Overnight US Stocks | The Three Major Indices Closed Lower, Nvidia (NVDA.US) Closed Down 4.3%

According to Zhitong Finance APP, on Thursday, the three major indices closed lower. Market sentiment was hit by the resignation of Nvidia CEO Jensen Huang and ongoing tensions in the Middle East. Nvidia initially saw a double-digit percentage decline at the start of trading. Meanwhile, some funds shifted to Nvidia's competitors, with AMD and Broadcom both rising about 5%.

[U.S. Stocks] At the close, the Dow Jones Industrial Average fell 189.40 points, or 0.36%, to 52,297.09; the S&P 500 Index dropped 26.98 points, or 0.35%, to 7,592.40; and the Nasdaq Composite lost 100.10 points, or 0.39%, to 25,366.09. Nvidia (NVDA.US) fell 4.3% at the close, having dropped as much as 13% during the session. Broadcom (AVGO.US) and AMD (AMD.US) both gained more than 5.5%, while SK Hynix (SKHY.US) fell 3%. The Nasdaq Golden Dragon China Index closed down 3.1%, with Alibaba (BABA.US) falling 7%.

[European Stocks] The German DAX 30 Index rose 144.29 points, or 0.54%, to 26,786.36; the UK FTSE 100 Index increased 28.09 points, or 0.26%, to 10,863.56; the French CAC 40 Index gained 28.49 points, or 0.34%, to 8,361.36; the Euro Stoxx 50 Index climbed 8.36 points, or 0.13%, to 6,401.75; the Spanish IBEX 35 Index fell 61.63 points, or 0.31%, to 19,966.27; and the Italian FTSE MIB Index fell 124.04 points, or 0.24%, to 51,822.50.

[Forex] The U.S. Dollar Index, which measures the dollar against six major currencies, rose 0.26% on the day, closing at 103.174 in late forex trading. As of the New York forex close, 1 euro exchanged for 1.1056 US dollars, down from 1.1091 the previous trading day; 1 British pound exchanged for 1.3236 US dollars, down from 1.3278 the previous day. 1 US dollar exchanged for 159.83 Japanese yen, down from 159.86 yen the previous trading day; 1 US dollar exchanged for 0.8353 Swiss francs, higher than the previous day's 0.8331 Swiss francs; 1 US dollar exchanged for 1.4260 Canadian dollars, up from 1.4248 Canadian dollars; and 1 US dollar exchanged for 10.0226 Swedish kronor, up from 9.9770 Swedish kronor the previous day.

[Cryptocurrency] Bitcoin fell more than 3%, trading at $71,365 at the time of publication; Ethereum dropped more than 2% to $2,011.53.

[Precious Metals] Spot gold fell 2.76% to $3,878.01; spot silver dropped 3.12% to $50.061 per ounce.

[Crude Oil] The NYMEX December light crude futures price rose $2.21, settling at $88.74 per barrel, an increase of 2.55%; January delivery Brent crude futures rose $3.06, settling at $95.82 per barrel, up 3.3%.

[Macro News]

Fed's Daly: Further rate hikes may be necessary to curb inflation. Federal Reserve San Francisco President Mary Daly said Thursday that further tightening of monetary policy may be necessary to reduce inflation, as inflationary pressures persist and are not limited to sectors directly affected by tariffs or oil prices. She said that more and more businesses have told her they plan to pass higher input costs on to consumers, and the willingness of businesses to raise prices is increasing. Daly said she supported the Fed's rate hike decision in September and holding rates unchanged in October. Speaking on AI, Daly said that AI infrastructure construction is undoubtedly pushing up some prices, but at this point the overall impact on inflation is still moderate, cost increases are limited, and have not yet spread to other areas. She believes that current overall inflation is mainly driven by other factors, not AI-related goods. She remains optimistic about the long-term prospects for productivity growth driven by AI, but says it is too early to judge when this will be realized. Daly is not a voting member of the FOMC this year.

U.S. posts $404 billion budget deficit in October, up 42% year-over-year. According to U.S. Treasury data, the first month of fiscal 2027 (October 2026), the U.S. budget deficit reached $404 billion, up 42% year-over-year. Government spending in the month rose 12% year-over-year to $773 billion, while tax revenues fell 9% to $369 billion, with tariff revenue down about 39% to $19.2 billion. Military spending, healthcare, and increased Treasury interest payments pushed government expenditures higher; greater tariff and corporate tax refunds compared to last year dragged down revenue. The U.S. Treasury expects the current fiscal year's deficit will edge up to about $2.2 trillion. The previous fiscal year, the deficit was $1.99 trillion, about 6% of GDP.

