Stocks hit on Huang exit and crude jumps on fading US/Iran deal hopes - Newsquawk US Market Wrap

• SNAPSHOT: Equities down, Treasuries down, Crude up, Dollar up, Gold down
• REAR VIEW: NVDA's CEO Huang resigns, CFO takes interim CEO role, with the company set to be probed; Iran says enemy military strike hit Sirik; US President Trump says US doesn't need a deal with Iran; Weak US 30yr bond auction; Houthis say they targeted Saudi Aramco in Riyadh with a drone; EIA shows surprise builds in crude, gasoline and distillate stocks while SPR draws down; US Existing Home Sales decline more than expected; US initial claims rise 9k to 200k; AMD upgraded; NBIS revenue guidance disappoints.
• COMING UP: Data: German Wholesale Prices (Oct), EZ Employment (Q3), Trade Balance (Sep), GDP 2nd Est. (Q3), US PPI (Oct). Events: IEA OMR; Informal Meeting of EU Leaders (Dublin). Speakers: Fed’s Daly, Collins, Bowman, Jefferson. Supply: Australia. Earnings: Richemont. Credit Ratings: Fitch on Germany; S&P on Italy; Morningstar DBRS on UK

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MARKET WRAP

Stocks were choppy on Thursday as attention centred on Nvidia (NVDA), geopolitical developments and the neocloud sector. Indices ultimately closed lower, with the Russell 2000 underperforming, while the equal-weight S&P 500 ETF also declined, highlighting negative market breadth. Sectors were mixed, with energy and communication services outperforming, while materials and technology lagged.

The main equity focus was the immediate resignation of Nvidia (NVDA) CEO Jensen Huang, which saw shares tumble as much as 14% in pre-market trade. However, NVDA pared a substantial portion of its losses during the session, although still closed firmly in the red. Huang's departure appeared to benefit competitors AMD (AMD) and Broadcom (AVGO) in the semiconductor space. Meanwhile, disappointing guidance from Nebius (NBIS) weighed on neocloud stocks, reversing some of the sector's gains following CoreWeave's (CRWV) earnings report on Tuesday evening.

Crude prices climbed on Thursday after US President Trump announced that he had instructed VP Vance to shift his focus towards domestic affairs, adding that the US does not need a deal with Iran. The remarks dampened hopes of a near-term resolution to the conflict, given that Vance had been viewed as a potential figure in brokering an agreement with Tehran.

The rise in crude prices contributed to higher Treasury yields across the curve, particularly at the front end, as renewed energy price pressures added to inflation concerns. The move higher in yields supported the Dollar, while the downbeat risk tone weighed on the Aussie. The Yen was little changed against the Greenback overall, although USD/JPY briefly climbed above 160.00 before sharply reversing lower, sparking fresh speculation around Japanese intervention or rate checks.

Looking ahead, attention turns to Friday's US PPI report for further insight into the inflation outlook, particularly following Tuesday's hotter-than-expected CPI data.

FED

BARR (voter): Said the US should be prepared for the risk of "serious short-term disruptions" in the job market due to AI. Barr added that there are signs AI is a substitute for labour in some sectors, and if change happens fast, "dislocations might be large". However, he noted there has been little displacement of workers so far, with competition among AI firms allowing broad access to the technology. Looking further ahead, he remarked that the outcome depends in part on whether AI leads to market concentration (a force for widening inequality) or more competition and more widely distributed gains. Barr concluded that at this point, AI's impact is mostly on prices, while giving a boost to investment and GDP.

HAMMACK (2026 voter): Said the Fed is doing very well on the employment side of its mandate but has been missing on inflation for years, with recent data showing inflation moving in the wrong direction and price pressures broadening. The Cleveland Fed President, who dissented in favour of a hike at the last meeting, added that real demand pressure is contributing to high inflation and that she worries an inflationary mindset could take hold. Hammack stated the Fed needs to move rates higher to reach a restrictive stance, but prefers smaller and steadier moves, which give the economy time to adjust. She does not believe the Fed is behind the curve, although she would consider more aggressive action if it were to fall behind, and noted that she goes into every FOMC meeting with an open mind. On the labour market, Hammack described it as static and said she would not call it healthy given a lack of dynamism, while noting that financial conditions remain supportive of growth.

