Overnight US Stocks | Fed Rate Hike Expectations Rise, Major Indexes Fall, Nvidia (NVDA.US) Continues to Drop 5.4%

According to Odaily Star Daily, US inflation in October rose above expectations, fueling speculation of aggressive rate hikes by the Federal Reserve. The three major indices fell, bitcoin briefly dropped below the $73,000 mark, and the dollar index recorded its largest daily gain since September.

[US Stocks] At market close, the Dow Jones Index fell 156.67 points, a decline of 0.30%, to 52,233.08 points; the S&P 500 fell 28.99 points, down 0.38%, to 7,520.95 points; the Nasdaq Composite dropped 187.26 points, a 0.74% decrease, to 25,065.87 points. SK Hynix (SKHY.US) fell 3.5%, Microsoft (MSFT.US) dropped 2%, Trump Media & Technology Group (DJT.US) rose 5%, Nvidia (NVDA.US) fell 5.4%, continuing the previous day's trend. The Nasdaq Golden Dragon China Index closed down 1.2%.

[European Stocks] Germany's DAX30 Index rose 107.87 points, up 0.41%, to 26,373.43 points; the UK's FTSE 100 Index fell 27.20 points, down 0.25%, to 10,755.67 points; France's CAC40 Index increased 45.29 points, up 0.55%, to 8,278.59 points; the Euro Stoxx 50 Index climbed 42.50 points, up 0.68%, to 6,332.95 points; Spain's IBEX35 Index gained 191.62 points, up 0.97%, to 19,934.12 points; Italy's FTSE MIB Index grew by 332.62 points, up 0.65%, to 51,732.50 points.

[Forex] US inflation data for October exceeded expectations for a third consecutive month. With Federal Reserve Governor Waller backing a rate hike in December, the dollar index rose more than 0.6% on Tuesday, marking its largest daily gain since September. The market further increased bets on rate hikes in 2027 and started pricing in a small possibility of a one-time 50 basis point hike in December, after previously fully factoring in a 25 basis point increase. Dallas Federal Reserve President Logan also supported at least two more hikes, each by 25 basis points. Major currencies broadly weakened against the dollar, with the Norwegian krone, Australian dollar, and Swedish krona all down over 1%, and the yen falling as much as 0.6%. The market believes that as long as the Fed maintains a hawkish stance, the dollar has further room for short-term strengthening.

[Cryptocurrency] Bitcoin briefly dropped below the $73,000 threshold, reaching a low of $72,669.28, and at time of publication was at $73,841; Ethereum fell more than 3.5% to $2,057.

[Precious Metals] Spot gold fell 2.6% to $4,033.22; spot silver dropped 3.53% to $51.546/ounce.

[Crude Oil] New York Mercantile Exchange light crude oil futures for December delivery fell $0.81 to close at $86.04/barrel, a decrease of 0.93%; January delivery Brent crude oil futures in London dropped $1.08 to $91.49/barrel, down 1.17%.

[Macro News]

US October CPI Shows Slight Cooling But Still Exceeds Expectations; Energy Cost Transmission May Become More Evident. According to the US Department of Labor, overall CPI in October increased by 0.4%, down from September’s 0.6%, but above analysts’ expected 0.3%; core CPI rose 0.3% month-on-month, unchanged from September and also above expectations. Last month, gasoline prices did not fall significantly and remained painfully high for drivers. However, as prices did not surge, economists had not expected gasoline to contribute much to the overall price rise in October. After months of elevated energy prices driven by the Iran war and impacting consumers, this comes as some relief. American Automobile Association (AAA) data showed last month’s average gasoline price was $4.32 per gallon, slightly lower than September’s $4.34, but still about 34% higher than pre-Iran war levels. A key question for the coming months is how much higher energy prices will continue to permeate other parts of the economy and more broadly push prices up. Some energy-sensitive industries are already showing strain, and companies that buy large quantities of fuel are passing on higher costs. Since the outbreak of the Iran war in February, energy prices have soared to the extent that some economists worry broader transmission effects may still be ahead.

Federal Reserve Governor Bowman: Inflation Still Needs To Be Controlled, Careful Assessment Needed For Further Policy Tightening. Vice Chair for Supervision Michelle Bowman stated that inflationary pressures persist while the labor market stabilizes, and there is room for inflation to further ease. She expects core PCE in October to rise year-on-year to 3.3%, driven primarily by higher energy prices and AI-related demand, but notes that lack of inflation progress is not due to an overheated labor market. Bowman anticipates that as the AI boom and Middle East tensions gradually subside, core PCE could move toward 2% next year. In terms of policy, Bowman pointed out that recent stock declines, rising Treasury yields, and a strong dollar have tightened financial conditions, while the economy has strengthened this year. She stressed that financial conditions are already tight, and any further policy tightening must carefully weigh benefits against costs to rate-sensitive sectors. Whether AI demand will persist and the evolution of geopolitical risks will be key factors in determining monetary policy direction in the coming months. She did not explicitly call for rate hikes, but emphasized the Fed must keep pushing inflation back to the 2% target.

