Morning in New York: The positive momentum remains fragile

A daily review and forecast of events in the U.S. stock market by Mikhail Denislamov, Deputy Director of Freedom Capital Markets Research.

Friday’s rebound in AI-sector stocks provided a positive boost to chipmakers in the Asia-Pacific region, but during overnight trading in the U.S., the sector—particularly NVIDIA (NVDA)—came under pressure once again. Following the Democrats’ victory in Texas, investors continue to price in the risk of delays in data center construction and postponed orders for chips and servers. At the same time, cloud companies will have time to utilize facilities that have already been built. Anthropic’s IPO is tentatively scheduled to take place before Thanksgiving (November 26).

WTI crude oil prices are falling and are trading around $90 per barrel. U.S. President Donald Trump said new strikes against Iran are unlikely given the progress in negotiations over the nuclear program and the reopening of the Strait of Hormuz. Last week, the decline in oil prices was accompanied by a drop in market inflation expectations and yields on 10-year Treasuries. If the negotiations lead to the resumption of shipping, a further decline in oil prices could trigger a correction in long-term Treasury yields, which would support stocks.

Following Thursday’s sell-off, the market estimated the probability of a Fed rate hike in December at approximately 67%. Currently, that figure has risen to nearly 80%, as the Labor Department’s October report showed that nonfarm payrolls increased by 165,000, compared with a consensus estimate of 70,000.

Today at 11:00 a.m. ET, the Federal Reserve Bank of New York will release data on households’ inflation expectations over a one-year horizon (consensus: 3.79%, previous reading: 3.9%). Freedom Broker forecasts a decline in the figure to 3.6%. Comments will be provided by the presidents of the Federal Reserve Banks of Chicago and Richmond, Ostin Goolsbee and Thomas Barkin, as well as Federal Reserve Board member Michelle Bowman. Treasury yield movements will be driven by expectations surrounding the upcoming release of consumer price index (CPI) data on November 10.

Before the market opens, Constellation Energy (CEG), NRG Energy (NRG), KKR (KKR), Ferguson (FERG), Barrick Mining (B), and monday.com (MNDY) will report their earnings. After the market closes, Rocket Lab (RKLB), AST SpaceMobile (ASTS), Occidental Petroleum (OXY), Take-Two Interactive (TTWO), Skydance (SKYD), Onto Innovation (ONTO), and Zeta Global (ZETA) will report their results.

U.S. index futures are trading with volatility. Nasdaq-100 futures have recouped most of their morning losses and are trading near zero, while S&P 500 futures are rising moderately. Pressure is concentrated in the semiconductor sector. The correction in oil prices and Treasury yields is supporting the broader market. We assess the risk balance for the upcoming session as neutral, with elevated volatility.

— As of 3:10 a.m. Eastern Time (ET), NVIDIA (NVDA) was down about 5% from its close on November 6. The board of directors launched an independent investigation following reports that CEO Jensen Huang may have been the target of foreign intelligence. The board had previously expressed confidence in the CEO, noting there was no reason to believe that the company’s confidential data or national security had been compromised.

— Berkshire Hathaway (BRK.B) reported a 5.8% year-over-year decline in third-quarter operating income to $12.7 billion. Underwriting income fell 43% to $1.35 billion. During the reporting period, the company repurchased $9.6 billion in shares, double the amount repurchased in the first half of the year.

— CoreWeave (CRWV) has offered to collaborate with Texas Governor-elect Gina Hinohose to complete data center projects that have already been approved and to develop regulations for the construction of new facilities. Ahead of the company’s quarterly earnings report on November 10, the timeline for bringing capacity online in the state remains a key focus for the investment community.

— Arrowhead Pharmaceuticals (ARWR) presented interim results from a Phase I/IIa study of the drug ARO-DIMER-PA. After a single dose, the mean reduction in LDL cholesterol in certain subgroups reached 65%, and the median reduction in triglycerides was 78% from baseline. The drug’s effect on cardiovascular health has yet to be evaluated.

Trading on November 6 on U.S. stock exchanges ended with mixed results. The S&P 500 rose 0.31%, the Nasdaq-100 rose 1.35%, the Dow Jones fell 0.46%, and the Russell 2000 rose 0.89%. The broad-market index’s rebound following the previous day’s sell-off was modest. The equally weighted ETF tracking the benchmark lost 0.38%, lagging behind the SPY by approximately 70 basis points. Of the 11 sector ETFs, only three closed in positive territory. The consumer staples ETF fell the most (−1.28%), and Walmart (WMT: −1.7%) was among the stocks that exerted the most significant downward pressure on the SPY.

Among sector ETFs, the IT sector ETF (+1.45%) emerged as the top performer thanks to a rebound in chip and equipment manufacturers. NVIDIA (NVDA: +2.8%) and AMD (AMD: +11.0%) made the largest positive contributions to the fund’s performance on the S&P 500, while declines in Microsoft (MSFT: −1.0%) and Apple (AAPL: −0.5%) held back its growth. Lam Research (LRCX: +8.2%) reacted positively to the expansion of its share buyback program by $25 billion. The SOX semiconductor index rose 4.2% but ended the week down 12.1%.

In the software sector, stock price movements were driven by companies’ forecasts. Cloudflare (NET: +9.9%) accelerated its revenue growth to 39% year-over-year and raised its full-year guidance. Atlassian (TEAM: −16.2%) expects cloud revenue growth to slow from 30.5% in the current quarter to approximately 27% in the next quarter.

A strong report from the Department of Labor reinforced expectations of a Fed rate hike at its December meeting. In October, nonfarm payrolls rose by 165,000 (consensus: 70,000), and the September figure was revised upward from 29,000 to 60,000. The unemployment rate fell to 4.1% (consensus: 4.2%). Average hourly earnings rose 0.4% month-over-month (consensus: 0.3%). The yield on two-year Treasuries rose by about 5 basis points to 4.51%, while the yield on 10-year Treasuries rose by 2 basis points to 4.86%. Against this backdrop, rate-sensitive real estate ETFs (−0.68%) and utility ETFs (−0.39%) corrected. The University of Michigan survey sent a more dovish signal on inflation. Annual inflation expectations fell from 4.7% to 4.3%, while the consumer sentiment index rose from 48 to 51 points.

This article was AI-translated and verified by a human editor