Stocks rebound on a strike delay, but three worries linger

Good morning. Wall Street rebounded last night. After President Trump said he won't strike Iran before the midterms, fears of Middle East escalation eased and oil fell. The Nasdaq and S&P 500 looked set to wrap up a week of record highs with gains.

AI stocks caught their breath, too. A day earlier, chip stocks had been rattled by a report that OpenAI's annualized revenue was $50 billion, well short of expectations; the gap was put down to differences in how revenue is counted, along with talk of $70 billion or more by year-end, and the selling calmed.

Still, it's too early to relax. First, the government's finances: the US deficit is close to $2 trillion this year, and interest on the debt now exceeds defense spending. In corporate credit, the gap between high-yield bonds and safe ones is the widest since April. And households are struggling: a Fed survey showed the share of households behind on debt payments is the highest since 2010.

All of this goes to the test next week, when big banks start reporting third-quarter earnings and inflation data arrives. With expectations this high, a growing chorus says things are fine only until earnings disappoint.