Overnight US Stock Market | Inflation Pressure Continues to Rise, All Three Major Indexes Up, Dell (DELL.US) Down 6.8%

According to the Zhitong Finance APP, on Thursday, the three major indexes rose. Pharmaceutical stocks surged, with Eli Lilly (LLY.US) up over 3%. Investors started to shift out of the AI trading sector into other value assets. Traders were also digesting resilient U.S. economic data showing inflation persistence.

[U.S. Stocks] At the close, the Dow Jones Index climbed 557.51 points, or 1.08%, to 52,178.99; the S&P 500 Index rose 25.18 points, or 0.33%, to 7,744.12; and the Nasdaq Composite Index increased by 20.16 points, or 0.08%, to 26,713.03. Micron Technology (MU.US) rose 1.87%, SK Hynix (SKHY.US) fell 0.98%, Nvidia (NVDA.US) dropped 1.84%, and Dell (DELL.US) fell 6.8%.

[European Stocks] The German DAX30 Index gained 87.32 points, or 0.35%, to 25,385.93; the UK FTSE 100 increased by 111.87 points, or 1.04%, to 10,836.73; the French CAC40 climbed 61.59 points, or 0.78%, to 7,934.70; the Euro Stoxx 50 Index dropped 19.22 points, or 0.31%, to 6,171.15; the Spanish IBEX35 Index fell 42.06 points, or 0.22%, to 19,188.64; and the Italian FTSE MIB Index declined by 336.34 points, or 0.68%, to 49,417.50.

[Forex] The US Dollar Index, which measures the greenback against six major currencies, fell 0.49% for the day, closing at 102.055 in the New York Forex market. At market close in New York, 1 euro exchanged for 1.1212 U.S. dollars, up from 1.1153 the previous trading day; 1 pound exchanged for 1.3272 U.S. dollars, up from 1.3181; 1 U.S. dollar exchanged for 158.14 Japanese yen, down from 158.20; 1 U.S. dollar for 0.8271 Swiss francs, down from 0.8345; 1 U.S. dollar for 1.4190 Canadian dollars, down from 1.4247; and 1 U.S. dollar for 9.9597 Swedish krona, down from 10.0321.

[Cryptocurrency] Bitcoin rose over 1%, last quoted at $82,367. Ethereum gained around 1.8%, quoted at $2,460.

[Precious Metals] Spot gold was quoted at $4,170.26 per ounce; spot silver was quoted at $57.425 per ounce.

[Crude Oil] November delivery light crude futures on the New York Mercantile Exchange rose by $2.88 to settle at $97.97 per barrel, a gain of 3.03%. December delivery Brent crude futures on London's ICE fell by $0.14 to $105.92 per barrel, down 0.13%.

[Macroeconomic News]

US Military States Hormuz Strait Remains Open to Navigation. The US Central Command issued a statement refuting three claims made by Iran’s Revolutionary Guard in the past 24 hours regarding control of the Hormuz Strait, merchant ship attacks, and US casualties. The US says that it and its regional partners retain control of the Strait of Hormuz and commercial vessels continue to transit the waterway. Regarding the Revolutionary Guard's claim that a Singapore-flagged container ship hit a mine in the strait on Wednesday, the U.S. said the ship, GFS Pride, was in fact struck by a shell fired by the Iranian Revolutionary Guard and sank while being towed to shore, not by hitting a mine. The U.S. emphasized that the main shipping lane in the Strait of Hormuz remains unblocked by mines, with more than 40 vessels having passed through in the past 24 hours. Furthermore, the U.S. denied IRGC claims of killing hundreds of U.S. troops in Jordan, stating that three U.S. soldiers were killed in July during partner forces' resistance to an attack by Iran.

Fed’s Mester: Worsening Inflation Expectations Could Force Stronger Action by the Fed. Cleveland Federal Reserve President Loretta Mester said Thursday that if the public’s inflation expectations deteriorate, the Fed may need to act more aggressively. Mester stated: “What concerns me is that if an inflation mindset sets in, with the public beginning to expect price pressures to become ever more persistent, it will be harder for monetary policy to be as effective as it should. If such an inflation mindset takes hold, the Fed may need to take stronger action.”

US 30-Year Mortgage Rate Holds at 7.4%, Unchanged for Eight Consecutive Weeks. Freddie Mac said Thursday that the average US 30-year fixed-rate mortgage remained at 7.4%, near the highest level since November 2023 and up from 6.27% a year ago. US mortgage rates have held steady for eight straight weeks, the longest streak since 2021, and have risen by 75 basis points over the period. The rapid rise in borrowing costs is forcing sellers to lower prices and suppressing homebuyer demand. According to Redfin, pending home sales in the U.S. fell 4% month-on-month in September, the largest drop in over three years, falling to the lowest level since 2014 except for the early months of the 2020 pandemic. Bright MLS Chief Economist Lisa Sturtevant expects high mortgage rates, rising inflation, and weak consumer confidence will cause a noticeable slowdown in the U.S. housing market this fall, with existing home sales potentially falling below 4 million units for the first time since the 1990s.

