ASML Says It Cannot Build Enough Machines For 2027 Or 2028

ASML raised its sales forecast for this year and said it will not be able to fully meet customer demand in 2027 or 2028. The Dutch firm makes the machines that print circuits onto the most advanced chips, so its order book is the closest thing the market has to a receipt for AI spending, and the results arrived after a week of selling in chip stocks. Bank of America goes into its own earnings carrying more than $1.21 billion in penalties the Treasury announced on Tuesday, and the September inflation report is scheduled for 8:30am ET.

Fast Facts

• UnitedHealth raised its outlook again after reporting third-quarter earnings of $4.56 a share and a medical-cost ratio of 88.4%, the share of premium dollars it pays back out as care (Read More)
• Second-quarter profit and revenue both fell at Albertsons, which pulled its full-year forecast and ordered a review of the business (Read More)
• Citigroup dropped 5.6% as bank earnings week opened on Tuesday, the worst showing on the KBW index that tracks bank stocks, with JPMorgan Chase and Goldman Sachs also slipping on weaker revenue from trading bonds (Read More)
• A bipartisan coalition of lawmakers called the administration's diesel deal with Russia a betrayal and asked whether it is legal (Read More)
• The ten-year Treasury yield, the interest the federal government pays to borrow for ten years, closed Tuesday at 5.21%, 3 hundredths of a percentage point lower than on Friday, a move traders call 3 basis points (Read More)
• The maker of Character.ai filed for Chapter 11 bankruptcy protection (Read More)

Global News

• Spain's inflation rate on the measure the European Union uses to compare countries rose to 5.0% in September from 4.6% in August, the fastest since February 2023, mostly on fuel and air-travel prices (Read More)
• Singapore's central bank unexpectedly left policy unchanged, saying it is well-positioned to respond to any risk to medium-term price stability (Read More)
• German wholesale prices, what distributors charge shops rather than what shoppers pay, rose 8.7% in September from a year earlier (Read More)
• Shares in Givaudan, the Swiss company that makes flavors and fragrances for food and perfume brands, rose more than 6% after sales grew 11% from a year earlier (Read More)

ASML Is Planning 30% More Capacity And Says It Still Will Not Be Enough

ASML reported third-quarter results in Amsterdam on Wednesday. Investing.com reported record third-quarter sales of about EUR 11.7 billion against EUR 9.33 billion in the second quarter, and net income of about EUR 5.0 billion against EUR 2.92 billion. Gross margin, the share of sales left after production costs, was 57.5% against 54%. The 2026 sales forecast went to EUR 44 to 45 billion from EUR 43 to 45 billion, the low end moving up. The part that mattered: Reuters reported that ASML said it will not be able to fully meet customer demand in 2027 or 2028, even with a 30% capacity increase planned for each of those years.

ASML shares rose in early European trading on Wednesday, with outlets putting the gain at roughly 2% to 2.6%. The STOXX 600, an index of 600 large European companies, was up 0.48% at 638.07 as of 8:57 a.m. GMT, with technology shares up 1.2%. MarketWatch described chip stocks as heading toward their worst stretch in 16 months.

ASML is the only company that makes extreme-ultraviolet lithography machines, lithography being the use of light to print circuit patterns onto silicon wafers, and every chipmaker building leading-edge processors has to buy them. They are ordered years before delivery, so the order book records what chipmakers have already committed to. An analyst forecasting AI demand is making a projection. A chipmaker ordering a machine for 2028 has put real money behind a factory it has not finished.

Two things stop the order book settling the argument. The roughly EUR 5.0 billion of net income includes a EUR 500 million gain from revaluing ASML's stake in Mistral, so it is not all operating strength. The doubt priced into chip stocks over the past week was never about whether chipmakers are spending. It is about whether AI revenue arrives to justify the spending, and an equipment maker's order book cannot answer that. MarketWatch reports customers are already asking to place orders for 2029 and 2030, which tells you what customers believe, not what turns out to be true.

Sources: Investing.com · MarketWatch · WSJ

Treasury Fined Bank Of America One Day Before Its Earnings Report

The U.S. Treasury announced enforcement actions against Bank of America on Tuesday over years of failures to monitor transactions and report suspicious activity. Treasury said the actions carry more than $1.21 billion in penalties, which its release calls the third-largest penalty in Treasury history. The Office of the Comptroller of the Currency, which supervises national banks, separately assessed a $750 million civil penalty. Axios reported that more than $5 billion in suspicious activity was either unreported or reported late, and that the bank said it will record a $1.2 billion charge, which is not tax-deductible. Bank of America is expected to report third-quarter results on Wednesday.

