Major U.S. stock indexes ended a volatile week lower as investors weighed the implications of Tuesday’s midterm elections, which saw Democrats gain control of both chambers of Congress. Democrats’ win initially fueled optimism that a shift in the political landscape could ease geopolitical tensions, particularly with Iran. However, equities reversed course sharply on Thursday as investors reassessed the implications of Democratic electoral gains for corporate earnings and regulatory policy. Concerns about potentially tighter oversight of the AI industry, compounded by disappointing outlooks from major semiconductor companies, triggered substantial selling in technology shares. The Nasdaq 100 declined 6.4%, while semiconductors plunged more than 12%, both recording their worst sessions since March 2020. U.S. stocks partially recovered on Friday. Meanwhile, US monthly jobs report was stronger than expected, and other data released during the week indicated that the economy remained resilient. European stock markets recorded slight weekly gains. EU banks outperformed while defense names fell. Japan’s Nikkei 225 index fell -9.25%. Oil prices declined as markets priced a lower probability of near-term escalation with Iran and signs of renewed diplomatic activity. U.S. Treasury yields declined across the curve, with short-term yields falling more sharply than longer-term yields, resulting in yield curve steepening. The dollar gained while bullion & bitcoin weakened.
Have a great weekend
Charles & Syz Research Lab