STRAIGHT FROM THE TRADING FLOOR
by Eric Criscuolo - Market Strategist
Published on 11/05/26 (a/o 1:15 pm)
DOW 51,820 (-1536), S&P 500 7,399 (-289), Russell 2000 2,734 (-123), NYSE FANG+ 16,879 (-906), ICE Brent Crude $97.40/barrel (+$2.78), Gold $4,115/oz (+$42), Bitcoin ~75.8k (-4360)
MAC Desk Commentary:
Yesterday equity markets reacted to Tuesday’s Democratic sweep by hammering tech and the broader AI trade while bidding up basically everything else except Energy. Things were not looking good for stocks as the election results were coming in, with futures down well over 1% at their lows. However the sell-off stabilized before a consistent rally throughout the overnight session flipped the script. By the time the Closing Bell rang the S&P 500 was up 1.6%, while the equal-weight and Russell 2000 rose a similar amount. Crude got slammed, falling 8% which took Energy stocks and yields along with it and provided another tailwind for the broader equity market. Iran/inflation took much of the blame for the Republican bloodbath (including from Trump and Vance) leading to conjecture of an off-ramp for the conflict. The ramifications of Democratic leadership across federal and local governments leading to a slowdown in the AI buildout was a key contributor to the selloff in AI picks and shovels. Hyperscalers and mega caps were outliers in the tech weakness: AMZN / MSFT+6%, as any spending slowdown would ease their prodigious spending needs and could cement their competitive position. After falling below both the 50 and 100d ma last week, the S&P regained the 100d yesterday and closed right at its 50d.

The action was much more subdued last night. S&P futures were around unchanged but began to weaken as we approached the Open. Global tech was under pressure again, especially in Asia, but like yesterday the pain was relatively contained.
The S&P 500 opened slightly lower, just below the 50d, but immediately started dropping with Tech and the broader AI infrastructure stocks leading the way again as the containment was breached. The S&P tested support at 7400 and saw a modest bounce, but has since fallen below it with the 200d quickly approaching, about 70 points below current levels as the index falls ~4%.
Unlike yesterday when 9/11 sector were higher, the rest of the market isn’t coming to the rescue. Every sector is lower with the equal-weight down almost 3%, so it’s technically outperforming. Small caps have broken down and are trading inline with underperforming the S&P. There's a clear defensive tilt to performance.
Looking at the sectors, Tech is under duress. There are 10% losses in numerous semiconductor and optical networking stock, while software is getting hit as well after avoiding trading higher the last two days. Reports that MSFT is tightening oversight of data center partners is adding to the pressure. For Comm Services GOOG is only down 1% but META is off 4%, while other constituents are seeing sharper losses (NWS -10% on earnings. ECHO is down 10% as well on SPCX weakness, -10%). Elon Musk is not having a good 48 hours as TSLA is also down 10%, adding to the broader pressure on Consumer Discretionary. EXPE is down over 10% on earnings. TPR is a bright green standout after reporting a solid quarter. For Industrials, Defense contractors and AI infrastructure names are seeing yesterday’s selling pressure continue. Utilities (ex-IPPs) are outperforming on the defensive rotation, as are Staples, while oil’s gains are propping up Energy. One notable piece of tech news given the environment: Google announced it will invest $17B in the Wyoming’s first data center. It’s a partnership with Tallgrass Energy, Black Hills Energy, American Electric Power (AEP), and Related Digital. It doesn't take a frontier AI model to detect a pattern in the hardest hit S&P 500 stocks since Tuesday's close.  
Treasury yields were slightly higher and moved up a little more after more strong jobs data this morning, as well as productivity numbers that could have given the Fed more room to contemplate another hike in December. Weekly claims fell blow 190K as the labor market continues to offer no reason for the Fed to worry on that front. Productivity was better than expected and improved from last quarter, as unit labor costs fell almost 1%, below the 0.6% expectations, and versus rising almost 2% last quarter. However rates began to reverse lower as the selling pressure on stocks took hold, triggering safe haven flows into Treasuries. The 2y is down 10bp while 10 and 30ys down ~5bp. Market pricing for a December Fed rate hike has fallen from 83% yesterday to 67% currently. The US Dollar is down modestly, limiting losses in light of the yield move.

