Stocks Slide To Session Lows As Risk Sentiment Fractures

Stocks Slide To Session Lows As Risk Sentiment Fractures

US equity futs are trading at session lows driven by a tech-led dip in stock futures over the past two hours as global risk sentiment turns sour to end the week, and with Goldman TMT specialist Peter Bartlett observing that  "a more bearish/skeptical view of the AI trade is coming up in more and more of our investor conversations… even if positioning hasn't changed much off the highs." As of 8:00am, S&P futures are down 0.5%, and Nasdaq futures drop 0.7%, with most of the Mag 7s underperforming (NVDA -0.7%, GOOG/L -0.5% and META -0.5%). Microsoft was poised for its longest losing streak since 2011. US Treasuries held onto yesterday’s gains with yields 1-2 bps higher after the two dismal labor reports . The dollar was steady, while Bitcoin headed for its worst week since March. Commodities are mixed; oil and precious metals are higher this morning, while base metals are lower. Macro headlines overnight were mostly quiet. Shutdown negotiation progress remains stalled; airline cuts begin this Friday. Chinese exports unexpectedly fall for the first time since February; Jensen Huang said he is not actively discussing the Blackwell shipment to China. 

In premarket trading, Mag 7 stocks are mostly lower: (Tesla +0.1%, Microsoft -0.4%, Apple -0.04%, Amazon -0.6%, Meta -0.5%, Alphabet -0.7%, Nvidia -0.8%) 

• Affirm Holdings (AFRM) jumps 10% after the buy-now-pay-later financing company raised its forecast for 2026 gross merchandise volume. The updated guidance beat the average analyst estimate.
• Airbnb Inc. (ABNB) rises 3% after issuing a better-than-expected outlook for the holiday quarter, with a recently launched “reserve now, pay later” feature helping fuel demand in the US.
• Applied Optoelectronics (AAOI) falls 13% after the maker of fiber-optic networking products reported third-quarter revenue that was slightly weaker than expected and gave a revenue outlook that was below the analyst consensus. However, analysts see strong prospects for 2026.
• Archer Aviation (ACHR) drops 11% after the company, which is trying to bring electric vertical takeoff and landing aircraft to market, said it is buying Hawthorne Airport in Los Angeles. The company is offering shares at $8 each to certain institutional investors to raise gross proceeds of $650m, part of which will be used to fund the acquisition.
• Block (XYZ) tumbles 14% after the fintech platform reported third-quarter adjusted earnings and net revenue that missed the average analyst estimate.
• Expedia (EXPE) rises 14% after the online travel agency’s results pointed to strong and resilient travel demand. Peer Airbnb (ABNB) also rallies after the company gave a better-than-expected outlook for the holiday quarter.
• Globus Medical (GMED) soars 28% after the medical-device maker increased its forecast for full-year profit following third-quarter earnings that topped estimates. Truist Securities upgrades to buy from hold, citing much higher earnings power following results.
• Intellia Therapeutics (NTLA) falls 30% after the biotech reported a patient died following treatment with its investigational gene-editing therapy to treat a rare disease.
• JFrog (FROG) soars 21% after the software company reported third-quarter results that beat expectations and raised its full-year forecast.
• KKR & Co. (KKR) is up around 5% after the investment company reported assets under management that beat the average analyst estimate. Fee-related earnings also came in above expectations.
• Microchip Technology (MCHP) falls 3% after the semiconductor-device company gave a weaker-than-expected revenue forecast.
• Monster Beverage (MNST) rises 4% after third-quarter results topped expectations. Analysts are positive about the energy drinks company’s gross margins and sales following the recent price hikes. Shares rose 4.1% in postmarket trading.
• Sandisk Corp. (SNDK) rises 3% after the computer hardware and storage company posted fiscal first quarter revenue that beat estimates. Second-quarter sales guidance also topped expectations. Analysts continue to see a strong AI-fueled tailwind for the company.
• Sweetgreen (SG) falls 13% after the restaurant chain cut its revenue guidance for the full year, missing the average analyst estimate. William Blair downgrades its rating on the stock.
• Take-Two Interactive Software Inc. (TTWO) falls 6% after delaying the release of Grand Theft Auto VI again, pushing back the much-anticipated video game by six months to November 2026.
• Wendy’s Co. (WEN) rises 7% after reporting that sales declined less than expected in the third quarter, a sign the burger chain is starting to rebound from a slump that’s eroded investor confidence this year.

