December Nasdaq 100 E-Mini futures (NQZ26) are down -0.52% this morning as investors continued to dump chipmakers and other AI-related stocks following the Democrats’ sweeping victory in the U.S. midterm elections.
Chip and AI infrastructure stocks slid in pre-market trading, extending yesterday’s slump amid concerns that the Democrats’ election sweep could bring stricter U.S. data center regulations and weaken demand. Sandisk (SNDK) was down over -3%, while Marvell Technology (MRVL) and Micron Technology (MU) each fell more than -2%.
Join 200K+ Subscribers: Find out why the midday Barchart Brief newsletter is a must-read for thousands daily.
Meanwhile, December S&P 500 E-Mini futures (ESZ26) and December Dow Mini futures (YMZ26) advanced, signaling further gains for the benchmarks after their post-election rally.
WTI crude prices edged higher on Thursday, stabilizing after a sharp drop in the previous session. Still, the U.S. benchmark hovered near two-month lows amid speculation that the Democratic sweep could speed up efforts to end the Middle East conflict. Treasuries were mixed.
Investors are now awaiting a new wave of U.S. economic data and corporate earnings reports, along with remarks from Federal Reserve officials.
In yesterday’s trading session, Wall Street’s three main equity benchmarks ended sharply higher as oil prices plunged and investors wagered that a divided government in Washington would benefit stocks. Most members of the Magnificent Seven rallied, with Microsoft (MSFT) and Amazon.com (AMZN) climbing over +6%. Also, healthcare stocks popped amid speculation that the Democratic-controlled Congress could reverse the Medicaid cuts included in last year’s tax and spending bill, with Centene (CNC) jumping over +12% and HCA Healthcare (HCA) surging more than +10%. In addition, Block (XYZ) soared over +15% and was among the top percentage gainers in the S&P 500 after the fintech firm posted upbeat Q3 results and raised its full-year guidance. On the bearish side, chip and AI infrastructure stocks sank, with Sandisk (SNDK) and Marvell Technology (MRVL) plunging over -7%.
Economic data released on Wednesday were mostly better than expected, supporting equities. The ADP National Employment Report showed that U.S. private-sector payrolls rose by 86K in October, stronger than expectations of 67K. Also, the U.S. trade deficit unexpectedly narrowed to -$105.0 billion in September, compared with expectations for a widening to -$107.9 billion. At the same time, the U.S. ISM services index fell to 54.5 in October, slightly below expectations of 54.8, but remained comfortably above the 50 level separating expansion from contraction.
“U.S. stocks are set for gains into year-end as the election removes a source of uncertainty, earnings remain strong, and lackluster investor positioning leaves room for renewed buying,” according to Citadel Securities’ Scott Rubner.
Third-quarter corporate earnings season continues, with notable companies including ConocoPhillips (COP), Airbnb (ABNB), Monster Beverage (MNST), and Cloudflare (NET) set to report their quarterly results today. According to Bloomberg Intelligence, S&P 500 companies are expected to post an average +31% jump in third-quarter earnings from a year earlier.
On the economic front, investors will be watching U.S. initial jobless claims data, set to be released in a couple of hours. Economists expect applications for U.S. unemployment benefits to come in at 197K in the week ended Oct. 31, compared with 194K in the prior week.
Preliminary U.S. unit labor costs and nonfarm productivity data will also be in focus today. Economists forecast Q3 unit labor costs to rise +0.3% q/q and nonfarm productivity to climb +2.8% q/q, compared with the second-quarter figures of +1.2% q/q and +1.4% q/q, respectively.
In addition, market participants will parse comments from Cleveland Fed President Beth Hammack, Richmond Fed President Tom Barkin, and Dallas Fed President Lorie Logan today.
U.S. rate futures are currently pricing in a 79.2% probability of a 25-basis-point rate hike and a 20.8% probability of no rate change at the December FOMC meeting.
