Overnight US Stocks | The three major indexes were mixed; most chip stocks rebounded; Micron Technology (MU.US) rose over 5%

According to Zhitong Finance APP, on Friday, chip stocks rebounded, pushing the Nasdaq higher. Economic data reinforced expectations that the Federal Reserve will raise rates in December, but bargain hunting continued to flow into the market. San Francisco Fed President Daly stated that the Fed is prepared to raise rates further if necessary. She said that monetary policy still needs tightening, but exactly how much and when to act require more information. Daly emphasized that the Fed must act cautiously.

[U.S. Stocks] At the close, the Dow Jones fell 237.32 points, or 0.46%, to 51,285.73; the S&P 500 rose 23.13 points, or 0.31%, to 7,376.86; the Nasdaq gained 264.42 points, or 1.09%, to 24,579.42. Most chip stocks rebounded: SK Hynix (SKHY.US) rose 2.78%, Nvidia (NVDA.US) rose 2.78%, AMD (AMD.US) gained 11.04%, Intel (INTC.US) rose 7.71%, Micron Technology (MU.US) gained 5.12%, Marvell Technology (MRVL.US) rose 5.73%, Arm (ARM.US) was up 4.74%. Tesla (TSLA.US) gained 4.23%, SpaceX (SPCX.US) surged 8.62%. The Nasdaq Golden Dragon China Index was up 1.67%; Alibaba (BABA.US) rose 1.26%, NetEase (NTES.US) gained 2.28%, Baidu (BIDU.US) was up 3.01%.

[European Stocks] The German DAX 30 lost 540.55 points, or 2.05%, to close at 25,789.50; the UK FTSE 100 dropped 109.28 points, or 1.01%, to 10,673.38; the French CAC 40 fell 66.37 points, or 0.81%, to 8,139.00; the Euro Stoxx 50 decreased 69.99 points, or 1.12%, to 6,161.55; the Spanish IBEX 35 fell 100.51 points, or 0.52%, to 19,350.39; and the Italian FTSE MIB lost 460.37 points, or 0.91%, to 50,045.50.

[Forex] The U.S. dollar index, which measures the greenback against six major currencies, rose 0.74% to close at 102.298 late in the session. As of New York's market close, 1 euro exchanged for 1.1140 dollars, down from 1.1225 in the previous session; 1 British pound for 1.3351 dollars, lower than the previous 1.3459; 1 dollar for 158.49 yen, up from 157.85; 1 dollar for 0.8206 Swiss francs, up from 0.8165; 1 dollar for 1.4132 Canadian dollars, up from 1.3998; and 1 dollar for 9.8988 Swedish kronor, up from 9.7948.

[Cryptocurrency] Bitcoin lingered below $76,000 and was quoted at $75,846 at press time; Ethereum rose slightly by 0.07 to $2,236.

[Precious Metals] Spot gold fell 0.41% to $4,071.58. Spot silver gained 0.31% to $51.97 per ounce.

[Crude Oil] Light crude oil futures for December delivery on the New York Mercantile Exchange rose $0.31 to settle at $90.83 per barrel, up 0.34%; January delivery of London Brent crude increased $0.03 to $98.32 per barrel, up 0.03%.

[Macro News]

High prices continue to erode purchasing power; U.S. consumer confidence remains subdued. Preliminary data from the University of Michigan shows the U.S. consumer sentiment index edged up about 6%. Several measures, including personal financial outlook and business environment expectations, improved, but the gains were mainly concentrated among independent voters. Confidence among low- and middle-wealth consumers picked up, but after recent volatility in the stock market, sentiment among wealthy consumers holding large equity positions actually fell 5%. Additionally, consumer comments indicate increasing concern over an AI bubble. However, compared to AI-related worries, living costs remain the top concern. About 57% of respondents proactively mentioned high prices have already eroded their standard of living—the highest since May this year, and up from 46% before the Iran conflict in February. Although consumer sentiment improved this month, it is still down 10% compared to February. This survey was conducted from October 20 to November 2. In the two months before the midterm elections, over two-thirds of consumers expected the Democratic Party to win House control, and more than half expected a Senate win. One-year inflation expectations fell to 4.3% this month from 4.7% last month. Although this is the lowest since August, it remains significantly higher than the 3.4% seen before the Iran conflict in February, and all readings for 2024. Long-term inflation expectations edged down to 3.4% from 3.5% in October, still noticeably above the 2.8%–3.2% range seen in 2024.

