- The three major Wall Street indices came under significant pressure, with the Nasdaq Composite Index (IXIC) dropping 1.63%. This was due to rising energy prices triggered by geopolitical conflicts, which increased risk-free rates and led the market to defensively reassess the valuation system of AI concept stocks.
- The yield on the U.S. 10-year Treasury (US10Y), a benchmark for borrowing costs, rose to 4.58%, reaching its highest level since May 2025. Meanwhile, Brent crude oil (BRN1!) prices climbed to $108.28 per barrel.
- There were marginal changes in the pricing of interest rate derivatives, with the CME's FedWatch tool indicating that the probability of the Federal Reserve (Fed) raising rates by 25 basis points at the December meeting has doubled to around 40%.
In the recently concluded trading day, global capital markets underwent an asset repricing process driven by macro variables. Ongoing conflicts in the Middle East have significantly disrupted the energy supply chain, forcing institutional investors to reassess the long-term inflation center. The tech sector, which previously received high valuation premiums due to expected capital expenditures in the AI industry, is now facing the challenge of liquidity contraction. The ratio of declining to advancing stocks on the New York Stock Exchange and Nasdaq was 3.84:1 and 3.34:1, respectively, indicating a systemic weakening of market breadth. The Chicago Board Options Exchange Volatility Index (VIX), known as the fear index, rose by 1.5 points to 18.8.
Revaluation of Tech Giants and Chip Sector
The semiconductor sector, a core engine of the recent U.S. stock market rally, bore the brunt of the selling pressure. The Philadelphia Semiconductor Index (SOX) fell by 4%, with leading companies like Nvidia (NVDA:US) and Advanced Micro Devices (AMD:US) both dropping over 4%, while Intel (INTC:US) fell by 6.8%. Market analysis suggests that in the macro environment where the 10-year Treasury yield approaches 4.6%, the increase in the discount rate for future cash flows directly suppresses the valuation ceiling of growth assets. Despite providing third-quarter performance guidance above market expectations, semiconductor equipment manufacturer Applied Materials (AMAT:US) still saw its stock price fall by 2.3%, reflecting the current macro headwinds' dampening effect on the microeconomic fundamentals of companies.
Institutional Portfolio Adjustments and Stock Movements
In an environment of systemic pressure, some stocks recorded contrarian performances driven by specific events. Software giant Microsoft (MSFT:US) rose by 1.3%, mainly boosted by news that Pershing Square Capital Management founder Bill Ackman is set to disclose a new position in the company. Additionally, medical device manufacturer Dexcom (DXCM:US) surged by 5.6% after announcing an agreement with activist investment firm Elliott Investment Management to restructure key board committees. This capital-level governance structure optimization received liquidity premium recognition in a weak market.
Energy Price Shock and Pressure on the Transportation Sector
The geopolitical shadow is accelerating its transmission to the real economy. Brent crude oil prices breaking the $108 mark directly increased the immediate operating costs of energy-intensive industries. The airline sector was directly affected, with Delta Air Lines (DAL:US), United Airlines (UAL:US), Southwest Airlines (LUV:US), and Alaska Airlines (ALK:US) experiencing declines ranging from 1.9% to 2.7%. UBS Global Wealth Management's multi-asset strategy team warned that if the upward pressure on prices caused by the energy shock becomes entrenched, central banks may be forced to maintain a tightening stance, posing a risk of dual declines in revenue growth and profit margins for cyclical sectors reliant on the economic cycle.
Continued Uncertainty in Macro-Diplomatic Aspects
Beyond economic data and geopolitical situations, investors also digested information from the U.S.-China summit. The two countries engaged in extensive discussions on core issues such as trade, tariffs, and regional geopolitics, but market feedback indicated that the meeting did not yield unexpectedly breakthrough results. In the absence of new macro-diplomatic catalysts, risk-averse sentiment further increased demand for U.S. dollar assets and highly liquid short-term Treasuries, making the upward structure of long-term rates appear more solid.
