The S&P 500 Index ($SPX) (SPY) is down -1.70% today, the Dow Jones Industrial Average ($DOWI) (DIA) is down -0.76%, and the Nasdaq 100 Index ($IUXX) (QQQ) is down -3.60%. December E-mini S&P futures (ESZ26) are down -1.76%, and December E-mini Nasdaq futures (NQZ26) are down -3.69%.
US stock indices are moving sharply lower today, with the Nasdaq 100 falling to a 3-month low. The selloff in chipmakers and AI stocks has deepened today and is pressuring the broader market. The rotation trade has gathered momentum, fueled by the US midterm elections, with previously unfavored sectors and economically sensitive stocks outperforming at the expense of chipmakers. AI infrastructure stocks and chipmakers are under pressure on fears that the Democrats’ sweep of Congress in the midterm elections will lead to tighter US data center regulation. The rotation out of chipmakers reflects a growing view that the shifting political landscape in the US could favor a shift toward more cyclical sectors of the economy. Also weighing on market sentiment are higher crude oil prices, with WTI crude up more than +1% as Ukraine ramps up its attacks on Russian refineries.
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Today’s US economic news is supportive of stocks. Weekly unemployment claims unexpectedly fell to a 3.5-month low, a sign of labor market strength, while Q3 nonfarm productivity rose more than expected and Q3 unit labor costs unexpectedly declined, positive inflation developments.
US weekly initial unemployment claims unexpectedly fell -6,000 to a 3.5-month low of 189,000, showing a stronger labor market than expectations of an increase to 196,000.
US Q3 nonfarm productivity rose 3.6%, better than expectations of 2.7%. Q3 unit labor costs unexpectedly fell -0.7%, weaker than expectations of a +0.4% increase.
Hawkish comments today from Cleveland Fed President Beth Hammack are negative for stocks and bonds, as she said inflation has moved in the wrong direction since March and "I expect that monetary policy will need to move to a restrictive stance to bring inflation back to 2% in a timely manner."
Dec WTI crude oil prices (CLZ26) are up more than +1% today after Ukraine launched a drone attack on Russia's 340,000 bpd Ryazan refinery, one of the country's largest. Ukraine has ramped up its attacks on Russian oil facilities over the past week, attacking five refineries and a major crude-pumping station. Additional gains in crude prices may be limited on speculation that Democrats retaking Congress in the US midterm elections could accelerate efforts to end the US-Iran war.
Stocks are supported by the prospect of solid quarterly earnings. According to data compiled by Bloomberg Intelligence, Q3 S&P 500 earnings are expected to climb by +31% from a year earlier, up from a July estimate of 22%. As of today, 372 of the S&P 500 companies have reported results, with 84% beating estimates.
Overseas stock markets are mixed today. The Euro Stoxx 50 fell from a 5-week high and is down -0.25%. China’s Shanghai Composite rose to a 1-week high and closed up +0.10%. Japan's Nikkei-225 Stock Average closed down -1.79%.
Interest Rates
December 10-year T-notes (ZNZ6) are down by -6 ticks today. The 10-year T-note yield is up +1.2 bp to 4.900%. Dec T-notes fell from a 1.75-month high today, and the 10-year T-note yield rose from a 1.75-month low of 4.835%. T-notes came under pressure today after weekly jobless claims unexpectedly fell to a 3.5-month low, a hawkish factor for Fed policy. Also, hawkish comments from Cleveland Fed President Beth Hammack weighed on T-notes when she said restrictive rates are needed to cool inflation. In addition, today’s +1% increase in WTI crude oil prices has boosted inflation expectations, a bearish factor for T-notes.
T-note losses are limited after Q3 nonfarm productivity rose more than expected and Q3 unit labor costs unexpectedly declined, positive developments for inflation. T-notes also have support for a second day on speculation that the Democratic sweep of Congress in the midterm elections led to a divided government that could reduce the risk of additional spending or tax cuts that would require more Treasury issuance.
The markets are now pricing in an 83% chance of a +25 bp rate hike at the FOMC’s next meeting on December 8-9.
European government bond yields are moving lower today. The 10-year German bund yield rebounded from a 2.25-month low of 3.251% and is up +0.3 bp to 3.275%. The 10-year UK gilt yield rose from a 2.25-month low of 5.087% and is up +1.3 bp to 5.142%.
Eurozone Sep PPI rose +11.1% y/y, stronger than expectations of +10.6% y/y and the largest pace of increase in 3.5 years.
German Sep factory orders rose +4.4% m/m, the largest increase in 6 months but slightly weaker than expectations of +4.5% m/m.
ECB Governing Council member Ante Zigman said, "Inflation has continued to rise in October, and we can say there's a rather big chance of an ECB interest rate increase in December."
The Bank of England (BOE), in an 8-1 vote, raised its benchmark interest rate by +25 bp to 4.00%, and BOE Governor Bailey said it's "unlikely" this will be the last BOE rate hike unless the Iran war is resolved.
The markets are now pricing in an 87% chance of a +25 bp rate hike at the ECB’s next policy meeting on December 17.