U.S. adds 165,000 non-farm jobs in October; dollar posts largest daily gain in nearly five months. U.S. non-farm payrolls increased by 165,000 in October, far exceeding the expected 65,000, and the unemployment rate dropped to 4.1%. Strong job data pushed the probability of a 25 basis point rate hike by the Fed in December to nearly 80%. The dollar index rose 0.71% to 102.31, its largest single-day gain since June 17. The euro, pound, and yen fell 0.72%, 0.74%, and 0.5% against the dollar, respectively. U.S. Treasury yields moved higher, with the 10-year yield up to 4.85% and the 2-year yield to 4.52%. Fed officials Williams, Musalem, and Daly all emphasized that inflationary pressures persist; Daly said the Fed may still need to raise rates further.

The U.S. considers easing restrictions on some sanctioned tankers to alleviate freight and oil price pressures. It is reported that at least four companies—Trafigura, Vitol, Mercuria, and ADNOC—are negotiating with the U.S. government to purchase or lease certain oil tankers listed on U.S. sanctions for involvement in illegal oil transport, aiming to mitigate the shortage of global tanker capacity and reduce shipping costs. The negotiations concern about 50 vessels from roughly 1,600 currently sanctioned by the U.S., including some very large crude carriers capable of carrying 2 million barrels of oil. The U.S. Treasury Department is reviewing applications and may grant case-by-case authorizations rather than blanket waivers; no final decision has been made and no approval timeline is set. It is also unclear whether these measures will effectively lower oil prices. Bringing idle ships back online could add real capacity, though some older ships present maintenance and safety hazards. As of November 4, the U.S. has sanctioned 1,568 vessels, including 462 crude oil tankers. The U.S. must also prevent such permissions from funding sanctioned entities, and U.S. licenses do not lift other sanctions imposed by the EU or UK.

[Company News]

Musk: SpaceX annualized revenue may exceed $100 billion by year-end. In an interview Friday, Musk stated he still expects SpaceX (SPCX.US) to surpass $500 billion in annualized revenue by the end of 2027, which he sees as the most reasonable projection; reaching $1 trillion in revenue is not impossible but the probability is only about 2%. He expects SpaceX's annualized revenue to exceed $100 billion in Q4 2026, an approximately 70% quarter-on-quarter increase, but emphasized these are personal expectations, not commitments. Musk also said that this quarter, revenue from U.S. government contracts will account for less than 10%, and in a year, drop below 5%. He said the company's government business provides the highest quality and lowest priced products. Following the news, SpaceX shares rose over 8% at one point.

Report: Microsoft is gradually ending its AI computing lease agreement with Oracle. Citing sources, the media reported that Microsoft (MSFT.US) has not renewed its AI compute lease with Oracle (ORCL.US), and has been gradually shutting down leased computing resources in recent months. Sources say Oracle servers used older generation Nvidia (NVDA.US) chips no longer meeting Microsoft's current technical requirements. The partners entered into the agreement in 2023 to provide AI computing for the new Bing search engine, but the contract amount is unclear. Oracle responded that its AI infrastructure demand remains strong and older generation GPUs still have a market. Microsoft is reevaluating external AI compute partnerships and has previously committed over $80 billion for computing lease deals with emerging cloud providers such as Coreweave (CRWV.US), Nscale, and Nebius (NBIS.US). Previously it was reported Microsoft leadership is increasingly dissatisfied with some suppliers due to high costs and project delays, tightening review of datacenter projects, exiting high-risk projects, and reconsidering whether to sign new compute partnership contracts. Meanwhile, Oracle’s cloud business is expanding rapidly, but high capital expenditures have pushed free cash flow negative, raising investor concern about returns on AI infrastructure investment, with shares down more than half from this year's highs.

Berkshire CEO bets on AI; ten-billion-dollar Berkshire deal attracts attention. In Greg Abel’s first year as CEO of Berkshire Hathaway, he took the investment group into a whole new field: artificial intelligence. In stark contrast to Buffett’s traditionally reserved stance on tech stocks, the new CEO began deploying capital rapidly after taking office. In just a few months, he invested $10 billion in Google parent company Alphabet (GOOG.US, GOOGL.US) to support its AI-related investment; he also injected another $930 million into Italian conglomerate Bending Spoons SpA, which is transforming businesses with AI technology. However, as some AI deals start showing cracks, Berkshire’s timing in ramping up investments might seem less than ideal. Cathy Seifert, an analyst with CFRA Research, said, “I do believe there is some deliberate push to increase AI investment exposure. However, some are asking: Is it too late to get in now?” Yet, for steadfast value investors and long-time Berkshire watchers, such market volatility may be irrelevant. After all, when Buffett invested in Apple in 2016, he was criticized for missing the iPhone maker’s prime, only to have it become one of Berkshire’s best investments. Keefe, Bruyette & Woods analyst Meyer Shields said Abel is likely viewing Berkshire’s AI investments as a bet on the long-term potential of the technology.