Source: Wall Street News Authors: Fang Jia Yao, Du Yu, Long Yue, Jiang Zihan

The Fed's favorite inflation gauge rebounded, with US core PCE inflation rising 2.7% year-on-year in September, meeting expectations, the lowest since early 2021. However, the 0.2% increase from the previous month was the highest in six months, and consumer spending also accelerated. Meanwhile, there are strong signs of labor market strength, with US initial jobless claims dropping to the lowest level since May. Additionally, US mortgage rates climbed for the fifth consecutive week, with economists stating that due to the resilience of US economic data, the Fed's subsequent rate cuts will be smaller. Data supporting a significant slowdown in Fed rate cuts caused US bond yields and stocks to rise simultaneously midday. The current market expectation is for the Fed to cut rates by 25 basis points each in November and December.

Internationally, food price growth accelerated, with Eurozone inflation picking up in October, with core CPI rising by 2.7%. In addition to yesterday's better-than-expected Eurozone GDP third-quarter data, and the UK Labour Party budget's expected tax hikes and borrowing plans are likely to moderately raise inflation. Traders have reduced bets on rate cuts by the ECB and the Bank of England, with the current expectation of a 25 basis point rate cut at the ECB's December meeting. The likelihood of a significant 50 basis point rate cut is small. The Bank of England is expected to cut rates three more times by the end of 2025, with a total cut of 95 basis points by December 2025.

On Thursday, October 31, US stocks opened lower and extended their losses, with tech stocks, chip stocks, AI concept stocks, and China concept stocks all falling. Disappointing revenue guidance from Microsoft and user growth from Meta dragged down Wall Street, leading to the tech sector experiencing the largest decline, with the Nasdaq dropping nearly 3% at the forefront. Only the energy and utilities sectors rose, with the former boosted by rising oil prices and the latter as a safe haven. Among the magnificent 7 tech giants, Amazon's revenue and guidance slightly exceeded expectations, briefly rising over 6% after hours. Apple surpassed expectations in Q3 revenue, but fell over 2% after hours. Looking at October as a whole, the Dow and S&P bid farewell to five straight months of gains, and the Nasdaq bid farewell to two consecutive months of gains.

• US stock indices all fell. The S&P 500 Index fell by 108.22 points or 1.86%, closing at 5705.45 points, ending October with a 0.99% decline, bidding farewell to five consecutive months of gains. The Dow Jones, closely related to economic cycles, fell by 378.08 points or 0.90%, closing at 41763.46 points, with a 1.34% decline in October, bidding farewell to five consecutive months of gains. The Nasdaq, dominated by tech stocks, fell by 512.78 points or 2.76%, closing at 18095.15 points, ending October with a 0.52% decline, bidding farewell to two consecutive months of gains. The Nasdaq 100 Index fell by 2.44%. The Nasdaq Technology Market Capitalization Weighted Index (NDXTMC) measuring the performance of Nasdaq 100 tech sector stocks fell by 3.39%. The Russell 2000 small-cap stock index, more sensitive to economic cycles, fell by 1.63%, with a 1.49% decline in October. The VIX fear index rose by 13.81% to 23.16.

• Most US stock sector ETFs closed lower. Utilities ETF rose by over 1%, energy ETF rose by more than 0.5%. Meanwhile, semiconductor ETF fell by nearly 4%, technology sector ETF and global tech stock ETF both fell by about 3%, biotech index ETF and consumer discretionary ETF fell by more than 1.5%, banking ETF, regional banking ETF, financials ETF, and global aerospace ETF also dropped by close to 1.5%, internet stocks index ETF and healthcare ETF both fell by nearly 1%.

• 11 sectors of the S&P 500 index fell more than they rose. Information technology/tech sector fell by 3.57%, consumer discretionary sector fell by 1.81%, real estate sector dropped by 1.73%, telecom sector fell by 1.63%, materials sector fell by 1.52%, finance sector dropped by 1.22%, industrial sector fell by 1.13%, consumer staples sector dropped by 0.14%, healthcare sector fell by 0.81%, while energy sector performed second best, up by 0.66%, and utilities sector rose by 1.04%.

• "Magnificent 7" technology giants all fell. Apple fell by 1.82%, down 3.04% in October, ending its five-month streak, with Q3 revenue exceeding expectations, but iPad, wearables, and services below expectations, causing stock price to drop over 2% post-market. Nvidia fell by 4.72%, up 9.32% in October and rising for the third consecutive month. Tesla fell by 2.99%, down 4.5% in October. "Metaverse" Meta fell by 4.09%, down 5.57% in October, with revenue slightly exceeding expectations but user growth below expectations. Google Class A shares dropped by 1.92%, up 3.17% in October, OpenAI launched ChatGPT search function, officially challenging Google and major shareholder Microsoft, Google's self-driving department Waymo valued at over $45 billion in new funding round. Amazon fell by 3.28%, up 0.04% in October, Q3 net sales exceeded expectations, AWS slightly below expectations, Q4 profit guidance midpoint above market expectations, stock price rose over 6% post-market. Microsoft fell by 6.05%, marking its largest single-day drop in two years, with cloud business revenue growth expected to slow down this fiscal quarter, Morgan Stanley raised Microsoft's target price from $506 to $548.

