The main US indices started the week with a bang, absolute records raining down for the S&P500, the Dow Jones, as well as dozens of stocks displaying stratospheric valuations… notably Nvidia which came back within a few dollars of its peaks, with a capitalization of $3.300 billion, the second on the planet.
Wall Street seemed invulnerable and its progression inexorable (since +40 basis points of rate increases since October 1 on the ’10 year’ have not slowed down its progress, nor the geopolitical context for that matter…).
Wall Street had reopened indecisively – a simple pause initially – then suddenly turned downward around 4:25 p.m., following ASML’s -15% plunge in five minutes (and -16.3% this evening on the Nasdaq ).
The Dutch founder dragged down the semiconductor sector and the Nasdaq dropped -1% (a lesser problem in fact, given the plunges of Arm -6.9%, AMD -5.2%, Nvidia – 4.7%, Texas Instruments -4.2%, Broadcom -3.5%, Micron -3.7%…). ASML has revised its sales forecasts for 2025 downward by almost 10% after completely missing its objectives in the third quarter.
With the sudden dissipation of the ‘full risk-on’ of the previous five weeks, the yield on American government bonds fell by -7 basis points to 4.03% (it was closed on Monday due to Columbus Day) .
Several publications have taken a bit of a back seat: Goldman Sachs -0.1%, Bank of America +0.6% and Citigroup -5.1% (with a +9% increase in provisions and a symmetrical drop in profit) .
A major burst of results publications is expected this week since 43 companies in the S&P 500, including six from the Dow Jones, must publish their accounts, including Netflix, American Express and Procter & Gamble.
Investors are waiting for good surprises in order to reassure themselves about the high level of current valuations, with the hope of revising upwards their forecasts for the results of large American companies.
On the figures side, manufacturing industry activity contracted sharply in New York State in October. The ‘Empire State’ index of general conditions, calculated by the local Fed, fell by 23 points this month to settle at -11.9.
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