In corporate news, Tesla shareholders approved a $1 trillion compensation package for CEO Elon Musk, more than 75% of the votes cast in favor of the largest payout ever awarded to a corporate leader. Comcast is said to explore Warner Bros Discovery Bid, and ITV confirmed discussions with Comcast’s Sky about a potential division sale. 

Investors are heading into the end of a dizzying week that has delivered one of the toughest tests yet for the post-April AI-fueled rally amid growing doubts that the surge has gone too far.  Futures edge lower in early trading, capping a week in which investors weighed concerns over tech valuations, sparse economic data, mixed signals on interest rate cuts and an unclear jobs market picture. With another empty Friday for labor economists, Fed commentary is drawing greater scrutiny. Austan Goolsbee said a lack of inflation data during the government shutdown makes him uneasy about continuing interest-rate cuts. That follows Beth Hammack’s caution that high inflation poses a bigger risk than job market weakness. John Williams sees Fed reserves as close to the desired level.

“Sentiment is probably modestly cautious,” said Karen Georges, a fund manager at Ecofi. “Any reassuring news on employment data in the US, a potential end to the shutdown, or tariff news-flow could give markets a new boost.”

With the US benchmark down 1.8% for the week, a notable feature has been the lack of clear catalysts behind the swings. Traders say the choppiness may linger for a while but expect it to remain relatively shallow, with solid earnings and the prospect of eventual Fed easing continuing to underpin sentiment.

“On the very short term, let’s say until the end of the year, we really don’t see any big correction on the horizon, we don’t see any type of catalyst for that,” said Arnaud Faller, chief investment officer at CPR Asset Management.

As noted last night, AI enthusiasm is increasingly meeting skepticism, with concerns centering on a question that threatens to undermine the hype: Who is going to provide all of funds needed to finance the lofty ambitions of OpenAI? 
Opinions vary. DoubleLine Capital’s Robert Cohen warns on novel project structures, like off-balance sheet funding, and the uncertainty over whether such huge projects will make money. Delphine Arnaud, portfolio manager at Edmond de Rothschild, shares concerns over how quickly heavy capex can translate into earnings but doesn’t see a bubble-bursting scenario. Japan’s largest tech fund says AI stocks are not in a bubble and can rise further. 

The silver lining: according to BofA, flows remain supportive with US equity funds attracting $19.6 billion for the week ending Nov. 5, an eighth consecutive week of inflows. That said, volatility gauges remain in focus with the VIX index back above 20 briefly on Thursday, and the VVIX rose at one point to the highest since mid-October.

Semiconductors remain in the spotlight. Nvidia isn’t in active discussions to sell its Blackwell AI chips to Chinese firms, said CEO Jensen Huang. The Netherlands is prepared to suspend its powers over Chinese-owned chipmaker Nexperia if China allows exports of its critical chips again.

Turning to earnings, out of the 448 S&P 500 companies that have reported so far in the earnings season, 82% have managed to beat analyst forecasts, while 14% have missed.  KKR, Franklin Resources, Duke Energy and Constellation Software are among companies expected to report results before the market opens. Analysts will be listening for Duke Energy details on new large-load customers like data centers as well as the utility’s plan for financing its rising capital expenditures. 

