What moved
- US: The S&P 500 shed 0.35% to 7,592.4, the Nasdaq Composite 0.39% and the Dow 0.36%. A morning rebound faded through the afternoon. The small-cap Russell 2000 closed 1.66% lower, and S&P 500 futures are 0.21% softer in evening trade.
- Europe: Closed modestly higher after a mid-afternoon wobble when Wall Street opened. The FTSE 100 gained 0.25% to 10,863.09, the DAX 0.41%, the CAC 40 0.34% and the Euro Stoxx 50 0.09%.
- Asia: Split. The Hang Seng ended 2.23% lower and Shanghai slipped 0.22%. The Kospi finished up 1.98%, Taiwan 0.89% and the Nikkei 0.6%.
Why
Nvidia's board accepted Jensen Huang's resignation as chief executive. Chief financial officer Colette Kress is interim CEO, and Harvey Jones becomes the company's first board chair. The exit followed reports of Huang's affair with an alleged Chinese spy. Nvidia shares fell hard at the open and then won back much of the loss, which is why the index damage looked worse this morning than it did at the close. Money moved within the chip sector rather than leaving it. AMD rose 5.86% and Broadcom 5.54% on bets they could pick up Nvidia business, while AI-infrastructure names were hit: Nebius lost 16.84% and Super Micro 11.30%.
By the close, though, bonds were the bigger force. The 10-year Treasury yield rose 10.5bp to 5.103% and the 5-year 11.8bp. Tuesday's hotter October inflation report had already revived talk of a rate hike. On Thursday San Francisco Fed President Mary Daly said 'my bias is that further tightening will be needed'. Higher yields shrink what future profits are worth today, which hurts growth stocks. They also raise borrowing costs for smaller companies that rely on floating-rate debt. Oil added to the inflation worry: after Donald Trump posted that 'we don't need a deal with Iran', Brent rose 3.34% to $95.86.
Hong Kong's slide has no clean explanation in the day's coverage, and we would not force one.
Sentiment & risk appetite
This was a rates shock more than a flight to safety. Bonds and gold sold off together: gold fell 3.05% to $3,878.5, and the dollar index rose 0.27% to 103.193, within 0.1% of its 52-week high. The euro lost 1.0% against the dollar and sterling 0.84% to 1.3236. Volatility in rates rose faster than in stocks. The MOVE index of bond volatility jumped 6.49% to 98.4, while the VIX closed 6.92% higher at 18.7. Under the surface the market was weak. On PrimerIQ's count of US listings, 1,546 shares rose and 4,368 fell, an average move of -1.05%, much worse than the S&P's -0.35%. Energy (+1.51%) was the only S&P sector to rise. Bitcoin fell 3.36%.
Economic calendar
The one US release today was initial jobless claims. They rose to 200,000 in the week to 7 November, against 195,000 expected, while continuing claims fell to about 1.7 million. That is no sign of a labour market weak enough to hold the Fed back. The bigger backdrop is Tuesday's October CPI: prices rose 0.4% on the month against 0.3% expected, and core prices rose 0.3%. After that report, futures implied an 85% chance of a quarter-point hike at the 8–9 December meeting. Chicago Fed President Austan Goolsbee called this 'a precarious moment'. Nothing else is due today. The November CPI lands on 10 December, the day after the Fed decides.
Earnings
Cisco beat comfortably after the bell. Adjusted earnings per share came in at $1.40 and revenue rose 24% to $18.5bn. The company raised its full-year guidance and now expects $9bn of AI-infrastructure revenue from the largest cloud companies, and its shares rose after hours. Applied Materials edged past forecasts with $4.16 a share against $4.06 expected. Earlier in Europe, Munich Re beat expectations by a wide margin and Allianz fell short.