A fine reaches a share price by a short route. A penalty is cash owed, so it comes out of the quarter's profit. Most business costs are tax-deductible, meaning they shrink taxable profit and the tax bill with it, which softens the hit. This charge is not deductible, Axios reported, so the full amount lands on earnings, which is how the bank gets to about 17 cents a share. Because it was announced a day ahead of the report, investors could react to it before the results arrived. Shares closed down 1.14% at $53.96 on Tuesday and were down 1.7% in pre-open trading Wednesday, as of about 05:00 ET.

Reporting suspicious activity is a legal duty rather than a courtesy. Banks are required to watch the money crossing their accounts and to flag transactions that look like they could be hiding a crime, because the bank is often the only party positioned to see the pattern. Axios also reported a $350 million fine against American Express National Bank less than a week earlier, a sign regulators were not looking at just one firm.

Sources: U.S. Treasury · Axios · Investing.com

China's Exports Jumped 36.3% In September, And Its Factory Prices Are The Highest Since 2022

China's customs data, released Wednesday, showed September exports up 36.3% from a year earlier, to $447.18 billion, far above the 25.5% forecast quoted by Investing.com. Imports rose 31%, after 28.2% in August. Exports to the United States were up 39.6%, to $47.88 billion, and Al Jazeera put semiconductor exports up more than 108%, a figure that may not cover exactly the same period. All of those are dollar values rather than counts of goods, so part of a gain like that can be higher prices instead of more stuff leaving port. China's statistics bureau separately reported producer prices up 5.0% from a year earlier, up from 3.8% in August and the highest since 2022, with consumer prices up 0.9%, from 0.8%.

HSBC's Taylor Wang attributed the export strength mainly to high-tech demand supported by the global and domestic AI upcycle, meaning a stretch of rising AI spending. That is an analyst's reading, not something the customs data says by itself, but if it holds, this is the same AI demand ASML is describing, seen from the far end of the supply chain. The other thread is the gap between those two price readings. Producer prices are what factories charge for the goods they make; consumer prices are what shoppers pay in the store. Five percent against 0.9% is a wide gap, and the question it raises is who is absorbing the difference.

Sources: Al Jazeera · Investing.com · Seeking Alpha

What To Watch

Expected to report Wednesday, before the open:

• Bank of America (BAC), with analysts' estimates on the Nasdaq calendar at $1.11 a share against $1.06 a year earlier, and the $1.2 billion charge it has already announced
• Morgan Stanley (MS), estimated at $2.83 against $2.80 a year earlier
• BlackRock (BLK), estimated at $14.01 against $11.55 a year earlier
• Progressive (PGR), estimated at $4.46 against $4.05 a year earlier
• State Street (STT), estimated at $3.65 against $2.78 a year earlier
• Fastenal (FAST), estimated at $0.34 against $0.29 a year earlier

Every one of those figures is an estimate of what a company is expected to earn per share, not a result.

The September consumer price index is scheduled for 8:30am ET, and it is the number this week has been arranged around. Investing.com's own preview of the report looked for prices to rise 0.6% on the month and 3.6% over the year, up from 0.4% and 3.4%, with the core measure that strips out food and energy at 0.2% and 2.5%. Those are expectations rather than a surveyed consensus, and the most recent reading the Bureau of Labor Statistics has actually published is the 0.4% monthly rise for August 2026. The Federal Reserve's Beige Book, a survey of business conditions across its twelve districts, is scheduled for 2:00pm ET.

Later this week: Taiwan Semiconductor Manufacturing is expected to report before the open on Thursday, estimated at $4.45 a share against $2.92 a year earlier, which makes it the second read in two days on whether chip demand is as firm as ASML says. Charles Schwab, Prologis, Bank of New York Mellon, U.S. Bancorp and PNC are also expected Thursday morning, with Interactive Brokers and J.B. Hunt after the close. Travelers, Truist, M&T Bank, Citizens Financial and Regions are expected Friday before the open.

Further out: the Federal Open Market Committee, the group inside the Fed that sets interest rates, is scheduled to meet on October 27 and 28. Gross domestic product and the personal income and outlays report are scheduled for October 29.

The Classroom Takeaway

A company saying it cannot build enough of what it sells is a different kind of evidence from an analyst predicting that demand will be strong, and learning to tell those two apart is most of what reading an earnings report teaches. How a price moves on news like that is worth watching in a stock market simulator rather than reading about it a week later.