  • US 2yr -10bps to 4.50%, 5yr -8bps to 4.61%, 10yr -6bps to 4.83%, 30yr -4bps to 5.25%
  • USD index: -$0.09 to $101.33
Moving to international markets, Japan’s Nikkei fell ~2%. The big tech stocks got hammered- Advantest, Kioxia, Tokyo Electron down ~10%-plus. However most other areas were positive. In China, Shanghai was flat but the Hang Seng ripped ~4% as the giant consumer tech stocks shot higher- Tencent 7%, Alibaba +9%- continuing their recent strength after substantial underperformance. South Korea fell 5% but not surprisingly the memory giants (Samsung, SK Hynix down ~10%) bore the brunt of the damage, as well as other tech names. Industrials were also sharply lower. India and Australia rose ~3%. India’s Sensex has rallied back to a six-month high while Australia’s resource stocks saw sharp gains. European equities are broadly higher with France leading. The STOXX 600 was back near its record high but the region began to sell off as the US market opened. The BOE raised rates while Norges Bank held rates unchanged, both as expected. German factory orders recovered from last month’s drop but missed estimates, and French Industrial Production declined a little more than expected. 
Crude bounced after yesterday’s sharp sell-off, with reports of another tanker hit in the Strait. Around noon the NYT reported that Iran was reviewing proposals on its nuclear program, pulling oil off its highs though its looking to reverse that move as we type. Precious metals are following through on yesterday’s gains but the flight to safety bid for gold isn’t that impressive, as the metal is only up 1%. Bitcoin however is seeing a flight away from it as it falls over 5% and trades near $75k. 
Mercifully looking ahead, Dallas Fed President Logan- a dissenter at the last vote- speaks tonight on an AI and economic landscape panel. NY Fed President Williams will speak tomorrow morning in Europe at the ECB Conference on Money Markets. Monthly payrolls will be the primary data release, as well as the latest Univ of Michigan sentiment survey. Among  the earnings reports will be two neocloud names (WULF and IREN) that should be interesting to hear from given the recent stock moves. 

Earnings:
  • After-Market: ABNB, AGM, AKAM, AXON, CALY, CDNT, COMP, CPK, CPT, ED, DBX, DKNG, DOCS, DNA, DVN, EOG, EVCM, FIGS, GMED, GRND, HHH, IONQ, IREN, LION, LITE, LYFT, LYV, MAT, MCHP, MTD, MP, NET, OPEN, PAR, PLBY, PURR, QNT, REG, RGA, SARO, SERV, SPG, SOLV, SMR, TDC, TEAM, TXRH, VSAT, WYNN, YELP, ZD
  • Pre-Market (Fri): BAM, BEN, BIP, BLMN, CHTR, ESNT, FLR, GLP, HUM, MSGS, MRNA, PPL, UAA, UTZ, VST, WULF

Economic Data:
US:
  • Challenger job cuts: 44K vs prior 43.3K
  • Weekly claims: 189K vs 196K cons, prior 195K
  • Continuing Claims: 1718K vs 1710K cons, prior 1695K
  • Q3 Nonfarm Productivity q.q: 3.6% vs 2.8% cons, prior 2.1%
  • Unit Labor Costs: -0.7% vs 0.6% cons, prior 1.9%
  • Nat gas inventories: 77Bcf vs 81Bcf cons, prior 80Bcf
  • 4:30pm Fed Balance sheet
Global:
  • BOE rate decision: Raise 25bp to 4.0% as expected
  • Germany Factory Orders m.m: 4.4% vs 4.8% cons, prior -10.1%
  • France Industrial Production m.m: -0.5% vs 0.3% cons, prior -0.4%
  • Italy Retail Sales m.m: 0.1% vs 0.2% cons, prior 0.3%
  • Europe PPI m.m / y.y: 2.5% / 11.1% vs 2.5% / 10.9% cons, prior 2.0% / 8.3%
  • Brazil rate decision: Hold at 13.75% as expected
  • 2:00pm Mexico rate decision
STRAIGHT FROM THE TRADING FLOOR
by Eric Criscuolo - Market Strategist
Published on 11/05/26 (a/o 9:00 am)
Good morning,
 
Yesterday equity markets reacted to the Democratic sweep by hammering tech and the broader AI trade but bidding up basically everything else except Energy. It was a lot more bleak as the election results were coming in, with futures down well over 1% overnight but a consistent rally completely flipped the script. The S&P 500 rose 1.6%, while the equal-weight and Russell 2000 rose a similar amount. Crude got slammed, falling 8% which took Energy stocks along with it, along with yields, providing another equity tailwind. Iran/inflation took much of the blame for the Republican bloodbath (including by Trump and Vance) leading to conjecture of an off-ramp for the conflict. Elon Musk companies also had a bad day. The possible slowdown in the AI buildout with a Democratic leadership led to the selloff in AI picks and shovels but the hyperscalers and mega caps were outliers in the tech weakness: AMZN / MSFT+6%.
 
The action was much more subdued overnight. S&P futures are around unchanged but off their lows. Global tech was under pressure especially in Asia but like yesterday the pain is contained there. QCOM is down ~10% in the pre-market following earnings- handset revenue fell 26% and data center revenue is only starting to inflect. ARM is also down ~8% on earnings. On the other hand APP is up over 20% on a strong print and guide, allaying concerns of disintermediation. Consumer/retail stocks are ramping up their earnings reports. BROS and CAVA are under pressure while TPR is up over 10%.                    
 

