Stocks Overcome Yesterday’s Selling Pressure, Recovery Rally Continues

Stocks are overcoming yesterday’s selling pressure that was triggered by Fed Governor Christoper Waller opening the door to a 50-bp hike next month and a subsequent, hotter-than-expected, CPI release. And with the bond market closed today amidst an empty domestic economic calendar in observance of Veterans Day, investors are taking their cue from CoreWeave (CRWV)’s upbeat earnings report and outlook boost. The company’s quarterly call has strengthened optimism about the rock-solid demand for the firm’s computing infrastructure while also lifting sentiment regarding the AI sector at large, especially regarding the momentum of the modern-technology’s buildout. Semiconductors and the Mag7 are leading the charge and boosting the Nasdaq 100 Index above its critical 200-day moving average and pushing it back into a medium-term uptrend, as 7 of the 11 principal sectors are participating in the gains alongside the other three major benchmarks. But the cyclical trade isn’t as buoyant, as the greenback strengthens materially while Treasury futures imply modest losses, capping the climb for the rate-sensitive areas of the market as the Dow Jones Industrial has appreciated by only 0.1% this morning. A slight increase in oil prices is contributing to these tighter financial conditions, as Tehran has communicated that no nuclear material will leave the Persian country, thereby denting hopes of a US-Iran deal. Still, the primary influencer of the recent decline in fuel charges has been President Trump reflecting little appetite for renewed military hostilities in the Middle East. Elsewhere, commodities and cryptocurrencies are broadly higher, while premiums on volatility protection instruments sink sharply on the revival of animal spirits against the backdrop of risk-on attitudes here on Wall Street.

Bottom Is In

With only about seven weeks remaining in 2026 while earnings reports and economic data both signal buoyant momentum, the bottom is in for stocks this year and a chase is poised to propel the benchmarks to fresh records just in time for Christmas. Investors don’t believe recently elected Democrats will derail the AI buildout as the harsh rhetoric from the party’s members has softened considerably following last week’s blue sweep. Meanwhile, portfolio managers are under-positioned in consideration of the significant volatility that compelled an equity deleveraging, which portends a lift in risk exposures in upcoming sessions. The positive seasonal effects of the calendar alongside a Fed that may have the option of delivering a calming one-and-done rate hike now that oil prices have tumbled could support an even fiercer recovery. The covering of an elevated level of short sales would also provide more fuel to the fire, as speculators piled into bets that would profit on further declines in stocks and the higher shares go, pressure to buy shares to close those trades in order to cap losses will intensify.

International Roundup

Double Whammy Hurts Mexico’s Industrial Production

Contractions in manufacturing and construction caused Mexico’s industrial production to fall more than expected in September with the country’s statistical agency, INEGI, reporting this morning that output sank 1.4% month over month (m/m) after climbing 0.2% in August. Economists anticipated that production would sink by only 0.3% following August’s 0.2% climb. It was fourth monthly contraction of the year and the first monthly contraction since June when output dropped 0.8%. Overall industry growth on a year-over-year basis, at 1.3%, also disappointed. Economists anticipated a repeat of August’s 3.5% jump. For the m/m results, manufacturing sank 1.7% with results for the automotive category and the computers and electronic equipment sector falling 4.1% and 2.1%, respectively. Construction, furthermore, slipped 2%. Mining bucked the overall trend with output climbing 0.4% despite oil and gas production dipping 0.9%. In this category, mineral extraction and mining related services grew 0.7% and 12.7%. The category consisting of electricity, water and gas utilities, similarly, climbed 1.4%.

South Korea Unemployment Falls

South Korea’s unemployment rate sank from 2.6% in September to 2.5% last month, but the decline was driven by more individuals throwing in the towel on working, according to the Ministry of Data and Statistics. Indeed, labor force participation, or the percentage of the overall population that is either punching time clocks or seeking work, sank from 64.8% to 64.6%. Since the unemployment rate is based on the percentage of employed individuals and job seekers that are out of work, the decline in labor participation pushed the unemployment rate down. The total number of employed individuals fell from 29.26 million in September to 29.l7 million last month while the unemployed population climbed from 600k to 602k.

Mortgage Issuance Plunges in Australia

The total number of new mortgage commitments for residential properties fell 15% during the quarter that ended in September while the value of the transactions slipped 15.5%. The quarter-over-quarter descent was led by the number and value of new commitments to investors, which sank 30.6% and 32.3%, respectively.  Financing for owner-occupied housing also weakened. After sinking only 2% during the second quarter, the number of inked deals sank 5.3%.