Closing Recap 

U.S. stocks pulled back from record highs on Thursday as a combination of mixed tech earnings, a lack of concrete details from the U.S.-China trade truce, and lingering caution from the Federal Reserve gave investors a reason to take profits. The Nasdaq snapped its five-day winning streak with a significant 1.58% drop, as investors rotated out of high-flying tech and discretionary names and into recent laggards like financials and healthcare. The U.S. dollar held firm near three-month highs after Fed Chair Powell’s hawkish comments tempered expectations for a December rate cut. 

This dollar strength continued to pressure foreign currencies, with GBP/USD sinking to fresh six-month lows and USD/JPY hitting a new nine-month high. In commodities, crude oil was flat, while gold edged higher. The crypto market faced another day of heavy selling, with Bitcoin tumbling below $107,000.

 Key Takeaways 

• Tech-Led Sell-Off: The Nasdaq fell over 1.5%, snapping a 5-day win streak, as mixed earnings from Meta (weak) and Google (strong) prompted a rotation out of growth sectors. 
• Market Resilience Tested: Despite the pullback, underlying sentiment remains strong, with active managers increasing their equity exposure to leveraged long positions for the first time since July 2024. 
• Powell’s Shadow Lingers: The market is still digesting Fed Chair Powell’s warning that a December rate cut is “not a foregone conclusion,” keeping the U.S. dollar supported and bond yields elevated. 
• Dollar Firm, Pound and Yen Sink: The DXY hovered near 99.50. GBP/USD fell towards 1.3100 for a ninth loss in ten days, while USD/JPY surged above 154.00, hitting a nine-month high. 
• Yen Tumbles to 9-Month Low: The Japanese Yen is the notable underperformer, with USD/JPY surging to a nine-month high above 154.00 as a dovish BoJ and pro-stimulus government keep the currency under heavy pressure.
• Gold Holds Above $4,000: The precious metal gained modestly, settling at $4,015 as geopolitical uncertainty and some safe-haven demand provided a floor against a stronger dollar.
•  Bitcoin Tumbles Below $107k: The crypto sell-off accelerated, with Bitcoin dropping over 4% amid persistent outflows from spot ETFs and a broader risk-off mood driven by Fed uncertainty. 
• Oil Steadies: Crude oil prices are consolidating after a volatile week

Market Overview 

After a powerful run to record highs, Wall Street took a step back on Thursday. The major indices finished lower, led by a decline in the previously high-flying technology sector. The catalysts for the pullback were multifaceted. Overnight, mixed earnings from tech giants set a cautious tone. While Google’s results were strong, Meta’s weaker report was enough to spook investors in the highly concentrated tech sector. Furthermore, while the Trump-Xi meeting resulted in a tariff truce, the lack of specific details left the market wanting more. 

Index	Up/Down	%	Last
DJ Industrials	-109.88	-0.0023	47522
S&P 500	-68.24	-0.0099	6822
Nasdaq	-377.33	-0.0158	23581
Russell 2000	-18.87	-0.0076	2465

However, the most significant overhang remains the Federal Reserve. Chair Powell’s comments from Wednesday continue to reverberate, forcing a hawkish repricing of the Fed’s future path. While the CME FedWatch tool shows traders have crept back to pricing in a 71% chance of a December cut, this is a far cry from the near-certainty seen earlier in the week. This uncertainty is creating a divergence under the surface: while headline indices are near all-time highs, the number of individual stocks hitting 6-month lows has spiked, signaling a fragile and narrowly-led market. Investors are now pinning their hopes on tonight’s earnings from Apple and Amazon to restore confidence and provide a clearer direction.

The Asian session was dominated by fresh economic data from Japan and China. In Japan, Tokyo’s CPI for October came in hotter than expected, but this was offset by other mixed data and had little impact on the Yen. In China, official PMI data showed the manufacturing sector slipping further into contraction to a six-month low, weighing on regional sentiment. European markets are opening with a cautious tone as traders await a barrage of inflation data from across the Eurozone.

Economic Calendar 

With the U.S. government shutdown entering its 30th day, the official data calendar remains sparse. Market focus is shifting to European inflation data and commentary from Fed officials who are now out of their pre-meeting blackout period. 

