Nasdaq enters correction as chip rout erases Wednesday's rally

Europe pared early gains and settled mostly lower on Thursday, as technology and financial shares tumbled on selling pressure. The STOXX Europe 600 ended down 0.38 percent, the FTSE 100 fell 0.43 percent to 10,782.66, and the DAX fell 0.43 percent to 26,325.01 after reaching a fresh intraday record of 26,692.90, while the CAC 40 rose 0.34 percent to 8,205.37 and Spain's IBEX 35 rose 0.59 percent. The Euro Stoxx 50 fell 0.55 percent to 6,231.54, Italy's FTSE MIB fell 1.03 percent, and Switzerland's SMI fell 0.37 percent. Rheinmetall was among the main drags in Frankfurt after the defence group lowered its 2026 outlook for a second time in several months.

Asia's Thursday closes, reported in the morning edition, stand unchanged in this edition: Hong Kong rose 3.67 percent, Australia rose 2.61 percent, and India rose 2.40 percent, while Seoul fell 5.28 percent, Taipei fell 3.20 percent, and Tokyo fell 1.79 percent. The contrast between the sessions is the day's lesson in time zones. Asia traded the chip purge first and hardest. Europe held its gains into the afternoon, then gave some back as the United States selloff gathered pace. By the New York close, the only market still standing on Thursday's gains was the one that had nothing to do with chips or data centers: oil.

Initial jobless claims fell 6,000 to a seasonally adjusted 189,000 in the week ended October 31, the lowest since 1969 and a 57-year low, against 196,000 expected, while continuing claims rose 23,000 to 1.718 million. Nonfarm productivity rose at a 3.6 percent annualized rate in the third quarter, above the 2.8 percent expected, after an upwardly revised 2.1 percent in the second quarter, and unit labor costs fell 0.7 percent, the first decline in more than a year. A Challenger, Gray and Christmas report showed United States employers announced the fewest layoff plans since 2023 in October. The labour market gave the Federal Reserve no reason to hurry, and the bond market took the hint.

Yields fell across the curve. The 10 year Treasury yield closed at 4.8408 percent, down 5.12 basis points from Wednesday's 4.889 percent, the 2 year yield fell 11.45 basis points to 4.4665 percent, and the 30 year yield fell 2.19 basis points to 5.2581 percent. Traders were pricing an 81.5 percent chance of a 25 basis point increase at the Federal Reserve's December 9 meeting, according to CME Group's FedWatch tool, down slightly from 83 percent on Wednesday, while prediction markets put the hike near 66 percent. Federal Reserve officials kept the hawkish tone: Richmond Fed President Thomas Barkin said a gradual pace of hikes makes sense, and Cleveland Fed President Beth Hammack said gradual rate hikes are the best way to get inflation to target. In London, Bank of England Governor Andrew Bailey said there is a case for another 25 basis point increase if the war does not end, and sterling still slipped, with the pound at $1.3448, down 0.17 percent. The dollar was mixed against the majors: the euro at $1.1217, the yen at 157.64 per dollar, and the Australian dollar down 1.13 percent to 0.6925.

Brent crude futures settled up $3.67, or 3.88 percent, at $98.29 a barrel, and West Texas Intermediate settled up $2.40, or 2.72 percent, at $90.52 a barrel, after both benchmarks tumbled more than 8 percent on Wednesday to their lowest settlements since August 31. Iran reported three more tankers had been damaged in the Strait of Hormuz on Thursday, and at least five vessels have reported incidents since Sunday, according to Reuters, at a pace close to October's 35 vessels hit, the most of any month of the war. The Islamic Revolutionary Guard Corps said two tankers had struck naval mines and another had caught fire, and the Iranian army later said three more tankers hit mines and caught fire. Separately, United Kingdom Maritime Trade Operations said a tanker was struck by two unidentified projectiles late on Wednesday, with the status of the crew, damage, and environmental impact unconfirmed.

The politics behind the price moved in both directions at once. On Wednesday, Vice President JD Vance blamed the Iran war for the midterm losses, raising hopes of a push toward ending the conflict. On Thursday, Iranian Supreme Leader Ayatollah Mojtaba Khamenei said there should not be "even the slightest inclination towards submission" to the United States, according to Reuters. The market's judgment was that the war premium comes out fast on hope and goes back in fast on shipping reports: Brent is still about $19 below its Friday intraday high of $117.64, but Thursday's $3.67 rebound shows how quickly a single Strait report can put a floor under the fall.

Metals split. Gold held its haven bid: Comex front-month gold settled $41.40 higher, or 1.02 percent, at $4,102.50 an ounce, its highest settlement since October 21, and spot gold rose 0.68 percent to $4,088.02. Silver fell 0.94 percent to $51.76 an ounce, and copper fell with the industrial trade: Comex front-month copper settled 2.41 percent lower at $6.2490 a pound, its lowest settlement since July 17. Natural gas traded near $2.94 per million British thermal units, down about half a percent in late trading, after the Energy Information Administration reported a 77 billion cubic foot storage build for the week, leaving the surplus at 1.4 percent above the five-year average. Bitcoin fell 5.69 percent to $75,861 late in the session, trading much more like the Nasdaq than like gold.