Goolsbee: U.S. inflation is at a dangerous moment and should be prevented from worsening. According to reports, Fed Chicago President Austan Goolsbee said he had hoped that as the effects of tariffs faded and oil prices dropped, U.S. inflation would cool significantly, but this expectation has not yet been realized. October CPI was above expectations for the second consecutive month, and Goolsbee said the U.S. is at a "dangerous moment" in its inflation outlook and should remain cautious to prevent further deterioration. Goolsbee noted persistent price pressures remain in the CPI services sector and healthcare, which are unrelated to tariffs and oil prices. He said the U.S. is gradually entering a stage historically difficult for central banks to curb inflation. Goolsbee said the Fed is currently trying to distinguish between two categories of factors causing persistent high inflation: supply-side shocks such as persistent tariffs or oil price spikes, and demand-side overheating driven by large-scale data center construction. He pointed out that AI-related inflation has not yet spilled over into the broader economy and remains concentrated in AI, technology, and related industries, but the Fed is closely watching for any spillover into other areas. If excess demand caused by data center construction begins to affect the overall economy, it would become a problem. He also noted that the recent proposal by newly elected Democratic governors to suspend data center construction is not directly related to the Fed's inflation efforts.

Yen falls below 160, BOJ intervention risk rises. The yen fell below the 160 mark against the dollar for the first time since September, weakening for the third consecutive trading day. Rising US Treasury yields and increased expectations of Fed rate hikes boosted the dollar, with the U.S.-Japan rate spread exceeding 250 basis points, adding pressure to yen depreciation. Japan's top foreign exchange official Atsushi Mimura said Thursday that recent yen exchange rate fluctuations have been "too rapid" and referenced previous currency interventions; Japan's Finance Minister Katsuya Katayama and U.S. Treasury Secretary Bessent have also signaled the possibility of intervention if necessary. Previously, the USD/JPY fell more than 70 points to 159.30, sparking speculation of Japanese intervention, now rebounding to 159.72. Japan intervened in the forex market three times last summer, using a total of 15.4 trillion yen (about $96.4 billion).

[Company News]

Nvidia's forward P/E drops to 14-year low; stock down more than 30% from all-time high. Nvidia (NVDA.US) shares have declined sharply recently, with the forward P/E falling to about 12 times, the lowest since 2012. After Jensen Huang resigned, Nvidia's stock dropped over 4% on Thursday and is down about 11% for the week, over 30% below its October 6 all-time high. In addition to management changes, the market is also worried about a potential slowdown in AI data center construction. CFO Colette Kress is acting CEO, and the company is seeking a formal successor. Analysts remain optimistic about Nvidia's strong earnings growth, expecting chip demand to continue to outpace supply. The market expects Nvidia's October quarter revenue to grow 92% year-over-year, with net profit surpassing $60 billion, up 89% year-over-year. Nvidia is scheduled to report earnings next Tuesday, and investors will focus on Kress' guidance for future performance, which may be more closely watched than the results themselves.

Microsoft cloud experienced outage; AWS and Google also reported issues. According to outage tracking site Downdetector, Microsoft (MSFT.US) suffered a large-scale service outage in the Eastern US on Thursday, affecting thousands of users across multiple regions. The outage began shortly before 2:00 a.m. Beijing time on the 13th, impacting Microsoft 365 services and Outlook. Meanwhile, users of Amazon Web Services (AWS) and Google (GOOG.US) also reported service interruptions on the site. A Microsoft spokesperson said, "We are aware of the issue and are investigating user reports of Microsoft 365 service outages, primarily focused on Exchange Online." Microsoft's “Microsoft 365 Status” account initially posted on social media that the issue may have been caused by "overloaded infrastructure in multiple regions." Later, Microsoft determined that the increased load was due to "some servers unexpectedly being unavailable, leading to increased stress on the remaining infrastructure."

Driven by semiconductor demand, Applied Materials' sales and profits both rise. Thanks to AI-driven semiconductor demand, Applied Materials (AMAT.US) achieved significant growth in both profit and sales in the fourth fiscal quarter. The company’s Q4 profit was $2.72 billion, or $3.40 per share; a year earlier, profit was $1.90 billion, or $2.38 per share. Adjusted earnings per share, excluding certain one-time items, were $4.16, exceeding analyst expectations of $4.06. Revenue rose 53% to $10.41 billion, exceeding analyst estimates of $10.3 billion. CEO Gary Dickerson said the company’s semiconductor systems business is expected to achieve growth of more than 40% this year. In the past quarter, sales in this segment surged 64% to nearly $8 billion. For Q1 of the new fiscal year, Applied Materials expects revenue to reach $11.1 billion (plus or minus $500 million) and adjusted earnings per share of $4.35 (plus or minus 20 cents).

SpaceX and Tesla merger talks reportedly progressing, announcement possible as soon as December. Citing sources, media reported that SpaceX (SPCX.US) and Tesla (TSLA.US) are making progress in merger talks, with both boards and advisors discussing terms and post-merger governance structure. The two companies could announce the merger as soon as December, though pushing the announcement to early 2027 is also being discussed. If realized, this deal would be one of the largest in history, integrating electric vehicles, energy storage batteries, rockets, and satellite businesses. The negotiations still face several obstacles, including how to separate some of Tesla's overseas business and the national security concerns involving SpaceX's Department of Defense contracts. Both companies’ boards have previously set up special committees of independent directors to study the merger.