In the bond market, the yield on the benchmark 10-year U.S. Treasury note is at 4.88%, down -0.10%.
The Euro Stoxx 50 Index is up +0.48% this morning, extending gains from the previous session that were fueled by the Democrats’ sweeping victory in the U.S. midterm elections. Mining stocks led the advance on Thursday, buoyed by higher metal prices and a post-earnings rally in ArcelorMittal shares. Travel and leisure stocks also climbed on hopes that the Democrats’ victory in the U.S. midterms could speed up efforts to end the war in Iran, which would drive down oil prices, lower fuel costs, and boost travel demand. In addition, bank stocks advanced. At the same time, defense stocks slid, with Rheinmetall (RHM.D.DX) tumbling over -16% after it cut its full-year sales guidance. Data released on Thursday showed that German monthly factory orders rose in September, partly recovering from August’s sharp decline. Separate data showed that French monthly industrial production unexpectedly fell in September. Meanwhile, Norway’s Norges Bank kept its benchmark rate unchanged at 4.50% on Thursday, as widely expected, but left the door open to additional rate hikes if inflation stayed elevated. Investor focus now turns to the Bank of England’s interest-rate decision. The BOE is widely expected to raise its key rate by 25 basis points to 4.00% later today, which would mark its first hike in more than three years, as policymakers seek to prevent persistently high energy prices from triggering second-round inflation effects. In other corporate news, Air France-KLM (AF.P.DX) surged over +11% after the company posted better-than-expected Q3 operating profit.
Germany’s Factory Orders, France’s Industrial Production, and Eurozone’s PPI data were released today.
The German September Factory Orders rose +4.4% m/m, weaker than expectations of +4.6% m/m.
The French September Industrial Production unexpectedly fell -0.5% m/m, weaker than expectations of +0.3% m/m.
Eurozone September PPI rose +2.5% m/m and +11.1% y/y, compared to expectations of +2.5% m/m and +10.9% y/y.
Asian stock markets today closed mixed. China’s Shanghai Composite Index ($CHSC) closed up +0.10%, and Japan’s Nikkei 225 Stock Index ($NKY) closed down -1.79%.
China’s Shanghai Composite Index closed slightly higher today, supported by a rotation trade sparked by the U.S. midterm elections. Gold-related stocks rallied on Thursday as the precious metal regained momentum, buoyed by lower oil prices and Treasury yields. Renewables stocks also jumped, extending their rally as investors viewed the Democratic Party’s sweep in the U.S. midterms as a positive development for the industry. In addition, semiconductor stocks climbed, bucking a selloff among their regional peers. However, gains in the benchmark index were capped by declines in energy and optical communications stocks. Morningstar analysts said on Thursday that “China and Hong Kong remain relatively attractive” following an October correction. Meanwhile, Hong Kong stocks jumped on Thursday as investors rotated into beaten-down internet giants. Alibaba Group climbed over +8%, while Tencent Holdings surged more than +7%. Elsewhere, Reuters reported on Thursday that flash-memory chipmaker Yangtze Memory Technologies Co. suspended plans for its Shanghai IPO after Beijing tightened approvals for share offerings in the wake of October’s stock market rout.