 
Treasuries were slightly higher and moved up a little more after another strong jobless claims print as well as productivity numbers that give the Fed more room to contemplate another hike in December. Weekly claims fell blow 190K as the labor market continues to offer no reason for the Fed to worry on that front. Productivity was better than expected and improved from last quarter, as unit labor costs fell almost 1%, below the 0.6% expectations, and versus rising almost 2% last quarter.   
 
  • US 2yr +3bps to 4.63%, 5yr +2bps to 4.72%, 10yr +1bps to 4.90%, 30yr +0bps to 5.28%
  • USD index: +$0.06 to $101.49
Looking at international markets, Japan’s Nikkei fell ~2%. The big tech stocks got hammered- Advantest, Kioxia, Tokyo Electron down ~10%-plus. However most other areas were positive. In China, Shanghai was flat but the Hang Seng ripped ~4% as the big consumer tech stocks shot higher- Tencent 7%, Alibaba +9%- continuing their recent strength after substantial underperformance. South Korea fell 5% but not surprisingly the memory giants (Samsung, SK Hynix down ~10%) bore the brunt of the damage, as well as other tech names. Industrials were also sharply lower. India and Australia rose ~3%. India’s Sensex has rallied back to a six-month high while Australia’s resource stocks saw sharp gains. European equities are broadly higher with France leading. The STOXX 600 is back near its record high. Financials are performing well across the group. The BOE raised rates while Norges Bank held rates unchanged, both as expected. German factory orders recovered from last month’s drop but missed estimates, and French Industrial Production declined a little more than expected.
 

 
Crude is bouncing from yesterday’s sharp sell-off, with reports of another tanker hit in the Strait supporting the move. Precious metals are following through on yesterday’s gains as gold climbs 1%. Bitcoin is pulling back below $80K after yesterday’s rally.    
 

 
Earnings:
  • After-Market (Wed): After-Market: AFL, ALB, ALL, AMC, AMCR, APA, APP, ARM, BIO, BROS, CAVA, CF, COHR, COTY, CPAY, CW, ELF, ES, EW, EXPE, FICO, FIG, FSLY, GNK, GNL, GT, HUBS, ITT, LUMN, MCK, MET, MSI, PAYC, PTC, QCOM, QGEN, RCUS, SNAP, TPL, WOLF, WTS, WU, ZG
  • Pre-Market: AAP, APD, ArcelorMittal, BDX, CAH, CI CMI, COP, DTE, DUK, EVRG, GOOS, GPN, HAE, HTZ, INSW, IRM, KMB, MAIR, Maersk, ONIT, OSCR, PH, PLNT, PZZA, Rhinmetall, RL, ROK, SHAK, SO, SRE, TFX, TRGP, TPR, U, USFD, VIRT, VRSK, VTRS, ZTS, WEN, WRBY, ZTS
  • After-Market: ABNB, AGM, AKAM, AXON, CALY, CDNT, COMP, CPK, CPT, ED, DBX, DKNG, DOCS, DNA, DVN, EOG, EVCM, FIGS, GMED, GRND, HHH, IONQ, IREN, LION, LITE, LYFT, LYV, MAT, MCHP, MTD, MP, NET, OPEN, PAR, PLBY, PURR, QNT, REG, RGA, SARO, SERV, SPG, SOLV, SMR, TDC, TEAM, TXRH, VSAT, WYNN, YELP, ZD
Economic Data:
US:
  • Weekly claims: 189K vs 196K cons, prior 195K
    • Continuing Claims: 1718K vs 1710K cons, prior 1695K
  • Q3 Nonfarm Productivity q.q: 3.6% vs 2.8% cons, prior 2.1%
  • Unit Labor Costs: -0.7% vs 0.6% cons, prior 1.9%
  • Fed Speakers: Hammack (8:50am),  Barkin (9:10am)
  • 10:30am Nat gas inventories
  • 4:30pm Fed Balance sheet
Global:
  • BOE rate decision: Raise 25bp to 4.0% as expected
  • Germany Factory Orders m.m: 4.4% vs 4.8% cons, prior -10.1%
  • France Industrial Production m.m: -0.5% vs 0.3% cons, prior -0.4%
  • Italy Retail Sales m.m: 0.1% vs 0.2% cons, prior 0.3%
  • Europe PPI m.m / y.y: 2.5% / 11.1% vs 2.5% / 10.9% cons, prior 2.0% / 8.3%
  • Brazil rate decision: Hold at 13.75% as expected
  • 2:00pm Mexico rate decision

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