US Stock Movers
Chipmakers and AI-infrastructure stocks are under pressure today on fears that the Democrats’ sweep of Congress in the midterm elections will lead to tighter US data center regulation. The iShares Semiconductor ETF (SOXX) is down more than -6% at a 6.5-month low. Sandisk (SNDK) is down more than -12%, and Advanced Micro Devices (AMD) and Western Digital (WDC) are down more than -10%. Also, ARM Holdings Plc(ARM) and Micron Technology (MU) are down more than -8%, and Lam Research (LRCX) and Intel (INTC) are down more than -7%. In addition, Applied Materials (AMAT) and KLA Corp (KLAC) are down more than -6%, and ASML Holding NV (ASML) and Broadcom (AVGO) are down more than -5%.
The Magnificent Seven Technology stocks, sans Apple, are falling today and weighing on the overall market. Nvidia (NVDA) is down more than -4%, and Meta Platforms (META) is down more than -3%. Also, Microsoft (MSFT) is down more than -2%, Amazon.com (AMZN) is down -0.91% and Alphabet (GOOGL) is down -0.69%.
Cloud infrastructure stocks are retreating for a second day today on concerns that the Democrat controlled Congress could boost regulations to limit the building of data centers. Nebius Group NV (NBIS) is down more than -13%, and Applied Digital (APLD) and Lumentum Holdings (LITE) are down more than -12%. Also, CoreWeave (CRWV) is down more than -8%, Arista Networks (ANET) is down more than -7%, and Oracle (ORCL) is down more than -4%.
Health insurance stocks are moving higher for a second day today on speculation that a Democratic controlled Congress could roll back the Medicaid cuts in last year’s tax and spending bill. Cardinal Health (CAH) is up more than +6%, and Centene (CNC), Elevance Health (ELV), the Cigna Group (CI) and United Health Services (UHS) are up more than +2%, and Humana (HUM), HCA Healthcare (HCA), and Molina Healthcare (MOH) are up more than +1%.
MercadoLibre (MELI) is down more than -13% after reporting Q3 net income of $448 million, weaker than the consensus of $473.2 million.
Expedia Group (EXPE) is down more than -12% after forecasting Q4 gross bookings of $27.9 billion to $28.4 billion, the midpoint below the consensus of $28.34 billion.
Qualcomm (QCOM) is down more than -9% after forecasting Q1 adjusted EPS of $2.15 to $2.25, the midpoint below the consensus of $2.32.
Tesla (TSLA) is down more than -9% and Space Exploration Technologies Corp (SPCX) is down more than -7% as they fall for a second day on concerns that a Democratic-controlled Congress will lead to tighter regulations that stifle growth in the companies of Elon Musk, who aligned himself with GOP politicians.
Zillow Group (ZG) is down more than -8% after reporting Q3 revenue of $724 million, weaker than the consensus of $753 million, and forecasting Q4 revenue of $635 million to $665 million, well below the consensus of $708.6 million.
AppLovin (APP) is up more than +32% to lead gainers in the S&P 500 and Nasdaq 100 after reporting Q3 revenue of $2.18 billion, stronger than the consensus of $2.07 billion, and forecasting Q4 total revenue of $2.37 billion to $2.40 billion, above the consensus of $2.25 billion.
EPAM Systems (EPAM) is up more than +15% after reporting Q3 adjusted EPS of $3.51, stronger than the consensus of $3.41, and raising its full-year adjusted EPS forecast to $13.23 to $13.31 from a previous forecast of $13.08 to $13.24, above the consensus of $13.15.
Tapestry (TPR) is up more than +9% after reporting Q1 adjusted EPS of $1.82, better than the consensus of $1.56, and raising its 2027 adjusted EPS forecast to $8.25 to $8.35 from a previous estimate of $7.80 to $7.90, well above the consensus of $7.96.
Earnings Reports (11/5/2026)
Air Products and Chemicals Inc (APD), Airbnb Inc (ABNB), Akamai Technologies Inc (AKAM), Ameren Corp (AEE), Axon Enterprise Inc (AXON), Becton Dickinson & Co (BDX), Bio-Techne Corp (TECH), Camden Property Trust CPT), Cardinal Health Inc (CAH), Cigna Group/The (CI), ConocoPhillips (COP), Consolidated Edison Inc (ED), Cummins Inc (CMI), Devon Energy Corp (DVN), DTE Energy Co (DTE), Duke Energy Corp (DUK), EOG Resources Inc (EOG), Evergy Inc (EVRG), Global Payments Inc (GPN), Iron Mountain Inc (IRM), Kimberly-Clark Corp (KMB), Live Nation Entertainment Inc (LYV), Mettler-Toledo International Inc (MTD), Microchip Technology Inc (MCHP), Monster Beverage Corp (MNST), Parker-Hannifin Corp (PH), Ralph Lauren Corp (RL), Regency Centers Corp (REG), Rockwell Automation Inc (ROK), Sempra (SRE), Simon Property Group Inc (SPG), Solventum Corp (SOLV), Southern Co/The (SO), Tapestry Inc (TPR), Targa Resources Corp (TRGP), Verisk Analytics Inc (VRSK), Viatris Inc (VTRS), Wynn Resorts Ltd (WYNN), Zoetis Inc (ZTS).
On the date of publication, Rich Asplund did not directly have a position in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
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