Midday Mashup
The AI-spending reckoning that knocked futures lower this morning has hardened into a full rotation out of growth and into value, cyclicals and defense. ServiceNow is down 26.6%, Alnylam Pharma 25.3%, Fortinet 22.4%, and Alphabet's two share classes are off roughly 13%, together wiping out hundreds of billions in market value despite beat-and-raise numbers from several of them. On the other side, Carvana is up 16%, Gen Digital 14.4%, Huntington Ingalls Industries 13.1%, Norwegian Cruise Line 12.8% and Leonardo DRS 12.7%, underscoring how sharply money is moving from megacap tech into cyclicals, travel and defense.
Layered on top is a deteriorating Strait of Hormuz situation. Iran's state broadcaster reports another tanker struck a mine this morning, Saudi Arabia's civil defense issued a fresh warning in Najran, and a sailboat sank near Oman after a security incident. Exxon Mobil and Chevron have pulled their executives from next week's ADIPEC conference in the UAE on security grounds, and Air France has extended flight suspensions to Riyadh and Dubai. Putin added to the unease, saying Russia is "prepared for war but does not want any war" and warning he does not want a Hormuz-style situation to develop in the Baltic.
The ECB held its deposit rate at 2.50% as expected, but Christine Lagarde struck a notably hawkish tone, saying the energy shock is likely to lift inflation, that risks to inflation are to the upside, and that "the direction of travel on rates is quite clear... unless there is a surprise." She also confirmed she is stepping down early. The euro fell to its lowest since May 2025 on the remarks, even as traders trimmed ECB hike bets to 68 basis points by end-2027.
On the data front, US GDP for the third quarter came in at 3.4% versus a prior PCE price index of 3.1%, while the PCE price index itself ran hot at 0.5% month-over-month against 0.3% prior, keeping the inflation debate alive. Trump said it was "a great morning from the standpoint of GDP" and separately said "the Fed hates to cut interest rates."
DoorDash's agreed $17 billion acquisition of Instacart remains the biggest corporate deal of the day, while Eli Lilly's guidance raise has pushed shares to a record high, one of the few growth names holding up against the broader tech unwind.
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