Market Update

Good morning,
 
One week until Thanksgiving and global equities are giving thanks to GPUs. Yesterday the S&P 500 broke a four-day losing streak with tech stocks bouncing modestly ahead of Nvidia earnings last night. Price action often helps to feed narratives and the recent pullback within the AI complex has been like Thanksgiving meal for the “AI bubble” narrative. In some ways this lowered the bar for Nvidia, and not surprisingly the company at the center of the AI related growth had another beat and raise quarter. CEO Jensen Huang was as bullish as ever - “Off the charts”, “sold out”, “exponentially” were some of the descriptions used for demand during various parts of the conference call. The next-gen Rubin chip is scheduled to ramp in 2H26. Nvidia addressed the growing scrutiny on chip depreciation schedules/obsolescence, stating older gen chips are still fully utilized, though sales of the H20 were insignificant. The stock is trading up >5% in the pre-market adding >$200B of market capitalization and has put a bid back underneath the entire AI complex and global markets. I would argue that the numbers coming in strong was the easy part, the real challenge will be in holding the gains.
 
S&P future were up ~1.25% ahead of this morning’s jobs data and have extended higher since currently up ~1.5%. If we open around these levels would put the cash index back above its 50d ma (~6,710). The VIX is pulling back sharply falling 4pts back under 20, highlighting just how puckered up markets were ahead of these events.
 

 
The delayed September jobs report showed a surprisingly strong increase of 119k jobs were added to the economy. The household survey also showed an increase of 251k jobs but there were negative revisions and the increase in labor force (470k) caused the unemployment rate to tick up to 4.4%. Initial claims held steady at 220k, but the continuing claims increased to 1.974ml. The next jobs will include October/November establishment surveys, but the October Household survey will not be collected. This will be released on December 16^th a week after the next Fed meeting. That scheduling along with hawkish commentary in the FOMC Minutes yesterday pushed probabilities of a rate cut in December lower yesterday. Interestingly despite the “stronger” data yields at the front end of the curve are moving lower this morning as it seems like markets are focused on the uptick in the unemployment rate.  The USD broke above $100 yesterday moving above its 200d ma for the first time since March. It is pulling back slightly after the data.
 

• US 2yr -3bps to 3.57%, 5yr -3bps to 3.68%, 10yr -2bps to 4.12%, 30yr -1bps to 4.75%
• USD index: -$0.07 to $100.08

 
European equites are trading higher with the major indexes up ~1% and Germany leading. Tech, financials, and industrial names are higher. The Nikkei jumped 2.7% overnight, riding the tailwinds of the Nvidia print. The index ripped higher at the Open but spent the rest of the day in consolidation. The yen continued to weaken and is now trading above ¥157/$. Approval to restart the Kashiwazaki-Kariwa nuclear power plant could happen this week. Besides the obvious historical significance, it’s also the world’s biggest nuclear plant.  While Japan jumped, China was flat to down. One and fiver-year LPRs were left unchanged, as expected. 
 

 
 
Commodities are mixed. Oil prices are trying to stabilize after falling sharply with ICE Brent up just under 1% trading ~$64. Metals have been pulling back since the jobs report. Ag is higher with corn up 3%. Crypto has also started to pullback after the data. Bitcoin is holding just above 90k, but Ethereum is breaking back under 3k.  
 

 
 
Earnings/Corporate Updates:

• After-Market: BV, CPA, EARN, NJR, NVDA,PANW, TBBB, UTI
• Pre-Market: ATKR, BBWI, DAO, J, MMS, RERE, STG, TEN, VIPS, WMT, ZIM, ZKH
•  After-Market: AUNA, BULL, ESE, ESTC, GAP, INTU, NGVC, POST, PXED, ROST, UGI, VEEV

Economic Data:
US:

• September Nonfarm Payrolls: 119k vs. 50k cons., prior 22k
  • Unemployment Rate: 4.4% vs. 4.3% cons. prior 4.3%
  • Participation Rate: 62.4% prior 62.3%
  • Average Hourly Earnings: vs. 0.3% cons. prior 0.3%
• Philadelphia Fed: vs. -3.1 cons., prior -12.8
• Initial Claims: 220k prior 232k
• Continuing Claims: 1.974ml prior 1.957ml
• 10:00 Existing Home Sales
• 10:30 Natural Gas Inventories
• 11:00 KC Fed Index

Global:

• China 1/5 LPR rates left unchanged at 3% and 3.5%
• Germany PPI: 0.1% vs. 0% cons. prior -0.1%