Midday Mashup
Published
The modest optimism that opened the session, with bank earnings offsetting the Strait of Hormuz standoff, has given way to a broad risk-off reversal after September CPI came in hotter than expected. Headline inflation rose to 3.7% year-over-year and core to 2.6%, both above consensus, and traders responded by piling into rate-hike bets rather than rotating back to banks. Citigroup now expects a 25 basis point December hike, a reversal from its prior call for no change this year, and some traders are pricing three more hikes by the end of 2027. The five-year Treasury yield jumped to its highest level since 2007, the dollar index hit an 18-month high, and the euro fell to its weakest level against the dollar since mid-2025.
The VIX is up 12.6% on the day, and the Nasdaq has extended its decline to 2%. Technology and financials are the weakest sectors. Oracle is sliding, and data-center-linked names are getting hit hardest, with CoreWeave down 16.5%, Dell down 11.7%, Nebius down 11.2%, and AST SpaceMobile down 9.8%; CoreWeave's CEO blamed the move on the market "acting irrationally." Bank of America fell 8.3% intraday, its biggest drop since April 2025, compounding its post-earnings slide. Health care is the one bright spot, with Merck up 4.1% and Bristol-Myers up 4.0%, while Elbit Systems leads gainers at 4.8% and Cboe Global Markets is up 4.2%. Paramount Skydance is the session's worst performer, down 27.2%.
The Hormuz crisis continues to escalate underneath the rate story. A second commercial vessel, a dry bulk ship, is reported sunk near the strait within 24 hours of the earlier container ship loss, and Russia says drones struck refineries in Saratov and Ryazan. Saudi Arabia says it has no intention of backing down against the Houthis, and Macron will travel to the Gulf next week to discuss the energy situation's impact on France. Gold and silver are both falling despite the geopolitical tension, down roughly 2% and 3% respectively, as higher yields dominate flows.
Elsewhere, Trump announced a $50 billion Alaska LNG project tied to Taiwanese and South Korean investment, and a $21 billion GlobalFoundries semiconductor investment in New York backed by Japanese capital, with the US government taking an equity stake.