Data Released Earlier / Overnight: 

• Tokyo Core CPI (Oct): Rose to 2.8% y/y, beating the 2.6% forecast. This stronger-than-expected reading points to persistent inflation in Japan, complicating the Bank of Japan’s policy path. 
• China Official PMIs (Oct): Manufacturing PMI fell to 49.0, its 7th straight month in contraction and a 6-month low. Non-manufacturing held steady at 50.1. 
• German Retail Sales (Sep): Rose +0.2% m/m, meeting expectations. 
• French Preliminary CPI (Oct): Slowed to +0.9% y/y, slightly below the +1.0% forecast. 

Today is the final day of a volatile month, with the focus on a barrage of European inflation data and the Canadian GDP report. Today’s Economic Calendar: 

• European Session: The main highlight is the Eurozone Flash CPI report. While not expected to alter the ECB’s current on-hold stance, any major surprises could spark volatility in the euro. 
• U.S. / North American Session: The key release is the monthly Canadian GDP report. The main focus, however, will be on speeches from several Fed officials (Logan, Bostic, Hammack), as traders will be eager to see if their views align with Chair Powell’s more cautious tone. 
• 12:30 GMT – Canadian GDP (Aug).

Asset Class Spotlight: FX, Commodities, Bonds & Crypto

The big story in commodities has been the sharp correction in Gold. After a dramatic sell-off, the precious metal has found its footing, with futures rebounding 0.4% to settle at $4,015.90. The metal found some support from profit-taking in equities, but its gains were capped by the strong U.S. dollar and rising Treasury yields. However, the metal is still poised to snap its historic nine-week winning streak. Crude oil contracts were little changed, with WTI settling at $60.57 a barrel as investors weighed the U.S.-China trade truce against Powell’s less dovish monetary policy outlook. 

Asset	Up/Down	Unit / % Change	Last
WTI Crude	0.09	0.0015	60.57
Brent Crude	0.08	0.0012	65
Gold	15.2	0.0038	4015.9
EUR/USD	-0.0034	-0.0029	1.1565
USD/JPY	1.38	0.009	154.09
10-Year Note Yield	0.031	0.0076	0.04091

Currencies The U.S. dollar’s dominance continued, driven by the recalibration of Fed expectations. This strength weighed heavily on most G10 counterparts. 

• GBP/USD: The pair continued its relentless slide, dipping below 1.3120 to fresh six-month lows. Having fallen for nine of the last ten sessions, the cable is suffering from persistent dollar strength and a lack of positive domestic catalysts and a repricing of Bank of England rate cut expectations.. 
• USD/JPY: The pair surged to a nine-month high, breaking decisively above the 154.00 level. The yen’s nearly 4% loss in October was compounded by dovish domestic policy signals and a fresh round of verbal intervention from Japan’s Finance Minister, which the market largely ignored. 
• EUR/USD: The pair struggled to find a footing, hovering near a two-week low around 1.1570. The ECB’s neutral stance on Thursday offered no support, leaving the euro vulnerable to the hawkish Fed repricing and broad strength in the U.S. Dollar Index, which held near 99.50. 

The sell-off in the crypto space intensified. Bitcoin fell over 4% to trade below $107,000, while Ethereum and XRP saw even larger declines. The market is being hit by a wave of outflows from U.S. spot ETFs and growing concerns that a less accommodative Fed will reduce liquidity for high-risk assets. U.S. Treasury yields finished higher for a second consecutive day. The 10-year yield climbed another 3 basis points to 4.091% as the bond market continues to adjust to the lower probability of a December rate cut from the Federal Reserve.

Looking Ahead 

Looking to Friday, traders will be closely watching the Eurozone CPI data and speeches from several Fed officials for further clues on the global inflation and interest rate outlook.What to watch: 

• The Post-Powell Repricing: The market is still adjusting to Chair Powell’s less-dovish-than-expected tone. The probability of a December rate cut has fallen to 71% from over 90% earlier in the week. This hawkish repricing is the primary driver of the dollar’s strength and the main headwind for stocks and gold. 
• The Yen’s Freefall: USD/JPY’s break above 154.00 is a major technical development. While the fundamental story is bearish for the Yen, traders will be on high alert for any stronger verbal intervention from Japanese officials, who have expressed concern over “one-sided, rapid” moves. 
• Gold’s Battle at $4,000: After the massive correction, gold’s ability to hold above the key $4,000 psychological level will be a crucial test. A failure to do so could signal a deeper pullback is in store. 
• The Shutdown Endgame: As the shutdown drags into its 30th day, the market is starting to price in a more prolonged disruption. Any headlines about a potential breakthrough or, conversely, a hardening of positions, could spark significant volatility.