50% of all shares, not only those that vote, "and that's quite a high hurdle" (CNBC).
What to watch: Tesla reports after today's close, with a webcast at 5:30 PM ET (Tesla); analysts expect revenue to dip slightly from a year ago to $27.9 billion (LSEG via CNBC). Nasdaq-100 futures are up 0.7% as of ~3:41 AM ET (CNBC).
🔑 3 Things to Know Before the Open
The average stock finally joined the rally. The Dow rose 1.02% to 52,495.88 Tuesday, the S&P 500 gained 0.28% to 7,712.57 and the Nasdaq slipped 0.02% to 26,424.82 (Reuters). This time the gains were broad. The equal-weighted S&P 500 rose 1.15%, a day after it fell 0.34% while the regular index rose (CNBC). The Russell 2000 of smaller companies gained 1.65%, its biggest rise since Aug. 4 (CNBC; Reuters). Rising stocks beat falling ones about 2 to 1 on both the NYSE and the Nasdaq (Reuters). Healthcare led, up 2.3% to a record high, with Eli Lilly up 3.5% (Reuters; CNBC). Tech slipped 0.3% and communication services fell 0.9% as Meta lost 1.6% and Alphabet 1.1% (Reuters; CNBC). On earnings: 3M rose 5.8% after raising its profit forecast and expanding a data-center partnership with Amazon, Equifax gained 11.3% and Hasbro 11.2% (Reuters). General Motors fell 6.8% even after beating estimates. Its 2026 earnings guidance has a $13.25-a-share midpoint, below the $13.41 analysts expected, and it flagged about $2 billion of commodity cost inflation, including memory chips (CNBC). GE Aerospace fell 3.7% (CNBC). Why it matters: Of the 13% of S&P 500 companies that have reported, 86% beat earnings estimates (LSEG via Reuters). The S&P 500 is 1.4% below its Oct. 6 record close and up 12.7% this year (FRED; our math). An equal-weight fund and a regular S&P 500 fund own the same companies; Tuesday, the one that gives every company the same slice did four times better.
Netflix slipped; Meta and Tesla are up next. Netflix fell 5.8% to $64.72 after hours after forecasting fourth-quarter earnings of 67 cents a share, below the 73 cents analysts expected (Reuters; CNBC). Third-quarter revenue rose 11.8% to $12.87 billion, in line with forecasts but its slowest growth in nearly three years (Reuters). It also cut its 2026 advertising forecast to about $2.7 billion from about $3 billion. The stock had already fallen more than 40% over the past year (Reuters). Today, AT&T reports before the open (CNBC). After the close come Meta, with a call at 4:30 PM ET (Meta), Tesla, IBM, Lam Research and Texas Instruments (CNBC; Reuters). Why it matters: Meta and Tesla are among the largest holdings in S&P 500 and Nasdaq-100 funds. Meta's spending plans are also a direct read on the AI build-out, which pays the chip and data-center companies those same funds own.
Home contracts hit a record low. Pending home sales, which count contracts signed on existing homes, fell 7.3% in September to an index reading of 66.0, the lowest since the series began in 2001 (NAR; Reuters). Economists polled by Reuters expected a 0.5% dip. Contracts fell 11.3% from a year earlier, in all four regions (NAR). "Market conditions weakened in September due to fast-rising mortgage rates," NAR chief economist Lawrence Yun said. Builders broke ground on homes at a 1.221 million annual rate, down 5.2% from August, and below the 1.305 million economists polled by Reuters expected (Census Bureau; Reuters). Single-family starts fell 4.6% to 859,000 (Census Bureau). Builder stocks rose anyway, on a day long-term yields fell: D.R. Horton gained 3.6% and Lennar 3.7% (CNBC). The 10-year Treasury yield fell 3 bp to 5.12% and the 30-year 6 bp to 5.42%, while the 2-year rose 2 bp to 4.79% (US Treasury). Fed funds futures put an 83% chance on no change at next week's Fed meeting (CME FedWatch via Reuters, Oct. 21). The odds of a hike of at least a quarter point were 17.2%, down from 57.6% a month ago (CME FedWatch via Reuters, Oct. 20). Why it matters: The average 30-year mortgage rate was 7.40% last week (Freddie Mac via FRED); on a $400,000 loan that is about $2,770 a month in principal and interest (our math). That bill is the reason contracts are at a record low, and the 10-year is the number it follows.
