Dear Trader,
Thursday was the kind of day that makes people check their account balance twice and then close the app.
The Nasdaq 100 fell 6.4%, chips dropped 12%, and $2.3 trillion in market value went up in smoke.
Friday morning the jobs report came in at more than double what anyone expected.
So the AI trade is broken, the economy is fine, and the Fed now has every reason to hike again in December.
That’s a lot to digest before 9:30, which is why Mark Sebastian’s hosting State of the Market today and he’s not doing it alone.
He’s bringing on Tim Colby first to work through the jobs number and what a hawkish Fed does to a market that just lost its footing.
Then Hans Albrecht comes on to talk the AI selloff, the data center backlash, and whether Nvidia at 13 times forward earnings is a gift or a trap.
They’ll go through all three links below and everything else that happened in the last 24 hours. If you’ve got a position you’re nervous about, this is the room to bring it to.
Click this link to jump to the State of the Market live room.
This link adds State of the Market to your calendar.
The Daily News Breakdown
SNEAKER: The jobs report came in at 165,000 and made every economist on the Bloomberg survey look like they were throwing darts. Consensus was 70,000. Unemployment slipped to 4.1%. September got revised up from 29,000 to 60,000, and wages grew 0.4% on the month. Professional and business services, the sector everyone assumed AI was eating alive, added 70,000 jobs. Healthcare added 42,000. Manufacturing chipped in 19,000. In a normal year this would be good news. In a year where the Fed just hiked, it’s ammunition for another one. CME FedWatch now puts December at a 73% chance of 25 basis points, up from 67% on Thursday. Nobody buys a dip hoping for a hawkish Fed.
SIREN: Futures spent Friday morning trying to find a floor after Thursday erased $2.3 trillion in market value. Nasdaq-100 futures bounced more than 1.5% after the index closed in correction territory. Dow futures slid 0.8%. The S&P barely moved. Blame the AI trade. Nvidia, Micron, AMD and Sandisk took the direct hit after the midterms handed Democrats both chambers and a batch of governors who campaigned against data centers. The VIX jumped 70% to 28, something that’s happened eight times since 1991. Yardeni calls the selloff overdone and is sticking with 7,900 on the S&P. Retail traders dumped $257 million in stocks, the fifth biggest selling day since 2020. One of those two camps is going to look foolish.
SIGN: Bloomberg says Wall Street is staring into the abyss on the AI trade, and for once the headline earns it. The semiconductor index dropped 12% Thursday and the Nasdaq 100 fell 6.4%, the worst day for both since March 2020. Nvidia lost $440 billion before lunch. UBS figures nearly a third of the computing power scheduled to come online in 2028 is now at risk, most of it in Texas, where the new governor ran on freezing data center approvals. The neoclouds got it worst. CoreWeave is down 75% from its peak and a few bucks above its IPO price. Nvidia now trades at 13 times forward earnings, down from 32 a year ago. Cheap, or correctly priced? Nobody wants to be first to find out.