Market Split Widens as Capital Rotates to Old Economy
TREE NEWS reports: US equities closed mixed Monday, with the Dow Jones Industrial Average gaining 0.41% to 51,983.98 while the Nasdaq Composite fell 1.07% to 25,164.32 and the S&P 500 slipped 0.51% to 7,541.40. The 1.5-percentage-point gap between the Dow and Nasdaq underscored a broadening rotation out of high-multiple technology names into cash-flow-rich traditional sectors. The equal-weight S&P 500 ETF (RSP) rose 0.76%, outperforming the cap-weighted index by more than a percentage point for a fourth consecutive week. The VIX climbed 8.91% to 21.15, reclaiming the 20 level even as the Dow finished higher.
Oil’s 7% Slide Reshapes the Tape
WTI crude plunged roughly 7.3% to about $96.5 per barrel and Brent fell 7.8% to around $104.6, the largest single-day declines in three months. The trigger was a diplomatic breakthrough signal between Washington and Tehran, with Tehran proposing to reopen the Strait of Hormuz within two days during talks in Doha. The move unwound the war-risk premium that had pushed crude to near seven-week highs. The knock-on effects were immediate: inflation expectations cooled, the 10-year Treasury yield fell about 3.5 basis points to 4.893%, and December gold rebounded 1.5% to $3,957 an ounce. Consumer discretionary and industrial sectors led gains, while energy slumped.
AI Infrastructure Trade Under Pressure
Marvell’s all-stock acquisition of Lumentum, valued at roughly $88.3 billion at announcement, was met with a sharp selloff. Marvell fell 12.72% to $171.41 and Lumentum dropped 18.59% to $684.40, cutting the implied deal value to about $77.1 billion. The transaction, expected to close in the first half of 2028, would give Marvell a full stack from custom silicon to optical modules. But investors already anxious about AI capex saw a near-$100 billion bill rather than a solution. The Philadelphia Semiconductor Index extended its two-day decline to nearly 10%. Nvidia reversed early gains to close lower, dragging the S&P 500 into the close.
Apple and Palantir Beat, Then Fall
Apple reported fiscal fourth-quarter revenue of $114.5 billion, up 12% year over year and a September-quarter record, with EPS of $2.10. iPhone revenue hit $575.8 billion and services reached a record $315.7 billion. Full-year revenue of $479 billion marked the company’s best ever. Yet shares fell about 3.8% after hours, weighed by a narrow beat, supply constraints on the iPhone Duo, and the absence of formal guidance. Palantir posted 63% revenue growth to $1.18 billion and raised full-year guidance, but its shares also reversed a 3% after-hours gain to close down 3.6%, with known bearish positioning adding pressure.
What to Watch
Tuesday is US midterm election day, with all 435 House seats and 35 Senate seats in play; results will shape tax, fiscal, AI-regulation and crypto policy. AMD reports after the close, with consensus at roughly $13.1 billion in revenue and $1.94 EPS, a key test for semiconductor sentiment. Nonfarm payrolls land Friday, with September’s 29,000 gain underscoring a cooling labor market and shaping expectations for a December Fed move.