Japan’s Nikkei 225 Stock Index closed sharply lower today, dragged down by a steep selloff in the technology sector. Chip and other AI-related stocks cratered on Thursday, tracking an overnight slump in their U.S. peers as investors feared that Democratic control of Congress could bring tighter regulation of data centers. Chip-testing equipment maker Advantest tanked over -14%, memory-chip maker Kioxia Holdings sank more than -13%, and tech investor SoftBank Group fell over -6%, weighing heavily on the Nikkei. At the same time, automobile stocks surged as investors rotated out of tech shares and into consumer-oriented names, with the sector getting an additional boost from a jump in Toyota Motor shares. Toyota Motor popped over +16% after the automaker raised its full-year profit guidance, citing strong demand for its hybrid vehicles. The so-called stock-rotation trade also lifted real estate and healthcare shares. Meanwhile, minutes from the Bank of Japan’s September meeting released on Thursday showed that policymakers saw the need to continue raising interest rates, with some signaling the possibility of a faster pace of tightening. Many BOJ board members flagged a growing likelihood that consumer inflation would accelerate starting in early autumn, noting that rising costs were increasingly being passed on to consumers and that price increases were planned for more food and beverage items than in typical years. On the economic front, a survey showed that Japan’s services sector grew modestly in October as business activity and new orders both increased at a slightly faster pace. Investor attention now shifts to Japan’s September wage data and a speech from BOJ Governor Kazuo Ueda, both scheduled for Friday. The Nikkei Volatility Index, which takes into account the implied volatility of Nikkei 225 options, closed up +34.35% at 33.56.
The Japanese October S&P Global Services PMI was revised downward to 51.7 from the preliminary reading of 52.0.
Pre-Market U.S. Stock Movers
Chip and AI infrastructure stocks slid in pre-market trading, extending yesterday’s slump. Sandisk (SNDK) was down over -3%, while Marvell Technology (MRVL) and Micron Technology (MU) each fell more than -2%.
Most members of the Magnificent Seven advanced in pre-market trading, with Amazon.com (AMZN) and Meta Platforms (META) rising over +1%.
Qualcomm (QCOM) slumped more than -8% in pre-market trading after the largest maker of smartphone processors issued soft FQ1 adjusted EPS guidance.
You can see more pre-market stock movers here
Today’s U.S. Earnings Spotlight: Thursday - November 5th
ConocoPhillips (COP), Parker-Hannifin (PH), The Southern Company (SO), Airbnb (ABNB), Canadian Natural Resources (CNQ), Duke Energy (DUK), Monster Beverage (MNST), Cloudflare (NET), Simon Property Group (SPG), The Cigna Group (CI), EOG Resources (EOG), Air Products and Chemicals (APD), Cummins (CMI), TC Energy (TRP), Targa Resources (TRGP), Cardinal Health (CAH), Wheaton Precious Metals (WPM), Becton, Dickinson and Company (BDX), Natera (NTRA), Sempra (SRE), Devon Energy (DVN), Rockwell Automation (ROK), ArcelorMittal (MT), Atlassian (TEAM), AngloGold Ashanti (AU), Consolidated Edison (ED), Live Nation Entertainment (LYV), BeOne Medicines AG (ONC), Microchip Technology (MCHP), Kimberly-Clark (KMB), Zoetis (ZTS), Iron Mountain (IRM), Mettler-Toledo International (MTD), Axon Enterprise (AXON), Ameren (AEE), DTE Energy Company (DTE), Pembina Pipeline (PBA), Verisk Analytics (VRSK), Affirm Holdings (AFRM), Global Payments (GPN), Tapestry (TPR), Formula One Group (FWONK), Formula One Group (FWONA), Ralph Lauren (RL), US