Market Pulse

Summary

• U.S. equities fell as selling in artificial intelligence-linked stocks outweighed gains elsewhere.
• The S&P 500 fell 4.4%, the Dow Jones Industrial Average declined 3.4%, and the Nasdaq lost 5.5%.
• Non-U.S. markets were mixed, with the DAX falling 0.4% and the Nikkei declining 1.8%.
• The 10-year Treasury yield fell to 4.84% while Brent crude rose 4.1%.
• Concerns that tighter restrictions on data center construction could slow the AI investment cycle served as the dominant catalyst.
• Democratic victories in the midterm elections increased scrutiny of technology earnings and economic growth.
• Large AI-linked companies weighed heavily on major indexes even as roughly two out of every five S&P 500 stocks rose.
• The Nasdaq traded more than 10% below its October 6 record close, a decline commonly defined as a correction.
• Arm Holdings beat estimates but its revenue outlook only slightly exceeded expectations.
• Qualcomm's smartphone chip sales fell short of estimates amid sluggish demand.
• Initial jobless claims fell to 189,000 while third-quarter productivity grew at a 3.6% annual rate.
• Unit labor costs declined, suggesting continued labor market resilience and improved efficiency.
• Political concerns add to increasing scrutiny around potential overinvestment, financing needs, and returns on investment.
• Gains since the 2022 bear market have been significant with a disproportionate share driven by a narrow group of stocks.
• Periodic rebalancing may help restore portfolios to their target allocations while mitigating risk.
• The firm emphasizes staying diversified, avoiding chasing recent performance, dollar-cost averaging cash for long-term strategies, and staying anchored to long-term goals.
• The backdrop for the U.S. economy remains constructive, supported by the ongoing artificial intelligence build-out and resilient consumer spending.
• The firm does not forecast a recession in its base case and maintains a real GDP growth range of 1.75% to 2.5% for this year.