Dow jumps 1,569 points as oil plunges and gold rallies

Europe finished higher on all nine indices tracked in the day's wrap, with Madrid's IBEX 35 jumping 3.00 percent to lead. The DAX closed 2.22 percent higher at 26,437.67, the FTSE MIB rose 2.18 percent to 51,031.02, the Euro Stoxx 50 rose 1.97 percent to 6,265.71, the CAC 40 rose 1.96 percent to 8,177.89, the STOXX Europe 600 rose 1.82 percent to 657.40, its highest close since August 26, and the FTSE 100 rose 1.79 percent to 10,829.21. Banks led the European advance, with the banking sector up 4.6 percent, while oil stocks fell 2.4 percent with Brent crude.

Asia's Wednesday closes, reported in the morning edition, stand unchanged in this edition: Shanghai rose 2.16 percent, Hong Kong rose 1.67 percent, Seoul rose 0.62 percent after an intraday swing, while Tokyo fell 1.42 percent on its return from holiday and Taipei fell 0.83 percent. The contrast between the sessions is instructive. Asia traded the overnight fear, that a Democratic Congress means tighter oversight of artificial intelligence spending. Europe and North America traded the daytime reading, that the same result means gridlock, lower borrowing pressure, and a smaller chance of a wider war. The market did not change its mind once; it changed its mind in stages, by time zone.

Private employers added 86,000 jobs in October, according to ADP, above the 69,000 expected by economists polled by Reuters, while September was revised down to 86,000 from 90,000. The ISM services index slipped to 54.5 from 54.9, a little below the 54.8 forecast, but still a 28th straight month in expansion territory, and S&P Global's final services reading came in at 56.1. Together, the two reports describe a labour market that is cooling slowly rather than breaking, and a services sector that is still growing, which is the combination that lets equities rally without forcing a rates rethink in either direction.

The bond market's verdict was a lower yield. The 10 year Treasury yield fell to 4.88 percent from 4.95 percent late Tuesday, with the drop tied in the report to lower oil prices and a lower risk of more government borrowing under a divided Congress. Traders were pricing an 83 percent chance of a December rate increase, according to CME Group's FedWatch tool as cited in the evening market digest. Thursday brings the Bank of England decision, widely expected to be a 25 basis point increase to 4.00 percent, and Friday brings the October jobs report, with a Reuters poll expecting 65,000 jobs and 4.2 percent unemployment. Friday, not Wednesday, is the data point that can still reverse this rally.

Brent crude fell 8.8 percent to $94.47 a barrel and West Texas Intermediate fell 8.74 percent to $87.70 a barrel, with Brent touching its lowest level since September 4. President Donald Trump said the United States had no immediate plans to strike Iran, Qatar stepped up mediation efforts, and a senior Iranian official indicated that Tehran and Washington remained far from an agreement, a combination that leaves diplomacy possible but not close. The market's judgment was blunt: the war-supply premium built up over the past week came out in a single session, and it came out faster than any inventory report could put it back.

The Energy Information Administration reported that United States crude inventories fell by 865,000 barrels to 409.8 million barrels in the week ended October 30, the fifth straight weekly drop, against a Reuters poll expectation for an 877,000 barrel build. Gasoline stocks fell 222,000 barrels to 209 million barrels, and distillate stocks fell 3.6 million barrels to 99.3 million barrels. In a normal week, that report supports prices. On Wednesday, it did not matter, because the price move was about the odds of a wider war, not about the week's stockpile arithmetic.

Metals ran the other way. Spot gold rose 3.34 percent to $4,059.39 an ounce, and December gold futures settled 3.36 percent higher at $4,072.30, the metal's biggest daily gain since mid-August, back above $4,000 after falling to $3,869.85 on October 30. Silver traded near $52.27 an ounce in the midday snapshot, up about 5 percent, copper held near $6.44 a pound with reports differing slightly on its direction on the day, and natural gas rose 1.67 percent to $2.9434 per million British thermal units, up from Tuesday's $2.8950 settlement. A weaker dollar, down to a more than one-month low, helped every dollar-priced commodity except oil, where the political repricing overwhelmed the currency tailwind.