European stocks reverse an opening rise, with the Stoxx 600 falling 0.4% on a drag from travel, insurance and tech stocks. Novo Nordisk shares dropped after the Danish drugmaker increased its offer for Metsera Inc. The media and autos sectors outperformed, while travel and leisure shares lagged, dragged lower by IAG. Here are some of the biggest movers on Friday:

• Euronext shares rise 3% on third-quarter profit beat, improved cost guidance for the full year and a €250 million share buyback.
• ITV shares surge as much as 18% in London trading, after the broadcaster announced Sky’s owner Comcast is in preliminary discussions about a potential acquisition of its media and entertainment division.
• Monte Paschi shares rally as much as 5% to be the best performers on the Stoxx 600 Banks Index on Friday, after the Italian lender reported net income for the third quarter that beat the average analyst estimate.
• Amadeus shares rise as much as 4%, the most since July, after the company reported results that topped expectations in the third quarter.
• Arkema shares rise as much as 6.5%, the most since May, after the French chemicals company released earnings and lowered its guidance as expected.
• Aumovio shares rise as much as 6.5% after the auto parts supplier posted earnings ahead of expectations in the third quarter, despite a challenging sales backdrop.
• SBB shares advance as much as 13% after the Swedish landlord delivered net income of 803 million Swedish kronor ($83.8 million) for the third quarter.
• Novo Nordisk shares drop as much as 2.3% after the Danish drugmaker said it expects a negative low single-digit impact on global sales growth in 2026 following Thursday’s deal with the Trump administration.
• Rightmove shares fall as much as 28% after the UK online property portal announced plans to step up investment in artificial intelligence, which analysts said will reduce profit estimates for 2026 onward.
• IAG shares drop as much as 9.8%, the most since April, after reporting a miss on Ebit in the key third quarter.
• Dino Polska shares drop as much as 10% after the company reported EPS and sales below estimates on Thursday.

Earlier in the sesssion, Asian stocks fell, with technology-heavy markets leading the decline, as concerns about swelling valuations put the regional gauge on track for its worst week in three months. The MSCI Asia Pacific Index dropped as much as 1.3% on Friday, set for its worst week since August. Markets with large technology weightings, such as Japan, South Korea and Taiwan, tracked declines in US peers, while Hong Kong also slipped and China’s benchmarks closed lower. Indonesia advanced, and Indian equities trimmed most of their earlier losses. Tech stocks will continue to be in focus for the week ahead, with several firms in the region reporting earnings including Tencent, SoftBank and Sony. India will also report inflation figures, while Hong Kong and Malaysia will release gross domestic product data.

In FX, the dollar strengthens against most G-10 currencies, with the yen, kiwi and sterling underperforming. Fed rate-cut bets into 2026 following hawkish comments from Goolsbee and Hammack.

In rates, bonds falling, with 10-year Treasury yields up two basis points and declines across Europe and the UK. Investors trimming

Treasury futures trade off session lows leading into the US session, with yields still slightly higher on the day across the curve.  US long-end yields are about 1bp cheaper on the day, steepening the curve by less than 1bp; 10-year near 4.09% also is about 1bp higher on the day, outperforming UK counterpart by about 2bp, Germany’s by about half a basis point. IG dollar issuance slate empty so far and expected to be sparse. Thursday’s $9.7 billion haul brought weekly total to $55 billion, matching dealers’ projections. Focal points of US session include November preliminary University of Michigan sentiment, with October jobs report expected to be delayed due to the government shutdown. 

In commodities, gold rose and hovered around $4,000/oz. Oil prices rallying with Brent futures above $64/barrel.

The US economic calendar includes University of Michigan sentiment (10am), October NY Fed 1-year inflation expectations (11am) and September consumer credit (3pm). October jobs report would ordinarily appear at 8:30am. Fed speaker slate includes Governor Miran (3pm)

