Welcome to the Prediction-Market Election

Host Alex Ossola reports that the Nasdaq fell 2.9%, its worst day since June, while the S&P 500 dropped 1.8% and the Dow lost more than 1%. Intel plunged more than 28%, wiping out roughly $140 billion in market value. For October, the Nasdaq fell 5.3%, its worst month since March 2025. Markets reporter David Uberti says investor fears have shifted from whether companies can grow quickly to whether they can afford the enormous cost of building AI infrastructure. Alphabet and Amazon both reported worse-than-expected earnings, and companies that were once “cash cows” are increasingly relying on debt to finance data centers because their operations no longer cover all of their spending. Investors are therefore questioning whether the AI investment will ultimately pay off. Uberti also says some traditional businesses, such as Google Search, appear to be weakening as AI changes the market. The selloff is especially punishing companies without large cash reserves. In a higher-interest-rate environment, borrowing is expensive, while companies with more than $100 billion in cash or cash equivalents are better positioned. Uberti says the skepticism may be less damaging to Anthropic, which is expected to go public next month, because investors are still assessing which AI companies can fund growth without turning heavily to debt.

In commodities, international oil rose above $117 a barrel after another tanker strike in the Middle East. Ukraine also struck an oil refinery in Russia, despite the Trump administration’s push for a pause in refinery attacks. Brent crude gained 14% in October. The disruption helped produce blockbuster third-quarter results for America’s two largest oil companies. Exxon Mobil’s earnings more than doubled to over $15 billion, while Chevron’s profit nearly tripled to about $10 billion. Both benefited from turmoil in energy markets after drones damaged major refineries in Russia and the Middle East. The companies are also increasing diesel output so they can benefit from elevated diesel prices. Ossola additionally points listeners to a special bonus episode about UPS and FedEx. That episode examines how the two delivery companies are not merely surviving high diesel costs but are actually thriving in that environment.

National security reporter Laura Seligman says the United States is sending additional troops and ships to the Middle East, including a third aircraft carrier and a second Marine amphibious-ready group. The military is on high alert for possible strike orders, although the deployment does not mean President Trump will necessarily order an attack. Oil prices had fallen when negotiations with Iran appeared to be restarting, then rose again as the military preparations became clearer. Seligman says the midterm elections may influence the decision. The war has raised oil and gasoline prices, and polls suggest Americans are unhappy with how the conflict is affecting their wallets. A Democratic victory could be interpreted as a repudiation of Trump’s Iran policy, but Trump would also face fewer political constraints after the election because he would not be running again. If strikes occur, Trump has referred to them as another “mini epic fury.” U.S. and Israeli strikes in February destroyed much of Iran’s missile and nuclear capability, but Iran has continued rebuilding drones and missiles and remains able to threaten ships in and around the Strait. Seligman says advisers have discussed changing tactics to target civilian energy infrastructure, which the earlier strikes largely did not hit.

Kalshi and Polymarket recorded more than $3 billion in trading volume across U.S. election markets in the previous month. Both market themselves as potentially more accurate than traditional polling because traders collectively express what they believe is likely to happen. Kevin Dugan, who covers the culture of business for the Journal, says polling has become harder because it is more difficult to reach representative voters. People are less likely to answer calls, and online polls do not necessarily produce the same quality of randomized data. Distrust of pollsters can also lead respondents to say what they think pollsters want to hear. Dugan says research from the Federal Reserve and Oregon State suggests markets can be accurate across many fields because traders have financial incentives to make good predictions. But the record is not uniformly strong. Prediction markets missed elections in Brazil and Serbia and misjudged the Democratic primary for governor in Wisconsin. Francesca Hong had odds above 96% on Polymarket just before the Wisconsin vote, partly because she had momentum and was associated with the Democratic Socialists of America. She lost by about half a percentage point, or roughly 4,000 votes, to moderate Democrat David Crowley. Dugan attributes such misses to poor-quality election data and relatively low trading volume. The midterms will therefore test whether the markets can produce reliable signals when data is uneven. Current markets put Democratic odds of taking the House in the 90%-plus range and the Senate around 70%, though Dugan says those House odds seem more optimistic than what he is hearing in Washington. Accurate results matter commercially: Polymarket CEO Shayne Coplan has called the company a “truth machine,” and repeated credibility problems could make traders less willing to trust or use the platforms. The episode notes that Polymarket has a data partnership with Dow Jones, the Wall Street Journal’s publisher.

Health reporter Jennifer Calfas says flu activity began in late August, roughly two months earlier than usual. CDC data shows positive flu tests at levels unusually high for this point in the year, and the early spread has been especially noticeable on the West Coast. The strain drawing attention is H1N1, including a mutation called G155E. Scientists believe the mutation may be allowing the virus to spread more easily. The current flu vaccine does not include that specific mutated H1N1, so it may not be as effective against the strain as it would be against a close vaccine match. Calfas nevertheless recommends vaccination because it should provide more protection than remaining unvaccinated and may work better against other influenza strains that emerge later. It is possible that the early beginning will produce two peaks during the season, with different influenza types spreading later. Calfas says it is still too early to know whether the season will ultimately be longer or more severe than normal. Her practical recommendation is to get a flu shot if one has not already been received, both for some protection against the current virus and in preparation for strains that may appear later.

Ossola notes that the next day’s program will be the weekly markets wrap-up, “What’s News in Markets.” Sunday’s episode will examine what the Trump administration’s efforts to expand its role in elections could mean for voters, followed by the regular Monday-morning show. The episode was produced by Danny Lewis, with Tali Arbel as supervising producer. Michael LaValle wrote the theme music, and the closing credits also identify I Shall Moosely as a development producer, Chris Zinsley as deputy editor, Lee Tal Malad as senior director of shows, and Samantha Henning as the Wall Street Journal’s head of multimedia. Alex Ossola hosts and signs off for the weekend.