Microsoft rose 6.68 percent to $555.80 and Amazon rose 6.12 percent to $266.03, with Apple also up more than 5 percent, as investors reassessed last week's cloud earnings in the new political light: Amazon Web Services grew 39 percent to $46 billion in the third quarter, and Microsoft pointed to Azure growth above 45 percent next quarter. McDonald's rose 6.53 percent to $280.22 after adjusted earnings of $3.57 a share beat the $3.38 expected, even as revenue of $7.16 billion missed and United States comparable sales fell 0.2 percent. Uber rose 4.91 percent to $69.87 after revenue of $14.8 billion, up 10 percent, and gross bookings of $59.8 billion, up 20 percent. DoorDash rose 8.33 percent to $198.59. Novo Nordisk rose 5.6 percent in Europe after its earnings beat and raised outlook, reported in the morning edition.

AMD is the day's fade. After jumping about 6 percent in premarket trading on data center revenue up 97 percent to $8.5 billion, AMD closed up only 1.01 percent at $488.78, while Nvidia fell more than 3 percent and Vertiv lost nearly 13 percent, as investors rotated out of artificial intelligence infrastructure suppliers and into the cloud and consumer names that benefit most from lower yields and lower oil. The rotation, not the earnings, set the closing prices.

After the close, the chip story continued in the same selective vein. Qualcomm reported adjusted earnings of $2.17 a share on revenue of $10.32 billion, narrowly beating consensus, with automotive revenue up 89 percent to $1.99 billion and data center related revenue of about $650 million, but handset chip sales of $5.14 billion came in below expectations and guidance for $2.15 to $2.35 a share on revenue of at least $10.4 billion was described as muted, and the shares came under pressure in after-hours trading. Arm beat estimates with revenue of $1.44 billion against $1.38 billion expected and adjusted profit of 52 cents a share against 47 cents expected, with licensing revenue of $773 million well above the $625.1 million expected, though royalty revenue of $670 million missed the $720.8 million expected, and the shares fell about 2 percent in extended trading. Both companies beat the headline. Neither beat the part of the report investors were watching.

Two other company items round out the day. Alphabet expanded its voluntary employee buyout programme to Canada, France, Germany, Japan, and Switzerland, as reported in the evening digest, as large technology companies manage costs while investing heavily in artificial intelligence infrastructure. Tesla fell more than 2.3 percent in the session, as Democratic victories raised concerns about tighter scrutiny of its businesses. No unverified allegation against a named company or person is carried in this edition.

Compare Wednesday's close to the last five days and the shape is a political shock absorbed in stages, with a sector rotation underneath it. Friday, October 30, was a tech-led fall: the Nasdaq down 2.86 percent, the S&P 500 down 1.82 percent, and the Dow down 1.09 percent. Monday split the tape, with the Dow up and technology down. Tuesday split it again, with the Nasdaq up 0.83 percent and the S&P 500 up 0.36 percent, but the Dow down 0.38 percent and Toronto down 0.75 percent. Wednesday reverses the Tuesday split and then some: every major index rises together, the Dow most of all, and Toronto's 2.28 percent gain erases Tuesday's loss three times over. A one-day rally does not erase a week of volatility, but a rally this broad, after two split days, is a different signal from a narrow bounce led by one sector.

The chain linking the drivers runs in order. First, politics: the midterm sweep first hurt chip shares overnight on oversight fears, then lifted broad equities as gridlock and a smaller Iran campaign were priced in. Second, oil: Brent's fall from its Friday intraday high of $117.64, through Monday's plunge of more than 7 percent, to Tuesday's $103.60 settlement and Wednesday's $94.47 close, is a drop of about $23 in five sessions, and it eases the inflation fear behind October's 4.0 percent eurozone print, even though that print's energy component, up 20.8 percent on the year, shows consumer prices have not yet felt the relief. Third, earnings: AMD, Arista, Qualcomm, and Arm all reported strong data center demand, yet only the cloud buyers closed sharply higher, which says the market is now paying for artificial intelligence revenue already booked, not for the infrastructure spending that might produce it later.

What would change the reading is Friday. If the jobs report lands near the 65,000 expected, with unemployment near 4.2 percent, Wednesday's chain holds: gridlock, cheaper oil, lower yields, and selective technology gains. If payrolls run hot, the yield leg tightens again and the December hike odds above 80 percent become a headwind rather than a backdrop. If the Iran diplomacy track produces a confirmed setback, oil's $94 close becomes a floor to test, not a relief to enjoy. The morning edition's warning still applies, in its stronger evening form: gold's 3.34 percent rise on a day equities rose 3 percent is the tell that the market bought the rally and hedged it at the same time.