Nov. 6th Market Overview: Hiring Came In Much Stronger Than Expected

Happy Friday

What a week. Tech won back part of the losses today, and the jobs report came in way stronger than Wall Street expected. The economy had a far better week than the stock market, and that’s worth remembering this weekend.

What did you do during yesterdays sell off?
Buy, sell, or close the screen and go for a walk

Let's dig in...

Today's Big Picture

1. Asia Sold Off, Then US Chip Stocks Bounced

Thursday’s AI sell-off hit Asia overnight, leaving Japan’s Nikkei and Taiwan’s main index at least a fifth below their highs. South Korea’s market dropped so fast at the open that trading stopped for 20 minutes. Back in New York, buyers returned to chip stocks, and tech led the S&P 500 higher while the Dow lagged. Bank of America says AI hardware stocks fell because investors are paying less for the same profits.

2. Hiring Came In Much Stronger Than Expected

Employers added 165,000 jobs in October, and the unemployment rate ticked down when economists expected it to hold. The government also added a combined 84,000 jobs to its counts for August and September. The economy only needs about 30,000 new jobs a month to keep the job market steady. The jobless rate may be the better signal, since a counting change this year can make monthly job numbers swing more.

3. Microsoft Is Cutting Back on Rented AI Computing

Microsoft $MSFT has been turning off computing power it rented from Oracle $ORCL after letting a contract lapse, Bloomberg reported. CNBC adds Microsoft plans to use fewer neoclouds, smaller companies that rent out AI computing, and build more of its own. Those reports kept a lid on the day’s rebound. Gartner predicted in October that as many as four in five neoclouds could stop operating on their own by 2030.

Market Overview

Index Performance

Stock Spotlight

IonQ $IONQ ( ▲ 21.45% )  
raised its full-year revenue forecast to $505 million to $515 million. Analysts had expected $456.2 million from the quantum computing company.

Firefly Aerospace $FLY ( ▲ 35.49% )  
signed a deal worth about $1.3 billion to supply AST SpaceMobile with 36 rocket engines. AST also gets a license to the technology behind the engine, and its shares rose too.

Microchip Technology $MCHP ( ▼ 9.76% )  
fell sharply after a weak forecast for this quarter. The chipmaker expects an adjusted profit of 87 to 95 cents a share, and analysts were looking for 94 cents.

Big Name Updates

Nvidia $NVDA ( ▲ 3.27% )  
lost more than $440 billion in market value yesterday, the most of the seven biggest tech stocks. It won back part of that today.

Tesla $TSLA ( ▲ 4.81% )  
will wind down the Cybertruck around mid-2027 to make room for its Cybercab robotaxi, Elon Musk said. Tesla once said it had more than 1 million preorders for the truck.

SpaceX $SPCX ( ▲ 8.51% )  
bounced after two days of heavy selling that followed the election. Deutsche Bank called the drop a buying chance, arguing Musk can likely protect his companies from political payback.

Costco $COST ( ▼ 1.03% )  
, one of the few stocks that rose Thursday, now trades near its May high of about $1,090. Investors are paying about 46 times next year’s expected profit, a little below its average of just over 49.

Other Notable Company News

Lam Research $LRCX ( ▲ 8.85% )  
rose after the chip equipment maker’s board approved buying back $25 billion of its own stock.

Sandisk $SNDK ( ▲ 3.32% )  
was one of Thursday’s five worst Nasdaq stocks, and it led all five higher before today’s open.

Walmart $WMT ( ▼ 1.78% )  
Kroger and Dollar General held above their pre-election prices through Thursday’s sell-off. Investors are betting a Democratic Congress boosts the kind of federal spending that ends up at the grocery store.

New York Times $NYT ( ▲ 4.12% )  
is reportedly in talks to buy Letterboxd, the movie review app, for $330 million.

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Sector Watch

Bond Market

Bonds sold off after the jobs report, which pushed the 10-year Treasury yield higher. Thursday’s panic reached Big Tech’s debt too, and insuring Amazon, Alphabet or Microsoft against a default now costs the most in five years.

Policy Watch

Data Centers

The White House spent Friday telling everyone to relax. Kevin Hassett, the president’s top economic adviser, said there’s still plenty of room for data centers to grow as planned, and President Trump posted that he’ll work with any state that wants them. If Democrats in Congress try to roll back Trump’s economic agenda, Hassett says the president will veto it.

• Goldman Sachs figures governors who promised to stop or pause construction could hold up nearly half of planned US data center capacity.

• None of those governors take office until January, so I’d expect the worry to hang around until then, and MAI Capital’s Chris Grisanti agrees.

Fed

Traders now put the odds of a December rate hike at nearly 8 in 10 after the jobs report, up from about two in three on Thursday. The friendlier news for the Fed came from consumers, who told the University of Michigan they expect inflation to cool a little over both the next year and the next five.

International

• Oil fell hard this week, and Brent crude is back below $100 a barrel.

• Secretary of State Marco Rubio has said he’d rather reach a deal with Iran than escalate the war, and Bloomberg reports he’s weighing leaving the administration after the midterms. If he goes, the administration loses a voice for a deal.

What to Watch

*AI is becoming physical

Robotics and automation are rapidly becoming essential infrastructure across healthcare, manufacturing, logistics, and many other industries. "Physical AI" is coming. Learn which seven companies are most positioned to benefit as intelligent robots enter the workforce.

Tuesday’s Inflation Report

Hassett blamed this year’s sticky inflation on higher gas prices from the Iran war. Tuesday’s report will show whether prices outside of energy are cooling. If they are, that backs up his case, and if they aren’t, gas isn’t the whole story.

Musk’s Texas Projects

Tesla and SpaceX are building a chip factory and data center together in Grimes County, Texas, called Terafab. Hinojosa has already asked a state agency to pause a public land sale to SpaceX. Watch whether Terafab gets caught in her data center pause.

Thanks for reading - you are now the more informed 🙂

- John

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