What moved
Wall Street's last word was Wednesday's close: the Dow ended up 3.03% at 53,356.12, the S&P 500 up 1.58% at 7,688.62 and the Nasdaq up 1.44% at 25,736.51. Futures are the only live read, and they are split at the 08:45 ET mark: S&P 500 contracts up 0.16% at 7,733, Nasdaq 100 contracts down 0.69% at 28,368.75.
Europe is holding its gains: the CAC 40 is up 1.18%, the FTSE 100 0.79% at 10,914.61 (off an early 10,947.96), the DAX 0.75% and the Euro Stoxx 50 0.69%. The DAX trades within 0.13% of its 52-week high. Asia closed sharply divided: the Kospi lost 5.28% and the Nikkei 1.79%, while the Hang Seng gained 3.67%.
Why
Two forces are pulling the tape apart. The first is the Democratic sweep of Congress, which markets read as a check on fiscal and policy surprises and as added pressure on Washington to end the Iran war. That hope has taken Brent down 17.85% over five sessions; cheaper crude eases the inflation fears behind this year's rise in yields. Brent is back up 2.13% at $96.64 this morning, and the bounce has no clean catalyst. Reports of mine strikes on tankers near Hormuz are one candidate; a pause after so steep a fall may be another.
The second is a rethink on AI hardware. Investors fear a Democratic Congress means tighter data-centre rules, and Qualcomm's weak smartphone chip sales and rising memory costs added to the pressure. Seoul took the worst of it. Hong Kong went the other way, helped by Beijing's support for domestic chipmakers and a cheaper relending facility for share buybacks. Amazon, Meta and Alphabet are firmer before the open, since a slower build-out means less capital spending for them.
The US session is being asked to price whether that rotation survives a resilient economy. Solid data keeps a Fed hike alive, and higher long yields reduce the present value of distant profits, which hurts growth stocks most.
Sentiment & risk appetite
Risk appetite is healthy but selective. Our US breadth count showed 4,002 advancers against 2,042 decliners on Wednesday, while consumer discretionary rose 4.26%, technology was flat at -0.01% and energy fell 4.74%: a broad rally with a large hole in it. The VIX is 16.76, up 0.9%, and the MOVE index of bond volatility ended Wednesday down 6.09% at 93.885. Gold is up 1.44% at $4,131.70 and the dollar index 0.13% at 101.643, so havens are bid modestly alongside equities.
Economic calendar
Initial jobless claims fell to 189,000 for the week to 31 October against forecasts of 196,000, matching July's reading, the lowest since 1969. Continuing claims rose 23,000 to 1.718 million, a sign that layoffs are rare but so is hiring. Third-quarter productivity rose 3.6%, ahead of consensus near 3%, and unit labour costs fell 0.7% where a rise was expected: good growth with less wage-driven inflation. Yields barely reacted, with the 10-year up 1.3 basis points at 4.907% and the 5-year up 2.5 at 4.714%. Markets were already pricing about an 80% chance of a December Fed hike.
Earlier, the Bank of England raised Bank Rate 25 basis points to 4.00% on an 8-1 vote, with one member wanting 50. Sterling is up 0.2% at $1.3461. The Fed's Hammack was due to speak at 08:50 ET; Barkin follows at 09:10 ET and Logan at 19:00 ET, with natural gas inventories at 10:30 ET.
Earnings
ConocoPhillips beat with adjusted earnings of $3.27 a share against a $3.06 estimate and raised its dividend 11%. Qualcomm is falling sharply pre-market after last night's smartphone shortfall, while Toyota closed up 16.68% in Tokyo after lifting its profit forecast. In Europe, Maersk dropped on a third-quarter miss and Deutsche Telekom slipped as its buyback of up to €2bn disappointed despite a beat.