AWS Sells Out of Capacity Into 2028: 8 Key Items Shaping the Stock Market Monday

These are the early headlines and other items poised to influence the market at the start of trading Monday. As we share this collection of market drivers, U.S. equity futures point to positive start to the trading week.

1. Oil prices fell on Monday, easing back from the $117 a barrel mark touched in a burst of volatile trading on Friday, as traders remain focused on the Middle East conflict… The steadier trading follows a frantic session on Friday when oil prices surged to five-month highs, partly driven by fears that US President Donald Trump would launch fresh attacks on Iran after the US midterm elections. (FT) US stock index futures ticked higher on Monday as crude oil prices retreated from last week’s surge, lifting sentiment at the start of a week dominated by corporate earnings and the Federal Reserve’s interest-rate decision. About one-third of S&P 500 companies are scheduled to report earnings this week, including hyperscalers Alphabet, Microsoft and Amazon.com, whose results would be closely watched for signs that hefty AI investments are paying off. (Reuters)

Coming off last week’s challenging performance, the move lower in oil prices this morning points to a bit of a rebound in equity futures. We’ll take it but as we explained in Friday’s Weekly Roundup, we are in for one of the busiest market weeks in some time. On tap are more hyperscaler earnings and what they say about AI usage and capex plans, and quarterly results and guidance from the other 176 S&P 500 companies reporting this week. Our view is that the market will likely be trading day to day with its moves influenced by the latest corporate results. Also, this week, we have the Fed’s latest policy decision…

2. Kevin Warsh faces a familiar challenge this week if the Federal Reserve holds interest rates steady: He must reassure investors the central bank is committed to quashing inflation while explaining why officials chose not to raise rates. It’s the same task the Fed chairman fumbled in July, when investors took a rate hold in stride but balked at Warsh’s unwillingness to signal borrowing costs might need to move higher. (Bloomberg) Fed Chairman Kevin Warsh, speaking shortly after the inflation data was released, did nothing to change investors’ expectations of a hold. In public remarks on Oct. 16, the eve of the central bank’s premeeting quiet period, he made no mention of the inflation reports and said the economy had “broadly conformed” to officials’ expectations at their September meeting. The probability of a rate increase slid to around 15%. A hike now would come as a surprise less than a week before the midterm elections on Nov. 3. (WSJ)

For those of us that follow the data, you’ve seen inflation pressures accelerate both in the September data that has been published and in last week’s Flash October PMI data published by S&P Global. Normally that would lead market watchers to expect the Fed to deliver a rate hike Wednesday afternoon, but that isn’t what it expects, according to the CME FedWatch Tool.

Entering this week, that tool pegs the odds of the Fed standing still at more than 90%. Warsh’s lack of inflation comments as well as the proximity to the midterms are helping fuel that expectation but given the data our view is the market should brace for an incrementally hawkish tone from the Fed chair. With that in mind, we’ll be monitoring CME FedWatch Tool expectations for a 50-basis point rate hike at the Fed’s early December policy meeting. Current expectations are very low for such a move, around 8%, but if Warsh indicates the Fed needs to become more aggressive to combat inflation, we could see a big shift in that probability. If October inflation data reflects the Flash findings from S&P Global… let’s just say we’ll want to refer back to the CME FedWatch Tool multiple times in the coming weeks.

3. Alphabet, Amazon.com, and Microsoft will have a chance to steady the ship when they report September-quarter earnings this week. Each company should offer fresh demand and spending outlooks that will bleed into 2027. Their reports could revive—or further drag down—the broader tech trade, which has lost a notable amount of steam heading into the final months of the year. (Barron’s) Amazon CEO Andy Jassy said on Friday that Amazon Web Services’ cloud computing capacity is largely sold out through 2027, with significant commitments extending into 2028, on growing demand for AI infrastructure. (Reuters)

Earlier this year, Amazon (AMZN) had said it would spend about $220 billion in capital expenditure for 2026 with CEO Andy Jassy commenting that cloud-computing capacity for 2026 is already sold out. So far, SpaceX (SPCX) and Meta (META) have signaled higher AI and data center spending in the current quarter and next year. Given Jassy’s latest comment, odds are it will join them.

