On Friday, all three major indexes plunged, with the Nasdaq suffering its worst single-day performance since June, falling roughly 8% from its recent high. The chip sector came under broad pressure, with NVIDIA (NVDA.US) dropping more than 4%. According to three senior Gulf state officials, the Trump administration has notified Gulf allies to prepare for a possible new round of short, intense military strikes on November 4, the day after the U.S. midterm elections. Trump hopes the new strikes will further dismantle Iran's nuclear program or force Iran into an agreement. The U.S. has not struck Iran since September 1 and is currently pressuring Tehran through a naval blockade of Iranian ports. Gulf officials said they cannot rule out opposition from some Gulf states to U.S. forces launching attacks from bases on their territory.
U.S. Stocks
At the close, the Dow Jones Industrial Average fell 572.25 points, or 1.09%, to 51,770.31; the S&P 500 dropped 140.30 points, or 1.82%, to 7,580.09; and the Nasdaq Composite slid 747.73 points, or 2.86%, to 25,437.00. Intel (INTC.US) tumbled 28.58%, SanDisk (SNDK.US) fell 14.1%, Qualcomm (QCOM.US) dropped 11.12%, AMD (AMD.US) declined 10.88%, Micron Technology (MU.US) lost 5.3%, NVIDIA (NVDA.US) fell 4.22%, Amazon (AMZN.US) slipped 1.41%, and Google (GOOGL.US) edged down 1.4%. The Nasdaq Golden Dragon China Index fell 0.28%, while Alibaba (BABA.US) dropped 1.54%.
European Stocks
Germany's DAX 30 fell 221.45 points, or 0.85%, to 25,818.23; the U.K.'s FTSE 100 rose 4.99 points, or 0.05%, to 10,727.06; France's CAC 40 slipped 0.58 points, or 0.01%, to 7,969.42; the Euro Stoxx 50 dropped 76.22 points, or 1.23%, to 6,130.85; Spain's IBEX 35 fell 206.14 points, or 1.09%, to 18,651.46; and Italy's FTSE MIB declined 509.86 points, or 1.02%, to 49,492.50.
Forex
The U.S. dollar index, which measures the greenback against six major currencies, fell 0.16% on the day to close at 101.878 in late New York trading. As of the late New York session, 1 euro bought 1.1167 dollars, up from 1.1162 dollars the previous day; 1 pound bought 1.3394 dollars, up from 1.3361 dollars. 1 dollar bought 157.37 yen, down from 157.96 yen; 1 dollar bought 0.8236 Swiss francs, down from 0.8264 francs; 1 dollar bought 1.3956 Canadian dollars, down from 1.3986; and 1 dollar bought 9.8170 Swedish kronor, down from 9.8608.
Cryptocurrencies
Bitcoin fell below the $77,000 mark, trading at $76,979 as of publication; Ethereum stood at $2,236.
Precious Metals
Spot gold fell 3.61% to $3,875.98; spot silver dropped 5.79% to $49.137 per ounce.
Crude Oil
December light crude futures on the New York Mercantile Exchange rose $2.12 to settle at $104.12 per barrel, up 2.08%; December Brent crude futures in London rose $2.76 to settle at $117.64 per barrel, up 2.4%.
Macro News
Concerns over AI investment returns are mounting, with the Nasdaq 100 facing its third technical correction this year. The Nasdaq 100 fell as much as 4.5% intraday on Friday, more than 10% below its recent high, putting it on track for its third technical correction this year. The index fell about 3% for the week, as disappointing earnings from Alphabet, Amazon, Intel, and ServiceNow triggered a tech selloff. Markets are beginning to reassess the return on AI investment, and rising financing needs among tech companies have added to sector volatility. Market strategists noted that investors are no longer assuming AI investment will necessarily yield generous returns, instead focusing on return on capital and whether principal can be recovered. The last time U.S. stocks saw three or more 10% swings within a year was in 2022.
Fed's Logan: At least two more rate hikes needed, totaling 50 basis points. Dallas Fed President Lorie Logan said Friday that under the current economic outlook, the Fed needs at least two more 25 basis point hikes, raising the policy rate by a cumulative 50 basis points, then pausing to assess economic and financial conditions before deciding the next step. Logan participated this week in the Fed's 10-2 vote to keep the federal funds rate target range at 3.75%-4.00%. Logan believes inflation still needs to be further suppressed and the policy rate should be raised by at least another 50 basis points to sufficiently restrain the economy and bring inflation back to the 2% target. She noted that the tech investment outlook and geopolitical tensions are fueling financial market volatility, and in such an environment, gradual policy adjustments help households, businesses, and market participants adapt to higher rates and reduce the risk of unnecessary sharp deterioration in economic activity. Logan also stressed that the Fed should clearly communicate its policy goals, differing from Fed Chair Warsh's view that such policy guidance should be provided only during crises. She argued that current financial conditions are still supporting growth, with rising long-term borrowing costs mainly reflecting investor expectations of stronger growth and higher rates rather than an independent drag on the economy. Even if the Fed skips a meeting, it would not change the ultimate policy goal; as long as markets understand the Fed's plan, the exact timing of hikes has limited impact on the long-term rates borrowers pay.
Fed's Musalem: Another rate hike will likely be necessary soon. St. Louis Fed President Alberto Musalem, speaking ahead of the Shadow Open Market Committee meeting on the U.S. economy and monetary policy, said: "I believe further tightening of monetary policy is necessary, and action will likely be needed soon." Musalem believes U.S. inflation remains too high, and if the Fed does not raise rates further, inflation risks remain skewed to the upside. At the same time, the overall U.S. economy and job market remain strong, and current overall financial conditions are still accommodative.
Company News
Apple's market value overtakes Nvidia to reclaim global No. 1, highlighting its relative resilience as a steadier investment. Apple (AAPL.US) closed Friday with a market value of $5.03 trillion, surpassing NVIDIA's (NVDA.US) $4.93 trillion to become the world's most valuable listed company. This is Apple's first time back above Nvidia since late July. On the day, Apple shares fell 1.2%, while Nvidia dropped 4.2%. Recent earnings from Intel (INTC.US) and Amazon (AMZN.US) have deepened market concerns about returns on massive AI capital spending, and Alphabet (GOOG.US) and Meta Platforms (META.US) had also been sold off earlier. By contrast, Apple's relatively restrained infrastructure investment and strong free cash flow have made it relatively resilient during the tech correction. Apple shares are up 27% year to date, while Nvidia has fallen more than 10% over the past month.
Google parent Alphabet is reportedly planning to take part in the U.S. $185 billion "Golden Dome" program. According to people familiar with the matter, Google parent Alphabet (GOOG.US) is in talks with the Pentagon to participate in Trump's $185 billion "Golden Dome" missile defense program, focusing on data security, storage, networking, and cybersecurity capabilities to ensure military command-and-control software data transmissions are less vulnerable to attack. The discussions are still at an early stage, and Google's networking company Aalyria is also involved in preparations for a related consortium. The Pentagon said no final decision has been made on forming a new consortium or on which companies would participate.
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