Good morning investors! Investors are dumping stocks with big losses.
Today we cover:
What happens after Nasdaq enters correction
Worst sell off since April 2025
New tax brackets
📊 Economy and News
Nasdaq Enters Correction Territory: History Suggests Recovery, but More Volatility Ahead
The Nasdaq Composite plunged 5.52%, closing more than 11% below its recent record and officially entering correction territory (a decline of at least 10%). The sell-off was driven by concerns that Democratic midterm election victories and potential restrictions on AI data-center construction could slow infrastructure investment and hurt technology companies.
Historical data from the past decade shows that further declines often follow corrections in the short term. However, the Nasdaq has historically recovered over longer periods. Across 10 previous correction episodes, the index gained an average of 9.41% within three months of its correction low and 17.03% within six months. The major exception was 2022, when the Nasdaq continued falling, losing another 18.3% over six months.
Historical midterm election data also offers some reassurance: the Nasdaq was higher 12 months after 12 of the 13 midterm elections since 1974, although volatility often occurred along the way. The 2018 cycle, for example, experienced a sharp December sell-off before recovering and gaining approximately 15% over the following year.
Meanwhile, semiconductor stocks suffered particularly heavy losses, with the iShares Semiconductor ETF (SOXX) plunging 12%, its worst daily performance since March 2020.
Overall, history suggests that corrections do not necessarily signal the beginning of a prolonged bear market. However, investors should expect continued volatility as markets assess AI investment risks, political uncertainty and the potential impact of restrictions on data-center development.
Global hits:
Bank of Canada and government agree to keep 2% inflation target.
Russia’s GDP grew 1% y/y in third quarter 2026.
Citi sees UAE real estate recovery in October transaction data.
Mexico’s central bank cuts key rate to 6.25%.
Fear is back: Wall Street’s fear gauge, the VIX, surged nearly 70% to above 28 on Nov. 5, its highest level since March, marking its biggest intraday move since April as investors reacted to the sharp tech-led market sell-off. Despite the S&P 500 falling around 3%, some traders argued volatility should be even higher, suggesting the market had not fully priced in the turmoil.
Reminder: Binance hack prompted US regulators to check in on bank systems.
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📈 Stocks
S&P 500 7,353.73 (-4.36%)
DJIA 51,523.06 (-3.44%)
NASDAQ 24,315.01 (-5.52%)
BRENT CRUDE 99.24 (+4.57%)
* Prices as of Nov 6th, 12:20 AM UTC
Wall Street Suffers Worst Sell-Off Since April 2025 as AI Fears Wipe Out Over $1 Trillion
The Magnificent Seven lost more than $1 trillion in combined market value, with Nvidia alone shedding nearly $450 billion, now down 14 trillion since its high in October. Nvidia and Qualcomm fell over 9%, while AMD, Micron and other semiconductor stocks suffered double-digit losses. Qualcomm's weaker earnings outlook added to the pressure, despite growth in its data-center business.
Investor concerns intensified after Democratic victories in key states and widespread voter opposition to data-center projects raised fears of tighter regulation, construction delays and reduced AI infrastructure spending. Rising interest rates, massive capital requirements, memory shortages and questions about whether AI investments can generate sufficient returns further weakened sentiment.
Selling spread across the broader market, with all 11 S&P 500 sectors closing lower. Retail investors also sold a net $338 million in individual stocks, marking their largest single-day outflow since the COVID-19 sell-off in March 2020.
Earnings:
Airbnb beat estimates with revenue growth of 19% marking its fastest pace in more than three years. Gross booking value rose 21% to $27.7 billion and nights and seats booked climbed 16% to 155 million. Net income increased 38% to $1.89 billion and the adjusted EBITDA margin widened to 52%. The company guided fourth-quarter revenue to $3.22 billion-$3.28 billion, raised its full-year growth outlook to the high teens and authorized an additional $12 billion in share repurchases. Shares rose about 10% after hours.
Cloudflare jumped more than 14% in late trading today after smashing third-quarter expectations and lifting its full-year outlook. Revenue growth hit its fastest pace in nearly four years as the annualized run rate crossed $3 billion. Current remaining performance obligations rose 37% from a year earlier. The adjusted operating margin also improved, to 17.5% from 15.3%, after shrinking year-over-year in each of the two prior quarters. Because stock-based compensation ran to $174.1 million, Cloudflare still lost $34.1 million on an unadjusted basis, compared with a $1.3 million loss a year earlier. Another $11 million went to restructuring from the roughly 1,100 job cuts announced in May. Free cash flow slipped to 10% of revenue from 13% a year ago.
IREN beat Wall Street revenue estimates as its AI Cloud division expanded rapidly. Also, it said that over $4 billion in annual recurring revenue projected to land in 2026 has been pushed out to at least January. The move, which could extend payment to February, is due to “a customer-requested change and supplier timing.”
Surprising: Developing countries’ external debt hit record $9.4 trillion in 2025. Elsewhere, Blue Origin pushes launch to January 2027 as it races to rebuild damaged launch pad. Lastly, Deoleo, the world’s largest olive oil company, plummeted 20% after two rivals announced plans to acquire the company
💵 Personal Finance
IRS Raises 2027 Tax Brackets, Capital Gains Thresholds and Estate Tax Exemption
The IRS announced inflation-adjusted tax changes for 2027, increasing federal income tax brackets, long-term capital gains thresholds, standard deductions and the estate and gift tax exemption. The changes apply to the 2027 tax year, with income tax returns filed in 2028.
Key changes include:
Federal income tax: The seven tax rates remain between 10% and 37%. The top 37% rate will apply to taxable income above $661,375 for single filers and $793,650 for married couples filing jointly.
Standard deduction: Increases to $16,600 for single taxpayers and $33,200 for married couples filing jointly.
Long-term capital gains: The 0% tax threshold rises to $51,050 for single filers and $102,100 for married couples filing jointly. The 15% and 20% rates continue to apply at higher income levels.
Estate and gift tax exemption: Increases from $15 million to $15.48 million per person, covering qualifying tax-free transfers during life and at death.
These adjustments could affect investors' decisions about selling investments, managing capital gains and rebalancing portfolios, as well as estate-planning strategies. The changes come amid rising living costs and ongoing concerns about affordability.
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