DALY (2027 voter): Said there is no doubt of AI-fuelled price pressures, although AI is only contributing a modest amount to inflation directly and is having a limited impact on the labour market. The San Francisco Fed President added that the Fed has an inflation problem, but AI is not doing most of the driving, while warning there is a risk it could contribute more. On valuations, Daly noted there has been a repricing in AI names, but not an unwinding of interest or enthusiasm, suggesting there is no risk to growth, and said there is positive momentum in productivity, with more productivity growth possible over the next one to three years. On the economy, she described a stable labour market, positive growth and productivity gains alongside high inflation, stressing that the focus must be on lowering inflation, although tackling it now does not mean ignoring the possibility that productivity growth could be disinflationary. On policy, she said her bias is that further tightening will be needed, welcoming tighter financial conditions, which are assisting and give the Fed more time, but stressing that markets do not do the Fed's job of keeping prices stable. Daly concluded that the Fed has many quarters to make policy decisions, and that exactly how much tightening is needed, and when, does not need to be decided now.

GOOLSBEE (2027 voter): Said inflation has been well above target, and that the Fed should be mindful of signs the overall economy is overheating. The Chicago Fed President stated there is plenty of room for the Fed to discuss policy options, adding that he does not want to prejudge what happens with monetary policy.

DATA

JOBLESS CLAIMS: Initial jobless claims (w/e November 7th) rose to 200k from the prior week's upwardly revised 191k (initially 189k), above the expected 195k, while the 4-week average was unchanged at 195.25k (prev. revised from 194.75k). Continuing claims (w/e October 31st) fell to 1.697mln from the prior week's downwardly revised 1.717mln (initially 1.718mln), beneath the expected 1.710mln. In the unadjusted figures, initial claims totalled 206,982 (+16.2% W/W), compared with the seasonal factors' expected increase of 19,663 (+11.0%). Looking at the advance state breakdown, the largest increases were seen in California (+5,047), New Jersey (+3,564), Missouri (+3,029), Minnesota (+2,831), and Texas (+2,104), while the largest declines were in Michigan (-2,996), Indiana (-616), Maryland (-261), Oregon (-109), and Arizona (-57). Overall, despite the modest increase in initial claims, the four-week average remained stable and continuing claims declined, suggesting that layoffs remain relatively subdued, with little evidence of a significant deterioration in labour market conditions. Oxford Economics writes, "The spike in jobless claims last week breaks a long spell of stability but still leaves them trending lower than year-ago levels and consistent with a continued low pace of layoffs. As we approach the holiday season, seasonal noise in initial claims will increase."

EXISTING HOME SALES: Existing Home Sales fell 5.5% in October to 3.75mln (prev. 3.97mln), well below the expected 3.89mln. The national median home price for existing sales rose 0.4% Y/Y to USD 416.7k, with the inventory of homes for sale at 1.59mln units, or 5.1 months' worth (prev. 4.8 months in September). M/M sales decreased in the Midwest, South and West, while holding steady in the Northeast. NAR Chief Economist Yun said, "Home buying is difficult when mortgage rates have climbed to their highest levels since 2000, aside from a single month in 2023. As a result, home sales fell to their lowest level since August 2010." Yun continued, "Based on the current underwhelming home sales pace at a time of consistent job growth, there could be sizable pent-up demand if mortgage rates decline."

FIXED INCOME

T-NOTE FUTURES (Z6) SETTLED 18+ TICKS LOWER AT 105-14+

Yields bear flatten as Trump says US does not need Iran deal. At settlement, 2-year +12.1bps at 4.867%, 3-year +12.7bps at 4.917%, 5-year +12.1bps at 4.949%, 7-year +11.4bps at 5.014%, 10-year +10.5bps at 5.105%, 20-year +8.2bps at 5.482%, 30-year +7.9bps at 5.437%.

THE DAY: Treasury yields rose across the curve on Thursday, with the curve bear flattening as front-end yields rose faster than those at the long end. The move appeared driven by renewed geopolitical uncertainty surrounding Iran and continued hawkish repricing of Fed expectations following Tuesday's hotter-than-expected CPI report.

One of the primary drivers was US President Trump's announcement that the US does not need a deal with Iran, dampening recent optimism surrounding a potential US-Iran agreement. Trump also instructed VP Vance to shift his focus towards domestic issues, seemingly reducing the prospect of Vance helping broker an end to the conflict. As a reminder, reports had suggested a potential meeting between Vance and Iranian Security Chief Rezaei was being discussed.

