Financial markets continued to decline as investors sold AI-related stocks amid valuation concerns, while rotating into more defensive sectors such as healthcare and consumer staples. A stellar third-quarter earnings report from NVidia prompted investors to step in and buy the market, but a subsequent reversal lower raised concern about the market’s health. NVIDIA reported year-over-year revenue growth of 62% to $57 billion, while EPS of $1.30 beat the consensus estimate of $1.26. The company issued Q4 guidance above consensus and announced an additional $60 billion share repurchase authorization. Retailers Walmart and Lowes reported better-than-expected results, while Home Depot fell after it missed consensus earnings per share and lowered FY 2026 guidance.
The S&P 500 traded 2% lower and fell further below its 50-day moving average. The Dow gave up 1.9%, the NASDAQ shed 2.7%, and the Russell 2000 lost 0.8%. There were gains across the entire US yield curve as a dovish tone from New York Fed President Williams recalibrated the probability of a December rate cut to 71% from the prior day’s 39%. The FOMC minutes from October showed a divided Fed related to the next policy move. However, there seemed to be a consensus on proceeding with caution, given the uncertain environment. The markets will receive a deluge of economic data this week, which will likely dictate the Fed’s December monetary policy decision. The 2-year yield declined by ten basis points to 3.51%, while the 10-year yield fell by nine basis points to 4.06%. The government will sell 2-year notes on Monday, 5-year notes on Tuesday, and 7-year notes on Wednesday. Oil prices fell by 3.36% or $2.02 to close the week at $58.06 a barrel. Gold prices fell by $15.09 to $4,079.20 per ounce. Copper prices closed the week lower by four cents to $5.02 per Lb. Bitcoin’s price plunged by 9.3% or ~$9,000 to $86,600, amid speculation of forced selling. The US Dollar index rose by 0.9% to 100.15.
Wall Street received its first dose of government-related labor data since the government shut down. BLS data showed that 119k Non-Farm Payrolls were created in September, well above the 50k consensus estimate. Similarly, Private Payrolls increased by 97k versus the estimated 58k. That said, August figures were revised lower for both data sets. The Unemployment rate ticked higher to 4.3%, above the consensus estimate of 4.2%, while Average Hourly earnings fell to 0.2% from 0.3% in August. The Average Workweek figure also fell from the prior month to 34.2 hours. This data is quite old and backward-looking. The BLS announced that the October and November Employment Situation Report would be released on December 16th after the Federal Reserve’s December meeting. This in itself makes the upcoming data deluge even more meaningful to the Fed’s monetary policy decision. Initial Claims for the week ending 11/15 decreased by 8k to 220k, while Continuing Claims for the week ending 11/8 increased by 28k to 1.974- the highest level since November of 2021. The final reading for November’s University of Michigan’s Consumer Sentiment fell to 51 from October’s reading of 53.6 on concerns over higher prices and weakening incomes. Finally, the S&P Global Manufacturing PMI came in at 51.9, down from the prior figure of 52.5, while the Services PMI came in at 55, above the prior month’s reading of 54.8. In the coming week, we will receive the Producer Price Index and Retail Sales. Durable Goods, Jobless Claims, the second estimate of Q3 GDP, September’s PCE, Personal Spending, and Personal Income.
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