US Retail Sales Data Strong, Inflation Pressures Continue to Erode Purchasing Power. US retail sales exceeded expectations in September, largely driven by higher spending at gas stations, which masked a mixed performance across other retail sectors. The US Department of Commerce reported Thursday that not adjusted for price changes, September retail sales rose 0.8% month-on-month, with August’s gain revised up to 1.3%. Excluding autos and gas, retail sales rose 0.2% in September. Eight of 13 retail categories saw gains, with gas station sales up 6.4%, the highest among all subsectors. Consumers cut back on spending for hobbies and building materials, but sales at furniture stores, electronics stores, and restaurants rose. The data showed that as the third quarter drew to a close and price pressures mounted, the momentum of consumer spending in the US weakened. Rapid inflation has further eroded Americans' purchasing power and squeezed household budgets. CEOs of Domino’s Pizza and Albertsons recently acknowledged in earnings calls that many consumers still face tough economic conditions.

Persistent Inflation Pressures in the U.S.; September PPI Surges. Boosted by rising energy costs, the U.S. Producer Price Index for September exceeded expectations, showing the impact of higher energy prices spreading across sectors. The US Bureau of Labor Statistics reported producer prices climbed 1.3% month-on-month in September and rose 6.3% year-on-year. Excluding food and energy, core PPI rose 0.7% from August and 5% year-on-year. The report showed that even as fuel prices rise, underlying inflation pressures in the U.S. remain stubborn. With just weeks to go before the November midterm elections, the burden of living costs has become a focal issue. The data could also encourage Fed officials to continue raising rates, particularly as another report Wednesday showed a key consumer price metric for September outpaced expectations. The report also indicated price pressures are expected to remain elevated for several months, with the gauge for six-month input price expectations reaching its highest since 2022.

[Stock News]

Meta Releases Open-Weight AI Model; Strongest Tech Still Closed Source. According to media reports, Meta Platforms (META.US) has launched a new open-weight AI model, Muse Spark Open, mainly targeting programming and AI agent tasks, but did not open source its most powerful model. Meta’s Chief AI Officer Alexandr Wang said that Muse Spark Open is not the strongest model the company has developed or released. Muse Wonder, launched earlier this week, remains closed source. Meta also admitted that in software development and some other areas, China's open-weight models still outperform Muse Spark Open. At the same time, Meta has partnered with Apple (AAPL.US) to allow developers to run Muse Spark Open locally on multiple high-end Mac computers. Apple has updated its MLX software toolkit to support running this model on Mac devices.

Chip Startup Bolt Graphics Seeks to Raise $100 Million. Three sources report that chip design startup Bolt Graphics is seeking to raise about $100 million at a valuation of around $700 million. The company intends to use the funds to develop graphics chips to compete with Nvidia (NVDA.US) and AMD (AMD.US). While these two giants continue to invest heavily in underlying hardware development, Bolt plans to design chips focused on non-AI domains, such as high-precision computing for supercomputers and graphics processing for video games. The sources noted that the fundraising is ongoing and the size and valuation may change.

Google Achieves Quantum Breakthrough; Willow Chip Error Rate Reduced by About 40 Times. On October 15, Google (GOOG.US) announced that its Quantum AI team had successfully validated a new technique called “Magic State Cultivation” on the Willow quantum chip, reducing the error rate of specific quantum states by about 40-fold, with prepared states achieving 99.99% accuracy. The relevant research has been published in the journal Science. Google explained that quantum computers are prone to interference and errors; to carry out complex calculations, special quantum states must be prepared in advance. However, this process is resource-intensive, with some studies estimating traditional methods consume up to 95% of a quantum computer’s computational power. The new technique improves preparation efficiency by detecting and discarding erroneous quantum states, potentially reducing resource consumption for error correction in future quantum computers. Google said the result is an important step toward practical quantum computing, though further verification is needed for larger-scale systems.

EU Plans to Fast-Track Approval of European Satellite Merger to Counter SpaceX. According to informed sources, the European Union is preparing to fast-track antitrust approval for the Project Bromo European satellite venture, jointly advanced by Airbus, Italy’s Leonardo, and France’s Thales, with the aim of creating a European satellite giant and reducing reliance on US satellite service providers such as SpaceX (SPCX.US). Sources say the European Commission has been in continuous talks with the three firms for the past year, identifying and resolving potential competition issues in advance. The companies have not yet formally applied for approval but are expected to do so within weeks. If the companies offer remedies such as asset divestitures, the project could be approved after the first phase antitrust review (which lasts a little over a month) without requiring a lengthy in-depth investigation. European Commission President Ursula von der Leyen supports the project, but Competition Commissioner Margrethe Vestager stressed that even with political backing, the project must comply with EU competition laws.

Jensen Huang Backs CoreWeave: Financials Continue to Improve, No Need for Nvidia to Provide Guaranty. Nvidia CEO Jensen Huang stated that data center operator CoreWeave’s financial status is improving. Nvidia is CoreWeave’s supplier of computing equipment. Speaking at an event in Stockholm, Huang said: “CoreWeave’s strength is growing every day.” He believes Nvidia has no reason to provide financial guarantees for CoreWeave. “I’m optimistic. In fact, their capital costs are falling.” Previously, market confidence in CoreWeave’s credit deteriorated due to perceived rising default risk, with Huang seeking to restore faith in the company. CoreWeave is a key test case for the sustainability of new AI infrastructure business models. Such companies have emerged to meet (what Nvidia calls) virtually limitless AI computing demand. Firms like CoreWeave have incurred significant debt with suppliers’ support, including Nvidia, sparking market concerns about circular financing creating artificial demand.

[Major Broker Ratings]

UBS: Raises Microsoft (MSFT.US) target price from $525 to $675; Raises BlackRock (BLK.US) target from $1,277 to $1,300.