What moved
- US: The S&P 500 closed 0.6% higher at 7,722.60, 1.55% below its 52-week high. The Nasdaq Composite gained 1.18% to 26,477.81, while the Dow finished barely changed, up 0.03% at 52,377.57.
- Europe: The DAX closed 0.71% higher, the Euro Stoxx 50 added 0.79% and the CAC 40 rose 0.51%. The FTSE 100 went the other way, ending 0.75% lower at 10,686.54.
- Asia: The region split in two. The Kospi closed up 1.59% and the Nikkei up 0.92%. The Shanghai Composite fell 1.14%, the Shenzhen Component 3.67% and Taiwan 1.69%, while the Hang Seng slipped 0.23%.
Why
AI hardware divided the day, and where a market sat decided which side it was on. In New York the Philadelphia Semiconductor Index rose 3.6%, with every one of its members higher. Oracle widening its Nvidia partnership helped, as did a rebound in the 'neocloud' data-centre names that had been sold hard. Technology was the best S&P sector, up 1.7%. Chipmakers in Japan and Korea rallied on the same AI optimism after Anthropic filed for its IPO. China went the other way. Its AI shares are falling from very high valuations. Hopes of fresh stimulus are fading, and foreign bans on Chinese data-centre equipment are a further threat. The selling got heavier in the afternoon, even though September industrial profits grew faster.
Oil was the day's second story. Brent fell 5.2% to $109.77 after talks in Tehran raised hopes of calmer relations with Iran. Energy was the worst S&P sector, down 2.05%. The same move pulled down the FTSE 100, where BP and Shell fell alongside HSBC, whose third-quarter revenue missed forecasts, and Reckitt, which cut its growth outlook. Cheaper crude also eases inflation worries a day before the Fed meets.
Some moves have no clean explanation. The euro fell 0.77% against the dollar with no single trigger, and the dollar index's 0.4% gain looks more like trading ahead of the Fed than a reaction to news. Brazil's Bovespa slipped another 0.51%, after Monday's sell-off of Brazilian shares on the election result.
Sentiment & risk appetite
Investors took on more risk, but they concentrated it in a few places. The VIX, Wall Street's volatility gauge, closed at 17.52, down 0.87 points, and the MOVE index of bond-market volatility eased to 97.9. The US sector spread shows money moving between sectors rather than a broad rally: technology rose 1.7% while energy fell 2.05% and consumer staples 0.92%. PrimerIQ's breadth counts across our listed universe show the regional split. UK risers beat fallers 497 to 296 and Europe's 1,990 to 1,583. In Asia, fallers outnumbered risers two to one, 7,071 to 3,532. Safe havens also gained. Gold rose 0.85% to $4,072.70 and the dollar index is within 0.6% of its 52-week high. The 10-year Treasury yield barely moved, up 0.7bp at 4.993%.
Economic calendar
The one important US release came at 10:00 ET. The Conference Board's consumer confidence index rose 7.5 points to 91.7 in October, up from a revised 84.2 for September. Its current-conditions measure stood at 120.4 and its expectations measure at 72.6. In China, September industrial profits grew faster, but that did nothing for its stock markets.
Nothing else is due tonight. The next test is tomorrow, Wednesday, when the Fed announces its decision at 14:00 ET (18:00 GMT) and Chair Kevin Warsh holds a press conference at 14:30 ET. Futures markets put the chance of no change at about 90% and the chance of a December rate rise at close to 80%. The wording of the statement will matter more than the decision itself.
Earnings
Before the open, Coca-Cola beat earnings forecasts and raised its full-year guidance. Boeing lost $0.34 a share, more than the $0.21 analysts expected, and its shares fell as much as 10% during the session. After the close, investors are selling even the companies that beat. Seagate is down about 7% despite earnings of $7.68 a share against $7.17 expected, Teradyne about 6.6%, and Robinhood 4–5% after slightly missing on revenue. Visa is about 2% lower.