• According to CCTV News, on October 29th local time, a Russian court fined Google $20 followed by 35 zeros for shutting down Russian TV channel accounts on its platform such as All-Russian State Television and Radio Broadcasting Company, Channel One, Independent Television and Star TV, and ordered Google to restore the accounts, or face further fines.

• Chip stocks all fell. Philadelphia Semiconductor Index fell by 4.01%, down 4.37% in October. Industry ETF SOXX fell by 3.88%. Nvidia's double long ETF fell by 9.62%. AMD fell by 3.05%. KLA Corp fell by 3.7%. ON Semiconductor fell by 4.26%. Arm Holdings fell by 8.48%, Qualcomm fell by 2.89%. ASML Holding ADR fell by 1.65%. Broadcom fell by 3.89%. Taiwan Semiconductor ADR fell by 2.03%. Micron Technology fell by 4.26%. Applied Materials fell by 2.01%. Intel fell by 3.5%, Q3 data center and AI revenue exceeded expectations, Q4 EPS guidance exceeded expectations, causing stock price to rise over 14% post-market.

• AI concept stocks collectively declined. Super Micro Computer fell by 11.97%, Ernst & Young resigned from audit, questioning corporate governance and ethical integrity. Dell Technologies fell by 4.46%. Nvidia-backed AI voice company SoundHound AI fell by 7.71%, BigBear.ai fell by 5.36%, CrowdStrike fell by 3.44%, BullFrog AI fell by 2.98%, Serve Robotics fell by 10.91%, Palantir fell by 4.88%, C3.ai fell by 5.09%, Snowflake fell by 3.5%, Oracle fell by 3.85%.

• Many China concept stocks fell. The Nasdaq Golden Dragon China Index closed down 1.30% at 6941.02 points, a cumulative decline of 4.50% in October. In the ETFs, the China Technology Index ETF (CQQQ) rose 0.41%, with a cumulative increase of 0.12% in October, barely continuing the 28.91% increase in September. The China Internet Index ETF (KWEB) fell 0.65%, with a cumulative decline of 5.35% in October, slightly giving back gains after rising by 32.43% in September. The FTSE China 3x Bull ETF (YINN) closed down 1.08%. The FTSE China 3x Bear ETF (YANG) closed up 1.37%. The "China Dragon" ETF RONDHL CHINA ETF (DRAG) closed down 0.31%.

• In popular China concept stocks, Li Auto fell by 13.58%, accumulated a 2.5% decline in October, with Q3 net income holding basically steady year-on-year, but Q4 revenue guidance below expectations. Zeekr fell 4.78%, XPeng fell 1.06%, Nio fell 4.67%, Fangdd Network fell 3.6%, PDD Holdings fell 0.23%, Netease fell 0.24%, Alibaba fell 0.73%, Meituan ADR fell 0.48%, Baidu fell 1.07%, New Oriental fell 0.62%, Trip.com fell 1.01%, Bilibili fell 0.45%, while JD.com rose 1.47%, and Vipshop rose 1.4%.

• Other key stocks: (1) American used car e-commerce platform Carvana rose nearly 25.1% before closing up 19.29%, benefiting from strong used car sales and positive outlook. (2) "Big Bitcoin Holder" MicroStrategy fell by 1.14%, experiencing losses for the third consecutive quarter in Q3, planning to buy more Bitcoin. The company stated that since adopting the "Bitcoin Holdings" strategy on August 10, 2020, the company's stock price has cumulatively increased by 1989%, compared to Bitcoin rising by 508%, the "Magnificent 7" tech giants rising by 261%, and the S&P 500 benchmark index rising by 74% during the same period. (3) Estee Lauder fell by 20.9%, marking the largest historical drop, withdrawing the 2025 fiscal year outlook and reducing dividend payouts. (4) Shell rose by 3%, with adjusted profit in the third quarter exceeding expectations. (5) The "Metaverse Number One Stock" Roblox rose by 19.89%, achieving the largest increase since November 2023, as the company raised its annual booking forecast. (6) With a decline in precious metals, gold and silver mining stocks generally fell, Coeur Mining fell by 5.57%, First Majestic Silver fell by 4.03%, and Pan American Silver fell by 3.82%. (7) Trump Media (DJT) fell by over 16% to close down by 11.72%, retracing over 35% from the peak of 54.68 on October 29. (8) Social media brokerage Robinhood fell by 16.73%, with third quarter performance falling below expectations. (9) Uber Technologies fell by 9.29%, with record profits in Q3 but total bookings in Q3 and order guidance for the fourth quarter below expectations.