As we learned with Meta’s quarterly results last week, what Amazon as well as Microsoft (MSFT) and Google (GOOGL) say about capex plans will be measured against the impact to their free-cash flow and inferred capital needs… something SpaceX seems to have at least partially addressed even before Meta can use its new Class C stock to raise a purported $40 billion.

4. Elon Musk said on Sunday that SpaceX had closed $40 billion in debt financing for graphics processing units, underscoring the soaring cost of building AI computing capacity. Musk, in a post on X, attributed the successful debt raise to the company’s investment-grade status and revenue from its Starlink satellite internet and launch businesses… “This is primarily callable debt for GPU purchases that will arrive in Q1 and Q2. Not a major factor this quarter,” Musk said in the post. Musk said debt markets “have almost entirely shut off access to money for any company that doesn’t have substantial revenue independent of AI data centers.” As a result, he predicted neocloud companies would face significant consolidation and failures, and later said SpaceX won’t buy any neoclouds, calling it “pointless.” (Reuters)

Musk’s comment about that $40 billion means we’ll want to take another look at SpaceX’s balance sheet, but it also shows there is an appetite in the market for AI and data center funding. Of course, we’ll want to see the particulars of the transaction when the deal closes to assess the borrowing terms.

In all likelihood, Musk’s comment about neoclouds is going to weigh on shares of CoreWeave (CRWV), Nebius (NBIS) and other neoclouds as it rekindles capacity and consolidation concerns. Our thinking is that Musk is likely correct eventually (read that as several years), but given existing data center capacity constraints (re-read the Amazon comments above) and power constraints, in the near to medium term, hyperscalers and other seeking cloud capacity will need to tap neoclouds. The indicators that we will continue to monitor for when Musk’s call could start to emerge will be a combination of AI adoption and usage metrics. And yes, we do recognize that Musk’s comment about neoclouds is being made as SpaceX ramps its AI and data center capacity.

5. EQT Corp said on Monday it would acquire Range Resources in an all-stock deal valued at more than $50 billion, including debt, creating what the companies called the “largest vertically integrated natural gas producer” in the United States. (Reuters)

The two companies will hold a conference call this morning that should flesh out expected synergies and overall deal rationale. We see it as a reminder about M&A activity continues to percolate even though the current environment has probably brought some incremental caution. Still, published a few days ago, Dykema’s 2026 M&A Outlook Survey finds that among the executives, bankers, private equity leaders, and advisors surveyed, just over half expect U.S. M&A activity to strengthen over the next 12 months. A pick-up in that deal category, would be help compensate for a slowdown in the IPO market. Like many others, we see the market’s reception to the Anthropic IPO dictating the next phase for the IPO market.

6. Anthropic’s Claude accessed publicly available Georgia voter data without human authorization, a disclosure sure to add to growing concerns about AI security ahead of the upcoming midterm elections. Claude accessed aggregate vote counts while on an internal statistics project, pulling data that the state makes available to the public for a fee. It didn’t access the state’s voter registration system or change or pull any voting records, an Anthropic spokesperson said. (Axios) Investors, at least for now, seem to be gravitating toward companies that are expected to get a big boost in demand thanks to AI. Think cybersecurity as worries about data breaches and other concerns about rogue AI agents mount. (Barron’s)

That incident in Georgia will give us and many other investors another reason to read the expected S-1 filing from Anthropic very carefully. That filing, which was expected as soon as late last week, could land at the SEC website any day. Meanwhile, the breach of Georgia voter data is another reason for us to reiterate our view that cybersecurity stocks should be a part of every investor’s portfolio. These AI-led attacks should support bullish comments from CrowdStrike (CRWD), Fortinet (FTNT), and Palo Alto Networks (PANW) when they report their next quarterly results. Fortunately for us, the Portfolio has exposure to all three through our cybersecurity ETF holding.

7. Economic data today per TipRanks: Dallas Fed Manufacturing Index (October).

8. Companies reporting today per TipRanks: AM – AstraZeneca (AZN), Verizon (VZ). PM – Alexandria RE (ARE), Greenbrier (GBX), Kforce (KFRC), PriceSmart (PSMT), Principal Financial (PFG), Public Storage (PSA), Simpson Manufacturing (SSD), Welltower (WELL), Whirlpool (WHR).

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At the time of publication, TheStreet Pro Portfolio was long GOOGL, META, and MSFT.