Meanwhile, a risk-off move was seen pre-market following the immediate resignation of Nvidia (NVDA) CEO Huang, which initially sent shares sharply lower. Disappointing guidance from Nebius (NBIS) also weighed on the neocloud sector. However, equities recovered after the opening bell, with NVDA rebounding from its lows and the broader indices gradually moving higher. Weakness among neocloud names appeared to benefit mega-cap hyperscalers, while Huang's resignation provided support to AMD (AMD) and Broadcom (AVGO).

Fed commentary was also in focus. Hammack said she favours smaller and steadier rate moves, marking her first remarks since Waller raised the possibility of a 50bps hike in December and the hotter-than-expected October CPI report. Her preference for gradual adjustments suggests she may be reluctant to support a larger move. Meanwhile, Barr highlighted the risk of significant near-term labour market disruption from AI, offering a more dovish consideration. Goolsbee said the Fed is failing on the inflation side of its mandate and that there is plenty of room to discuss policy options, although he did not want to prejudge the outcome. He also warned that AI investment could act as a form of stimulus and that policymakers should remain alert to signs of broader economic overheating. Daly reiterated that further tightening will likely be needed, warning that inflation is spreading into services, where price pressures tend to be sticky. However, she stressed that the timing and extent of additional tightening do not need to be decided immediately.

Elsewhere, the Fed released its 2027 meeting schedule, confirming there will be no October meeting. Warsh had previously indicated that one autumn meeting would focus on strategy rather than an interest rate decision, with two strategy meetings planned annually from 2028. The final meeting of 2027 will take place in November.

The USD 25bln 30-year Treasury auction was soft but had little market impact. The offering tailed by 0.4bps, while the bid-to-cover ratio declined and dealer takedown increased amid weaker indirect participation, although direct demand remained broadly stable.

US data also had little impact. Initial jobless claims rose to 200k from 191k, above the 195k forecast, although the four-week average was unchanged. Continuing claims fell below 1.7mln, while existing home sales declined to 3.75mln from 3.97mln, below the 3.85mln forecast.

SUPPLY

Notes/Bonds

• US sold USD 25bln of 30-year bonds; tail 0.4bps.

STIRS / OPERATIONS

• Fed Hike Pricing via CME FedWatch: Dec 28.3bps (prev. 27.4bps), Mar 65.1bps (prev. 58.5bps).
• EFFR at 3.88% (prev. 3.88%), volumes at USD 98bln (prev. USD 95bln) on November 10th
• SOFR at 3.89% (prev. 3.88%), volumes at USD 3.159tln (prev. USD 3.1tln) on November 10th
• NY Fed RRP op demand at USD 0.25bln (prev. USD 0.15bln) across 1 counterparty (prev. 3) on November 12th.
• US Treasury Buyback (1-yr to 10-yr TIPS, max USD 750mln): Accepted USD 556mln of USD 3.22bln offered; 8 of 28 eligible issues accepted.

CRUDE

WTI (Z6) FUTURES SETTLED USD 2.21 HIGHER AT 88.74/BBL; BRENT (F7) SETTLED USD 3.06 HIGHER AT 95.82/BBL

The crude complex gained, as US-Iran updates were less conducive to improving relations. A modest bounce was seen in the European morning after the IRGC announced that two crude-carrying vessels had been struck in Hormuz, before further upside followed when US President Trump said “we don’t need a deal with Iran. Those days have long since passed”. The President also directed VP Vance to focus entirely on domestic issues. Vance had been seen as the potential face of a peace agreement with Iran, so the comment potentially implies the Rezaei meeting will not go ahead. As a reminder, the WSJ reported around Wednesday’s settlement that there had been preliminary discussions for Vance to meet Rezaei. Meanwhile, Fars reported that explosions were heard at several points in Sirik, eastern Hormozgan province, Iran over the past few hours and sources stated the sounds were caused by warning shots fired at offending ships. However, IRNA then reported that explosions were due to a military strike.

In the weekly EIA data, delayed by a day due to Veterans Day, crude, distillates and gasoline all saw unexpected builds, while crude production rose 10k BPD W/W to 14.013mln BPD.

For the record, WTI traded between USD 85.13-88.69/bbl, while Brent hit a low of USD 91.19/bbl vs. a later high of USD 96.16/bbl around settlement.