Foods Holding (USFD), Guardant Health (GH), Viatris (VTRS), BCE Inc. (BCE), Evergy (EVRG), Unity Software (U), Reinsurance Group of America (RGA), MACOM Technology Solutions Holdings (MTSI), Lamar Advertising Company (LAMR), Solventum (SOLV), The Carlyle Group (CG), Halozyme Therapeutics (HALO), Regency Centers (REG), Bentley Systems (BSY), Millicom International Cellular (TIGO), American Healthcare REIT (AHR), Texas Roadhouse (TXRH), IonQ, Inc. (IONQ), Akamai Technologies (AKAM), Madison Air Solutions (MAIR), DraftKings (DKNG), Globus Medical (GMED), Fidelity National Financial (FNF), Oscar Health (OSCR), Camden Property Trust (CPT), Advanced Drainage Systems (WMS), JFrog (FROG), Arrow Electronics (ARW), IAMGOLD (IAG), Viasat (VSAT), Nova Ltd. (NVMI), Paylocity Holding (PCTY), CareTrust REIT (CTRE), IREN Limited (IREN), Quantinuum (QNT), 10x Genomics (TXG), StandardAero (SARO), Wynn Resorts (WYNN), Virtu Financial (VIRT), Molson Coors Beverage Company (TAP), Celsius Holdings (CELH), Gildan Activewear (GIL), Lincoln National (LNC), Molson Coors Beverage Company (TAP.A), Dropbox (DBX), Primo Brands (PRMB), Compass (COMP), First Majestic Silver (AG), Lyft, Inc. (LYFT), Kratos Defense & Security Solutions (KTOS), EPAM Systems (EPAM), Genpact (G), MP Materials (MP), Loar Holdings (LOAR), Brookfield Business (BBUC), Open Text (OTEX), Frontdoor (FTDR), Ingredion (INGR), Teleflex (TFX), Installed Building Products (IBP), Doximity (DOCS), Aura Minerals (AUGO), ACI Worldwide (ACIW), OUTFRONT Media (OUT), The Middleby Corporation (MIDD), Haemonetics (HAE), StepStone Group (STEP), Nexstar Media Group (NXST), Concentra Group Holdings Parent (CON), Applied Optoelectronics (AAOI), Main Street Capital (MAIN), LifeStance Health Group (LFST), BGC Group (BGC), HA Sustainable Infrastructure Capital (HASI), Insight Enterprises (NSIT), Moelis & Company (MC), Marex Group (MRX), Vontier (VNT), International Seaways (INSW), Howard Hughes Holdings (HHH), Workiva (WK), Perimeter Group (PRM), Nelnet (NNI), Kontoor Brands (KTB), iRhythm Holdings (IRTC), Apple Hospitality REIT (APLE), Mattel (MAT), BILL Holdings (BILL), ICU Medical (ICUI), Planet Fitness (PLNT), Americold Realty Trust (COLD), Karman Holdings (KRMN), MDA Space (MDA), MDU Resources Group (MDU), Core Scientific (CORZ), Pulse Biosciences (PLSE), Core Natural Resources (CNR), Iovance Biotherapeutics (IOVA), First Advantage (FA), Sphere Entertainment Co. (SPHR), Lionsgate Studios (LION), FIGS, Inc. (FIGS), GPGI, Inc. (GPGI), Diodes (DIOD), Amylyx Pharmaceuticals (AMLX), Appian (APPN), The GEO Group (GEO), AvePoint (AVPT), Shift4 Payments (FOUR), WillScot Holdings (WSC), Lemonade (LMND), Chesapeake Utilities (CPK), CarGurus (CARG), Steven Madden (SHOO), Celcuity (CELC), Alarm.com Holdings (ALRM), NMI Holdings (NMIH), Century Aluminum Company (CENX), Teradata (TDC), Assured Guaranty (AGO), FS KKR Capital (FSK), Baytex Energy (BTE), Shake Shack (SHAK), ACM Research (ACMR), SiriusPoint (SPNT), Advance Auto Parts (AAP), Callaway Golf Company (CALY), F&G Annuities & Life (FG), Axcelis Technologies (ACLS), Privia Health Group (PRVA), IMAX Corporation (IMAX), Warby Parker (WRBY), DNOW Inc. (DNOW), NetScout Systems (NTCT).
On the date of publication, Oleksandr Pylypenko 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.
More news from Barchart
Nasdaq Futures Slip as Chip Stocks Extend Slide; Earnings and Fed Speak on Tap U.S. Futures Climb After Democrats Take Congress S&P Futures Muted With U.S. Midterms in Focus; Nasdaq Futures Gain as Chip Stocks Rebound U.S. Stock Futures Climb as Oil Slumps; Midterm Elections and Jobs Data in Focus