Rising Cost of Living Forces More Americans Into Serious Debt Problems. According to CBS, a recent analysis by the non-partisan Urban Institute indicates that about 24% of Americans with a credit record are behind on medical bills, student loans, car loans, or retail loans, with a median debt of $2,913. In communities of color, the rate is as high as 30%, and the median debt collection amount reaches $3,009. Senior researcher Breno Braga of Urban Institute said, "The rising cost of living makes it harder for people to pay basic expenses." This year, the Fed has repeatedly raised rates to curb inflation, making debt repayment even more difficult. Braga added, "This reflects the current financial situation of Americans." According to the latest data from the New York Fed, total consumer credit card debt has soared to a record $1.29 trillion, up nearly 70% from five years ago.

EIA Raises US Gasoline and Diesel Price Forecasts for 2027, Reflecting Persistent Tightness in Petroleum Product Supply. The US Energy Information Administration (EIA) raised its 2027 US retail price forecasts for gasoline and diesel in the latest short-term energy outlook, with diesel up 12% and gasoline up 5% from last month. EIA expects global oil product supply constraints will persist through the end of 2027, with refined product crack spreads remaining high, prompting US refineries to maintain high utilization rates. Meanwhile, EIA expects Brent crude prices to stay around $100/barrel for the remainder of this year, then fall to an average of $77/barrel in Q4 2027 as global inventories recover.

New York Fed: US Household Loan Delinquency Rates Edge Up; Mortgage Delinquency Rate Hits Highest Since 2018. The New York Fed's Q3 Household Debt and Credit Report showed the percentage of loan balances at least 30 days overdue rose to 5%, from 4.7% in Q2; total household debt increased by 1.8% quarter-on-quarter to $19.1 trillion. The share of mortgages over 90 days overdue rose to 1.13%, the highest since Q1 2018, and home equity line of credit balances increased by $23 billion, the biggest jump since 2005. Auto loan delinquencies also increased, while student loan delinquency rates slowed, and credit card delinquencies improved. The New York Fed noted that despite rising mortgage delinquencies, overall credit quality remains robust.

Federal Reserve's Logan: Fed Still Needs At Least Two More Rate Hikes, Each by 25 Basis Points. Fed's Logan latest remarks: "Excessive inflation is unacceptable. This winter, the Fed may raise rates at a faster pace than so far. Apparently, the Fed still needs at least two more hikes, each of 25 basis points. After these two hikes, pausing and assessing possible further actions is sensible. Currently, Fed policy rates are at least 50 basis points below a moderately restrictive level. Gradually adjusting policy can reduce the risk of economic deterioration exceeding necessary levels. Wartime energy disruptions are not the only source of price pressure; price increases can stem from tariffs and this broad upward trend may persist."

[Stock News]

CoreWeave Q3 Revenue Exceeds Expectations, Debt Pressure Remains a Concern. Coreweave (CRWV.US) Q3 revenue surged 167% year-on-year to $3.66 billion, beating market expectations of $3.55 billion, with a loss per share of $1.27, better than the forecasted loss of $1.46. The company raised its full-year revenue guidance from $12.4–$13.2 billion to $13–$13.3 billion. After earnings, shares rose as much as 8.7% after hours, now narrowed to roughly 2%; the stock dropped more than 40% over the past month and is down 32% year-to-date. The company still faces significant debt, with over $50 billion as of end-June and 2030 bond yields around 15.2%. The CEO stated that investments are based on signed client contracts, and client prepayments help support data center construction; current order backlog is enough to cover debt obligations. Microsoft (MSFT.US) previously said some new cloud service provider data center projects are delayed and tightened project oversight, exiting some high-risk projects. After the US midterms, multiple newly elected officials expressed plans to slow or block data center development, adding uncertainty to industry expansion. CoreWeave said it plans to expand revenue by launching new services and expanding in Asia.

US AI Compute Power Futures Market Launch Encountered Obstacles. According to reports, US financial market regulators have postponed approving futures contracts linked to AI chip leasing prices, impacting exchanges' plans to launch the first compute power futures market. Such contracts allow traders to bet on AI chip rental prices. Sources say the US Commodity Futures Trading Commission (CFTC) has extended the review period for these contracts by at least 60 days. This means related trading activity will be delayed until early 2027 at the earliest. The decision has not been publicly announced. CME Group previously aimed to launch in October GPU futures contracts tied to the rental prices of two Nvidia (NVDA.US) chips, H100 and B200. The relevant price index is designed by startup Silicon Data. The postponement comes as regulators ask for public input on how to manage risks in emerging compute power markets. Currently, online trading platforms offer spot compute power price trading, but there is no open futures market for longer-term contracts.