EQUITIES

CLOSES: SPX -0.35% at 7,593, NDX -0.30% at 28,289, DJI -0.36% at 52,299, RUT -1.61% at 2,800

SECTORS: Materials -1.49%, Industrials -0.91%, Financials -0.73%, Health -0.66%, Real estate -0.5%, Technology -0.42%, Consumer staples -0.14%, Consumer discretionary flat, Utilities flat, Communication services +0.37%, Energy +1.5%.

EUROPEAN CLOSES: European Closes: Euro Stoxx 50 +0.13% at 6,402, Dax 40 +0.57% at 26,816, FTSE 100 +0.25% at 10,863, CAC 40 +0.34% at 8,361, FTSE MIB -0.27% at 51,809, IBEX 35 -0.31% at 19,966, PSI +0.02% at 9,596, SMI +0.63% at 15,149, AEX -0.44% at 1,140

STOCK SPECIFICS:

• Nvidia (NVDA): Announced a CEO transition, with Huang stepping down as CEO and from the board; CFO Colette Kress was named interim CEO. The company said it was initiating a search for a permanent CEO, with internal and external candidates to be considered. The stock was downgraded beforehand at Evercore, Bernstein, William Blair and Oppenheimer. Multiple US DoJ probes threatened to sweep up Nvidia, Semafor reported, citing two administration officials. Also, the US was reportedly probing whether Alice Huang helped smuggle Super Micro (SMCI) products; SMCI was weighed on by the report. Later, it was reported that CEO Huang had a relationship with a second employee, according to Reuters, citing sources.
• iShares MSCI China ETF (MCHI): Chinese AI firms reportedly rushed to secure overseas NVDA capacity on fears of tighter US restrictions after espionage allegations.
• AMD (AMD): Upgraded to 'Outperform' at William Blair, which cited Intel Xeon delays and Nvidia's leadership vacuum.
• CoreWeave (CRWV): Reportedly planned to raise at least USD 4bln via an investment-grade loan led by Morgan Stanley and MUFG.
• Nebius Group (NBIS): Quarterly results beat, but it saw FY26 revenue at the low end of its range, below expectations.
• Eli Lilly (LLY): Won Chinese approval for oral GLP-1 orforglipron for weight management, getting a head start over Novo Nordisk.
• Keurig Dr Pepper (KDP): Launched a USD 2bln underwritten public stock offering.
• Strategy (MSTR): MSCI was reportedly set to remove the company from its equity indices.
• Corteva (CTVA): Profit and revenue were light; cut FY guidance on increased pressure in Latin America.
• Global Payments (GPN): CD&R and GTCR abandoned their pursuit of the company, Reuters reported, citing sources.
• Alphabet (GOOG): Announced Gemini 4 Hydrogen.
• SpaceX (SPCX) and Tesla (TSLA) merger talks are advancing, with advisers discussing terms; a deal could be announced as soon as December but may slip into 2027, Bloomberg reported.

FX

USD was broadly firmer against peers as higher US yields continue to offer an attractive rate differential environment for the buck. The move has continued in the aftermath of surprisingly hawkish comments from Fed's Waller, accompanied by hotter-than-expected CPI readings. US data showed an uptick in initial claims, though still at benign levels, while existing home sales declined more than expected. Headlines centred on Nvidia and its CEO transition, with discussion emerging over whether it is an idiosyncratic or systemic risk. Despite NVDA falling 14% at its intraday lows, a strong recovery was seen, with competitors helping offset losses in the key AI player, allowing a rebound in stocks. Higher oil prices were another supportive factor for the USD, partially in response to US President Trump saying "We don't need a deal with Iran" and signalling that VP Vance will not take part in discussions with Iran, instead focusing on domestic matters.

There was plenty of Fed speak throughout the day. 2026 voter Hammack said rates need to move higher to reach a restrictive stance, 2027 voter Daly said her bias is that further tightening will be needed, and 2027 voter Goolsbee said the Fed should be mindful of signs the economy is overheating.

DXY now trades around fresh YTD highs of 103.24.

Outside of the US, newsflow was limited. A sharp move lower in USD/JPY sparked intervention and rate-check speculation. USD/JPY briefly climbed above 160 to highs of 160.05 before swiftly falling to lows of 159.29. Thereafter, USD/JPY recovered most of the downside into the time of writing. The move followed failed jawboning attempts from Japan's top currency diplomat Mimura. Meanwhile, BoJ's Asada struck his usual dovish tone, warning against premature rate hikes.