Top Overnight News

• About 700 flights today were canceled by the four biggest US airlines as the government ordered reduced operations. Trump's administration finalized flight cuts to start at 4% on Friday and will ramp up to 10% on November 14th: BBG
• VP JD Vance said Americans are about to start suffering some very real consequences because of the government shutdown.
• Senate Majority Leader John Thune will attempt to move legislation in the Senate on Friday that could lay the groundwork for reopening the government, although Democrats look like they could block this measure. Politico
• The Trump administration moved to appeal the judgement requiring full SNAP benefits to be paid by Friday.
• The European Commission is proposing a pause to parts of its landmark AI laws amid intense pressure from Big Tech companies and the US gov. Brussels is set to water down parts of its digital rule book, including its AI at that entered into force last year, in a decision on a so-called simplification package on Nov 19. FT
• Nvidia CEO Jensen Huang said his company isn’t in active discussions to sell its Blackwell AI chips to Chinese firms, waving off speculation it’s trying to engineer a return to that market. BBG
• China has begun designing a new rare earth licensing regime that could speed up shipments, but it is unlikely to amount to a complete rollback of restrictions as hoped by Washington, industry insiders said. RTRS
• China’s exports fell in October, with shipments to the U.S. dropping for a seventh straight month, as the growth that has powered the world’s second-largest economy this year took an unexpected stumble. Exports came in at -1.1% (vs. the Street +2.9%) and imports +1% (vs. the Street +2.7%). WSJ
• German exports rose in September, helped by a bump in trade with the U.S. after the European Union agreed to a deal on tariffs in the summer. Exports +1.4% (vs. the Street +0.5%) and imports +3.1% (vs. the Street +0.5%)
• Ukraine’s ambassador to the US Olha Stefanishyna said there have been “positive” talks on acquiring Tomahawk missiles, despite Trump’s reluctance. BBG
• NY Fed President John Williams said that the Federal Reserve could soon return to expanding its securities holdings, a week after the central bank said that it would wind down efforts to shrink its balance sheet on Dec. 1.  The net bond purchases would be the next, long-planned phase of the Fed’s approach to matching the levels of cash-like assets available to banks to their needs—not a new effort to stimulate the economy.  WSJ
• The longest US government shutdown in history isn’t driving the recent softening in markets, but still, they aren’t holding up as well as they did during 2018-2019, according to Bloomberg Intelligence. And missing paychecks and data delays may make the situation worse. BBG
• US Justice Department is said to be investigating the DC mayor over a foreign trip, according to The New York Times.

Market Snapshot

• S&P 500 mini -0.1%
• Nasdaq 100 mini -0.2%
• Russell 2000 mini little changed
• Stoxx Europe 600 -0.5%
• DAX -0.6%
• CAC 40 -0.3%
• 10-year Treasury yield +2 basis points at 4.1%
• VIX +0.8 points at 20.28
• Bloomberg Dollar Index little changed at 1222.16
• euro unchanged at $1.1547
• WTI crude +1.4% at $60.26/barrel

Trade/Tariffs

• US President Trump posts that he's thrilled to announce an incredible trade and economic deal between the US and Uzbekistan in which the latter will be purchasing and investing almost USD 35bln over the next three years, and more than USD 100bln in the next 10 years in key American sectors, including critical minerals, aviation, automotive parts, infrastructure, agriculture, energy & chemicals, information technology, and others.
• US is to block NVIDIA's (NVDA) sale of scaled-back AI chips to China, according to The Information.
• Netherlands is said to be ready to drop control of Nexperia if chip supply resumes, according to Bloomberg.
• China has begun working on rules to ease rare earth export curbs, according to Reuters citing industry sources.
• China's Commerce Ministry suspends more rare earths related export control measures.

A more detailed look at global markets courtesy of Newsquawk

APAC stocks were mostly lower as the region took its cue from the risk-off mood stateside, where sentiment was weighed on by weak US labour market proxies and AI concerns, while sentiment was also not helped by weak Chinese trade data. ASX 200 was led lower by weakness in tech and the top-weighted financial industry, with the latter pressured as Macquarie shares retreated on earnings disappointment. Nikkei 225 briefly fell beneath the 50,000 level after recent tech woes, currency strength and disappointing Household Spending data. Hang Seng and Shanghai Comp conformed to the downbeat mood after the PBoC's open market operations resulted in the largest weekly drain since early 2024 and as participants awaited Chinese trade data which ultimately showed a surprise contraction in exports, while it was also reported that the US is to block NVIDIA's sale of scaled-back AI chips to China.

Top Asian News

• PBoC injected CNY 141.7bln via 7-day reverse repos with the rate kept at 1.40%, while its operations resulted in a weekly net drain of CNY 1.57tln which is the largest fund withdrawal since January 2024.

European bourses (STOXX 600 -0.3%) opened with a slight positive bias, but slipped soon after the cash open to display a mostly negative picture in Europe. Initial strength perhaps a cooling from the prior

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