The PHLX Semiconductor index plunged 12.25 percent to 9,011.14, a drop of 1,257.52 points. AMD fell 17.26 percent to $404.40, Arm fell 13.08 percent to $166.72, Broadcom fell 10.43 percent to $291.53, Intel fell 10.33 percent to $52.25, Qualcomm fell 9.49 percent to $156.75, and Nvidia fell 9.26 percent to $181.60, according to Finnhub regular-session closes. Memory makers fell further still, with SanDisk down 22.69 percent and Micron down about 17 percent in the session close report. The trigger, as the session coverage framed it, was a reassessment of the Democratic sweep: investors weighed whether a change of power in Washington brings tighter scrutiny of the data center buildout, and possible moratoriums on data centers, that has driven the year's equity gains. Qualcomm's weak outlook added to the pressure, and Microsoft's tougher stance on neocloud projects hit those shares, according to the session coverage. AMD chief executive Lisa Su said the market is a little short-sighted and that she sees no slowdown in demand for artificial intelligence chips.

The selling was not only chips. Zillow fell 10.65 percent to $30.29 after reporting a drop in traffic to its apps and sites in what it called one of the toughest housing markets in a generation. Rockwell Automation fell 14.15 percent to $381.05 after reporting before the open. Cummins fell 4.93 percent to $448.58 even as it reported record third-quarter results: revenue rose 13 percent to $9.4 billion and diluted earnings were $8.25 a share, against $8.21 expected, but revenue missed the $9.87 billion expected and the company narrowed its full-year revenue growth outlook to about 10 percent, from 10 to 13 percent, on weak pickup truck demand, even as Power Systems sales rose 15 percent on global data center buildouts.

After the close, two reports bucked the session. Airbnb reported earnings of $3.16 a share on revenue of $4.87 billion, both ahead of forecasts, with revenue up 19 percent from a year earlier, nights and seats booked up 16 percent to 155.0 million, and gross booking value up 21 percent to $27.7 billion, and the shares rose about 10 percent after hours after closing down 3.54 percent at $170.13. The company raised its 2026 revenue growth forecast to the high teens, guided fourth-quarter revenue to $3.22 billion to $3.28 billion, and authorized up to an additional $12 billion of share repurchases. Cloudflare reported revenue of $782.5 million, up 39 percent from a year earlier, with non-GAAP earnings of $0.38 a share, up from $0.27, and raised its full-year outlook, and the shares climbed about 17 percent after hours. Monster Beverage reported third-quarter earnings of $0.29 a share against $0.30 expected, with net income of $568.4 million, after closing down 1.89 percent at $47.83. Atlassian also reported after the close; its results were not verified before this edition.

Energy names reported into a rising oil price and still fell with the market. ConocoPhillips raised its quarterly dividend by 11 percent and beat Wall Street estimates for third-quarter adjusted profit, helped by stronger commodity prices and cost cuts, and the shares closed down 1.08 percent at $135.46. Canadian Natural Resources beat estimates for third-quarter profit, with earnings of C$1.65 a share against C$1.47 expected, adjusted net earnings of $3.4 billion, and production of about 1,652,000 barrels of oil equivalent a day, and the shares closed down 1.45 percent at $48.92 in New York. With net debt at $12.1 billion, below its $13 billion target, Canadian Natural will now put 100 percent of free cash flow into share repurchases, targeting $800 million a month in November and December, and declared a quarterly dividend of C$0.625.

Compare Thursday's close to the last five days and the shape is a rally erased in a single session. 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 0.41 percent and technology down: the S&P 500 down 0.51 percent and the Nasdaq down 1.07 percent. 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 reversed the split and then some, with every major index rising together and the Dow up 3.03 percent. Thursday reverses Wednesday by more than Wednesday reversed Tuesday: the Dow's 1,833.06 point loss is larger than its 1,569.40 point gain the day before, the S&P 500's 4.36 percent fall is nearly three times its 1.58 percent rise, and the Nasdaq's 5.52 percent fall is nearly four times its 1.44 percent rise. A one-day rally does not erase a week of volatility, and a one-day rout does not erase it either, but the week now has two 4 percent days in opposite directions, and the second one was the worse of the two.

The chain linking the drivers runs in order. First, politics: the midterm sweep first lifted broad equities on gridlock, then turned on the chip and data center trade as oversight and possible moratoriums were priced in, and on Thursday that leg did all the damage while the broad leg gave back its gains too. 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 $94.62 close, is a drop of about $23 in five sessions, and Thursday's rebound to $98.29 shows the floor is set by shipping reports, not by inventories. Third, rates: yields fell even as oil rebounded, with the 2 year yield down 11.45 basis points, which says the bond market is pricing slower growth, not higher inflation, and the December hike odds near 81.5 percent are a bet on the Federal Reserve's tone, not on a hot economy. Fourth, earnings: Airbnb, Cloudflare, Qualcomm, Arm, Rockwell, and Cummins all reported, and the market punished the suppliers and rewarded the buyers, which says it 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, Thursday reads as a positioning unwind, the kind Nomura strategist Charlie McElligott described as hedge funds rushing to lock in profits before year-end, driven less by deteriorating fundamentals than by the calendar. 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 Strait of Hormuz produces a confirmed escalation, oil's $98 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 rise on a day equities fell 4 to 6 percent is the tell that the market sold the rally and hedged it at the same time, and this time the hedge was the only trade that worked.