Equity markets are digesting the midterm results with a pronounced split between breadth and the benchmarks. The S&P 500 is indicated at 7,664.22 (-0.32%) and the Nasdaq Composite at 25,420.96 (-1.23%), as weak chip earnings knock semiconductors off their perch. Meanwhile, the Dow Jones Industrial Average is at 53,488.75 (+0.25%) and continues to reflect the broader post-election relief bid. Beneath the surface, the rally is notably wide: ten of eleven sectors are in positive territory, led by Consumer Discretionary (+5.41%), Financials (+3.54%) and Communication Services (+3.46%). This is a rotation story, not a risk-off one.
The defining feature of the session is the dispersion inside mega-cap tech. MSFT (+6.68%), AMZN (+6.12%) and AAPL (+5.31%) are surging and, per IBD, flashing buy signals. In contrast, NVDA (-3.17%), AVGO (-2.00%) and TSLA (-3.34%) are under pressure. The Reuters observation that data-center stocks sank after the midterms helps explain CAT's 5.23% decline, given its power-generation exposure. Defense contractor RTX (-2.64%) is also softening as the market reprices a Democratic-controlled Congress. Energy (-4.65%) is the clear loser. Refiners MPC (-8.11%) and VLO (-5.76%) are leading the decline even with WTI only modestly lower at $87.46 (-0.75%). That pattern suggests investors are discounting a less favorable policy and regulatory backdrop rather than reacting to spot crude.
The macro picture argues for caution about extrapolating the relief bid. Wednesday's ISM Services PMI came in at 54.5, roughly in line with expectations. However, New Orders slumped to 55.9 from 59.8, and the S&P Global Services PMI was revised down to 56.1, well short of the 57.9 estimate. The Atlanta Fed GDPNow model eased to 3.4% from 3.7%. On the positive side, ISM Services Prices cooled to 73.0 and ADP private payrolls beat at 86K. Policy expectations, however, remain firmly hawkish: Polymarket traders assign 98% odds to no Fed rate cuts in 2026. That leaves equities dependent on earnings and growth rather than monetary relief. Gold's 1.35% gain to $4,127.80, which powered NEM up 9.90%, underscores lingering demand for hedges, and SPY's put/call ratio of 1.24 and positive 25-delta skew point the same way.
Today's calendar includes initial jobless claims (consensus 196K) and preliminary Q3 productivity (expected 2.8% vs. 1.4% prior), with unit labor costs seen easing to 0.6%. Scheduled remarks from Fed officials Hammack and Barkin round out the day. The bigger test arrives Friday with October nonfarm payrolls (consensus 65K vs. 29K prior) and the unemployment rate (4.2%), followed by Tuesday's CPI, where core is expected to ease to 2.5% YoY. SPY implied volatility sits in a depressed regime with a ±0.9% implied move, while the market faces a heavy catalyst slate. That combination leaves room for volatility expansion if payrolls or inflation surprise. Overseas, Europe is embracing the U.S. outcome (DAX +2.22%, Euro Stoxx 50 +1.97%) and the Hang Seng is up 3.36%, whereas the Nikkei's 1.83% drop mirrors the chip weakness weighing on the Nasdaq.
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