On Thursday, October 31, the Fed's favorite inflation indicator rebounded, with the US core PCE price index up 2.7% year-on-year in September, the largest increase in six months, and consumer spending also fast-paced. There are further signs of strength in the labor market, with US jobless claims falling to the lowest level since May. Data supports the Fed's rationale for slowing interest rate cuts, with US bond yields rising across the board. The current market expectation is that the Fed will cut interest rates by 25 basis points in November and December each.

European and American stock markets collectively opened low with widening declines, led by the Nasdaq falling over 2.3%, and the S&P declining for two consecutive days. Microsoft's revenue guidance and Meta's user growth disappointed Wall Street, dragging down tech stocks collectively. The Europe STOXX 600 index widened its decline to 1.5% at one point.

In other assets, spot gold and silver continued to decline, with spot gold dropping nearly 1.7% to approach $2740, and spot silver dropping nearly 3.7% to about $32.50 per ounce. Cryptocurrencies collectively fell, with spot Bitcoin falling over 2.5% to around $70,765. The UK's two-year government bond yield rose by 21 basis points, leading to a general decline in European and American bonds. In addition, oil prices rose, with US oil rising over 1.5% to approach $70, and Brent crude rising over 1.1% to break $73.3.

• US three major indices generally fell. The S&P 500 index fell nearly 1.4% at one point. The Dow Jones, closely related to the economic cycle, fell over 0.7% or 304 points at one point. The Nasdaq, primarily composed of tech stocks, fell over 2.3% at one point. The Nasdaq 100 fell over 2.2%, while the VIX fear index rose over 11% at one point.

• At the beginning of the US stock market, major industry ETFs were mixed, with energy industry ETFs up over 1%, utilities ETFs up nearly 1%, semiconductor ETFs down over 2%, and technology industry ETFs down nearly 2%. Of the 11 sectors in the S&P 500 index, the S&P Technology sector fell by 2.7% at one point, the Consumer Discretionary sector fell by around 1% at one point, the Telecommunications sector fell by over 0.2% at one point, while the Energy sector rose by over 1.1%.

• "Magnificent 7" were all defeated. Apple fell nearly 1% at one point. Nvidia dropped nearly 5% at one point, while Tesla rose over 0.8% before falling over 1.9%. "Metaverse" Meta fell nearly 3.3% at one point. Google A rose nearly 1.4% before turning down. Amazon fell over 2.9% at one point, Microsoft fell nearly 6% at one point, and Morgan Stanley raised Microsoft's target price from $506 to $548.

• Chip stocks across the board fell. The Philadelphia Semiconductor Index fell nearly 4.2% at one point, the industry ETF SOXX fell over 4% at one point, and Nvidia's double long ETF fell nearly 10.2% at one point. Arm Holdings fell over 8.5% at one point, Broadcom fell nearly 5.1% at one point, and Micron Technology fell over 4.1% at one point.

• AI concept stocks collectively declined. Super Micro Computer fell nearly 17.7% at one point, EY resigned as auditor, questioning corporate governance and ethical integrity. Dell Technologies fell nearly 4.3% at one point. Serve Robotics fell over 10% at one point, while BullFrog AI rose over 2.5% at one point. AI voice company SoundHound AI, in which Nvidia holds shares, fell nearly 7.2% at one point.

• Most Chinese concept stocks fell. The Nasdaq Golden Dragon China Index fell nearly 2% at one point, and the FTSE A50 Futures once fell over 0.4%. Among popular Chinese concept stocks, Li Auto fell nearly 14% at one point, with Q3 net income basically flat year-on-year and Q4 revenue guidance below expectations. Zeekr fell over 8.8% at one point, XPeng fell over 3.4% at one point, Nio fell over 5.5% at one point, while solar stocks Daqo New Energy rose over 8.7% at one point.

• Other key stocks: (1) The US used car e-commerce platform Carvana rose nearly 21.5% at one point, benefiting from strong sales of used cars and optimistic expectations for the future. (2) "Bitcoin big holder" MicroStrategy fell nearly 4.2% at one point, experienced losses for the third consecutive quarter in Q3, and plans to buy more Bitcoin. The company stated that since adopting the "Bitcoin holding" strategy on August 10, 2020, the company's stock price has risen by 1989%, compared to Bitcoin's 508% rise, the 261% rise of the "Magnificent 7" tech giants, and the 74% rise of the S&P 500 benchmark index during the same period. (3) Estee Lauder fell over 27% at one point, marking its largest historical drop, retracting its 2025 fiscal year outlook and cutting dividends. (4) Shell rose over 1.9% at one point, with profits adjusted for the third quarter exceeding expectations. (5) "Top metaverse stock" Roblox rose over 22%, marking the largest increase since November 2023, with the company raising annual booking predictions. (6) As precious metals declined, gold and silver mining stocks generally fell, with Coeur Mining falling over 5% at one point, AG falling 4.8% at one point, Pan American Silver falling 4.6% at one point, and gold mining stock ETF falling 2.9% at one point. (7) Trump Media (DJT) fell over 16% at one point.

Editor/Lambor