Written by: Trend Research

U.S. stocks fell from their highs, with pressure mainly coming from the rebound in oil prices, rising Treasury yields, and a mixed earnings report. The VIX declined, indicating that the market did not enter panic trading, but funds began to reassess valuations. Energy stocks led the gains, while storage and software stocks faced significant declines, with AI hardware maintaining its structure temporarily. Before Friday's non-farm payroll report, the Nasdaq, semiconductor index, and 10-year U.S. Treasury yield remain key in determining whether the high-level fluctuations can continue.

U.S. Stocks Fall from Highs, Volatility Declines

U.S. stocks collectively closed lower on Thursday. The Dow Jones dropped 0.85%, closing at 53885.10 points; the S&P 500 fell 0.18%, closing at 7709.96 points; the Nasdaq declined 0.06%, ending at 26348.35 points; the Russell 2000 fell 0.58%, closing at 3001.55 points. The Dow ended a five-day winning streak, while the S&P and Nasdaq fell for the second consecutive day.

Volatility did not spike in tandem. The VIX settled at 15.15, down 4.17%. Market pressure was focused on oil prices and interest rates. The yield on 10-year U.S. Treasury bonds rose to about 4.68%, and the 2-year yield reached about 4.25%, tightening the pricing environment for high-valuation assets.

Among the 11 sectors of the S&P, energy rose 1.52% to lead gains, followed by a 0.29% increase in communication services and a 0.16% rise in healthcare; materials dropped 0.89%, real estate fell 0.89%, industrials declined 0.84%, utilities fell 0.62%, consumer discretionary was down 0.46%, financials dropped 0.34%, technology fell 0.30%, and consumer staples decreased 0.23%. The index suffered only a small decline, but sector rotation has accelerated.

Hormuz Disturbances Affect Oil Prices, Rates More Sensitive Before Non-Farm Data

Middle Eastern risks have resurfaced. News regarding transit restrictions in the Strait of Hormuz from Iran has led to a rapid rebound in crude oil. WTI September crude futures rose 2.75%, closing at $77.29 per barrel; Brent October crude futures increased 3.83%, closing at $82.49 per barrel. Gold briefly rose over 1% during trading but closed down, with COMEX August gold futures falling 0.09% to $4242 per ounce.

The rebound in oil prices impacts more than just energy stocks. In the past, the upward movement of U.S. stocks was partly attributed to falling oil prices, easing inflation pressures, and diminished interest rate hike expectations. Now, with oil prices rising again, yields have rebounded, weakening the valuation support for growth stocks.

Digital assets also exhibited weakness. According to CoinGecko data, Bitcoin hovered around $64200, down about 0.6% over 24 hours; Ethereum fluctuated slightly around $1900. Cryptocurrency prices do not seem to follow an independent trend and continue to fluctuate with macro risk preferences.

Storage Software Leads Declines, Earnings Guidance Determines Valuations

Storage stocks have become a major drag on U.S. stocks. Western Digital fell 13%, and SanDisk dropped 6.8%, as both companies had previously risen significantly but did not raise their earnings expectations, prompting investors to take profits.

Software stocks experienced even greater declines. AppLovin dropped 19.7% due to quarterly revenue falling short of expectations, while Datadog fell 19% due to slowing revenue growth expectations in Q3. The market still buys growth stocks, but once growth slows, valuations tend to compress first.

Funds continue to flow into companies with solid performance and clear guidance. SiTime rose over 20% due to better-than-expected results, SpaceX increased 6.1% after its early investor lock-up period ended, Microsoft rose 2.5%, and AMD climbed 1.5%; BillionToOne fell over 39%. In the latter half of the earnings season, exceeding earnings expectations can stabilize expectations, but further upward revisions of guidance are more likely to unlock valuation potential.

AI Capital Expenditure Expansion, Financing Costs Enter Valuation Framework

Alphabet plans to raise up to $25 billion through the issuance of U.S. investment-grade bonds, reportedly with a subscription multiple over four times. In the short term, the market is still willing to finance large technology companies; in the medium term, the financing costs and return cycles of AI investments begin to enter valuation models.

Recently, AI trades have mainly revolved around computing power, cloud services, models, and application demand. Now, the market is beginning to assess investment cycles, return speeds, and debt costs. Microsoft, Alphabet, and Meta still have financing capabilities, but the quality of cash flow will be prioritized, and the emphasis on purely growth narratives will diminish.

The model price war is not over. After the price increase of DeepSeek API, Meta quickly followed with a new model at a lower price; ByteDance also stated that it would continue to develop its own large models. As inference costs continue to decline, the profit distribution among cloud vendors, chip makers, and application layers will be adjusted.

Tariff Resource Policies Heat Up, Supply Chain Risks Return to the Fore

Trump signed an executive order imposing minimum import prices and extra tariffs on imported polysilicon and its derivatives, and a 15% ad valorem tariff on related polysilicon ingots and derivatives, planned to take effect from December 4, 2026. The policy ostensibly targets polysilicon and solar energy, but effectively influences the rebuild of domestic semiconductor, photovoltaic, and upstream material supply chains in the U.S.

DRC has decided to completely ban the export of copper concentrates and cobalt concentrates, and will impose new taxes on economically valuable mining by-products. Copper and cobalt correspond to power grids, data centers, new energy vehicles, and battery supply chains. Changes in resource-country policies will affect the global cost curve. If resource commodities continue to disrupt, mining, energy, electrical equipment, and grid infrastructure in U.S. stocks are more likely to receive funding attention.

The Chinese Cyberspace Administration has initiated a cybersecurity review of Paituo Network’s products sold in China, adding uncertainty for U.S. cybersecurity companies in the Chinese market. For U.S. tech stocks, supply chain, market access, and geopolitical scrutiny remain sources of valuation discounts.

High-Level Fluctuations Before Non-Farm Payrolls, Focus on AI Main Line

The most important data on Friday is the U.S. non-farm payrolls. The market expects an increase of about 88,000 jobs, with the unemployment rate holding at 4.2%. If employment and wage data are strong, U.S. Treasury yields may continue to rise, putting pressure on high-valuation technology and small-cap stocks; if the data cools, the inflation pressure from rising oil prices may be partially offset.

The trend of the index has not been broken, but internal selection has accelerated. The simultaneous occurrence of stronger energy, rising interest rates, and a declining VIX indicates that funds have not withdrawn from the market but are compressing valuation elasticity at high levels. The earnings reports causing declines in storage and software show that simply exceeding expectations is no longer sufficient; funds are placing greater importance on strong guidance and growth continuity.

The short-term key still lies in the Nasdaq, semiconductor index, and the yield on 10-year U.S. Treasury bonds. As long as the AI hardware main line can still hold, and yields do not continue to surge, U.S. stocks will remain in high-level fluctuations; if oil prices, interest rates, and earnings reports all pressure valuations simultaneously, the margin for error in chasing higher will continue to decrease.