📈 Chart of the Day
AI is now SpaceX's biggest business. For context, a year ago SpaceX's AI unit brought in $0.8 billion, about a seventh of revenue, and Starlink paid most of the bills. Notice the last quarter: AI revenue nearly tripled from the April–June quarter to $7.6 billion, passing Starlink's $5.2 billion. Source: SpaceX Q3 2026 earnings release (SEC Form 8-K, Exhibit 99.1), filed Oct. 20, 2026; segment revenue for the three months ended Sep. 30, 2025, Jun. 30, 2026 and Sep. 30, 2026. Unaudited.
⚡ Quick Hits
Servers: Super Micro Computer rose 15.5% after hours (CNBC). It estimated preliminary September-quarter revenue at $18.5 billion–$19.5 billion, well above its earlier guidance of $14.5 billion–$15.5 billion, citing demand for AI platforms (Super Micro).
Cards: Capital One rose 4.2% after hours after earning $5.61 a share, or $6.69 excluding items such as Discover integration costs (Capital One; CNBC).
Robots: Intuitive Surgical fell 7.0% after hours after reporting $3.00 a share, excluding items, on revenue of $3.05 billion (CNBC).
Oil: Brent touched $111.99 Tuesday, a five-month high, then settled down 0.7% at $108.79; November WTI expired down 1.8% at $101.79 (Reuters). Overnight, Brent is up 0.9% at $109.77 as of ~3:41 AM ET (CNBC). Iran's Revolutionary Guards said a supertanker struck a sea mine south of the Strait of Hormuz, per Iranian media, and industry data showed US crude stocks fell 4.9 million barrels last week, according to market sources (Reuters).
Asia: Seoul's exchange briefly paused program trading after Kospi 200 futures jumped 5% (CNBC). SK Hynix closed up 5.8% and Samsung Electronics 5.7% (Yahoo Finance), and AI infrastructure company Elice Group surged almost 30% a day after a slump in its debut (Reuters). Not all of AI rallied: Australian data center operator NextDC plunged 39.5% after slashing its revenue forecast, citing power supply delays (CNBC). Japan's September exports rose 16.7% from a year earlier, short of the 20.1% economists polled by Reuters expected (CNBC).
Batteries: CATL closed down 11.7% in Hong Kong after third-quarter profit rose 14.5%, as Citi cited weaker margins (CNBC).
France: The gap between French and German 10-year borrowing costs closed Tuesday at its widest since 2011, and French stocks fell 0.4% (Reuters). This morning, Carrefour fell 10.6% after France's largest grocer cut its profit forecast, citing national unrest (CNBC).
UK: Inflation rose to 3.5% in September, its highest in a year and above the 3.4% economists polled by Reuters expected, driven by motor fuel costs (ONS via CNBC).
Crypto: Bitcoin near $83,064 as of ~3:51 AM ET (+2.0% vs. its 24-hour open); Ether near $2,451 (+2.7%) (Coinbase).
🧠 Explain Like I'm Busy
What is a "special committee," and why does Tesla need one?
When a company's boss sits on both sides of a deal, the board hands the decision to a committee of independent directors, people with no stake in the other side. They hire their own bankers and lawyers, judge whether the price is fair to their shareholders, and can say no. Musk runs both SpaceX and Tesla, so he called himself "a conflicted party" who can't be in the talks (CNBC). Think of it as recusing yourself from judging a bake-off you entered. Forming a committee starts a review; it does not mean a deal is coming.
🗓️ Today's Catalysts (all times ET)
Day | Event | Why it matters |
|---|---|---|
Wed Oct 21 | AT&T before the open (CNBC) | Phone and broadband subscribers, as Starlink pushes into mobile. |
Wed | $13 billion 20-year Treasury bond auction, bids due 1:00 PM (TreasuryDirect) | How much buyers demand to lend for two decades at 5%+. |
Wed | Meta (call 4:30 PM) and Tesla (webcast 5:30 PM) after the close (Meta; Tesla); IBM, Lam Research and Texas Instruments also report (CNBC; Reuters) | The week's big AI, chip and Musk test. |
Thu Oct 22 | Weekly jobless claims, 8:30 AM (Labor Department); Procter & Gamble and American Airlines before the open (CNBC); Freddie Mac mortgage rates (Freddie Mac) | Layoffs, shoppers, fuel and mortgage rates. |
Fri Oct 23 | American Express reports, ~7:00 AM (American Express) | How card spenders are handling higher prices. |
Oct 27–28 | FOMC meeting (Federal Reserve) | Rates decision; target now 3.75%–4.00%. |
Wed Nov 11 | Veterans Day: bond market closed (SIFMA); stock market open (NYSE) | No Treasury trading that day. |
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That’s the desk. See you tomorrow at 6 AM ET.
— The Overnight Desk Team
Note: The Overnight Desk Team may hold positions in assets discussed. Nothing here is investment advice. · Sponsor: No one paid for any mention in this issue.
