Special Report: Chips and Korea Slide While the Equal-Weight S&P 500 Fund Closes at a Record

Chips and Korea's Kospi are down about 22% since Oct 6, while the equal-weight S&P 500 fund closed at a record

The biggest question before Thursday's open is what kind of market this has become. Since the Oct 6 close, the record close of the S&P 500 and the Nasdaq, the market's averages have moved far apart.

• Equal-weight S&P 500 fund (RSP): +5.18%, to a record close of 223.33. Wednesday's +1.86% was its best day since Apr 8.
• S&P 500: -1.67%, which is also its distance from the record.
• Nasdaq Composite: -6.75%, also its distance from the record.
• PHLX Semiconductor index: -22.31%, and 29.83% below its Jun 22 record. Its Wednesday close of 10,268.65 was the lowest since Apr 28.
• iShares Semiconductor fund (SOXX): -23.59%, and 31.24% below its record.
• South Korea's Kospi, through Thursday's close: -22.44%, and 40.93% below its Jun 22 record. Its close of 5,383.80 was the lowest since Apr 3.

Who leads and who lags

Equal weight leads. The S&P 500 is close behind, the Nasdaq is lagging, and chips and the Kospi are far behind. That ranking holds only since October and June. For 2026 so far, the chip index is up 44.97% and the Kospi 27.75%, against 12.32% for the S&P 500.

The record is on a price basis and belongs to the fund. The fund's ratio to the S&P 500 is up about 7% since Oct 6, but it was higher on Nov 2, so that ratio is not at a new high.

The case each way

Broadening: the median S&P 500 stock rose 2.57% on Wednesday, beating the index. Financials, health care, staples and materials funds also closed at records.

Cracking: the chip index and the Kospi, among the leaders of 2026, have lost more than a fifth in a month. The Nasdaq-100 fund (QQQ) is down 8.91% since Oct 6 and the momentum fund (MTUM) is down 15.90%.

The split was still there before the open: in thin pre-market trading, the VanEck chip fund (SMH) was down 2.98% at 7:34 am New York time and the equal-weight fund up 0.47% at 7:31 am.

What it could mean

If the money leaving chips is staying in other stocks, gains in the average stock could keep the broad indexes near their highs even while chip stocks lag. If the former leaders keep falling, their heavy weight in the S&P 500 and the Nasdaq could pull those indexes down, and selling that starts in a crowded group has at times spread to the rest of the market.

Is this narrow leadership cracking, or rotation broadening the market?

Rotation since Oct 6: health care up 13.51%, tech down 12.62%, value ahead of growth

Over the past month, leadership has moved from growth, momentum and chips toward value, low volatility, health care, staples and financials. Each line below shows Wednesday's move, then the change since the Oct 28 close, then the change since the Oct 6 close.

Sector funds

• Health care (XLV): +3.06%, +5.53%, +13.51%
• Consumer staples (XLP): +3.36%, +5.87%, +12.40%
• Financials (XLF): +3.51%, +5.47%, +9.61%
• Consumer discretionary (XLY): +4.26%, +6.07%, +9.50%
• Energy (XLE): -4.74%, -7.20%, -0.36%
• Communication services (XLC): +3.47%, +1.76%, -5.99%
• Technology (XLK): -0.01%, -7.59%, -12.62%

Styles and groups

• Value (IWD): +2.60%, +2.54%, +5.39%
• Growth (IWF): +0.39%, -4.15%, -8.74%
• Low volatility (SPLV): +2.12%, +4.58%, +9.45%
• Momentum (MTUM): -1.97%, -10.10%, -15.90%
• High beta (SPHB): -0.67%, -5.79%, -13.13%
• Small caps (IWM): +1.51%, +0.97%, +0.95%
• Semiconductors (SMH): -2.75%, -11.17%, -20.27%

Financials, health care, staples, materials, value and low-volatility funds all closed at price records on Wednesday.

Two exceptions

Energy closed at a record on Oct 30, at 70.02 for XLE, then lost 9.28% in three sessions as oil fell.

Defense fell on Wednesday, with the ITA fund down 1.54% and Lockheed down 6.88%, amid doubts about President Trump's $1.5 trillion defense budget request. ITA is still up 2.20% since Oct 6.

What it could mean

A move toward value and defensive groups can be a healthy widening of the market, with more kinds of stocks carrying the gains. It can also be a sign of caution, since investors have often moved toward health care, staples and low-volatility stocks when they grow less sure about growth. A rebound in technology could reverse much of the shift quickly, given how far that sector has fallen.

Are these moves a lasting change in what the market rewards, or a pause inside the technology trade?

After Democrats won the House and Senate, the Dow had its best day since April 2025

Democrats won control of both the House and the Senate in Tuesday's midterm elections. On Wednesday the Dow rose 1,569.40 points, or 3.03%, to 53,356.12, its best percent day and largest point gain since Apr 9, 2025.

Where the calls stand

• Senate: Democrats have at least 54 seats. Mississippi and Alaska were uncalled as of Wednesday night. In Mississippi, Colom led Hyde-Smith by just over 1,000 votes.
• House: called for Democrats early Wednesday. The final seat count is still open, with 42 races undecided at NBC's last update, 9:52 pm New York time on Wednesday.
• Governors: Democrats also flipped governorships, including Texas and Georgia.

The White House stays Republican and the new Congress does not sit until January, so this is divided government, and US policy options have not changed yet.

How markets read it

The reading from strategists was less uncertainty and more gridlock.

"Stocks are sharply higher today as election clarity reduces uncertainty"

That was Terry Sandven of U.S. Bank Wealth Management. Andrew Slimmon of Morgan Stanley Investment Management said markets "like gridlock — they don't like a party with too much power." Jay Woods of Freedom Capital Markets said: "Still more uncertainty looms, but one thing is certain, there will be gridlock..."

President Trump told The New York Times he was "absolutely willing" to accept the results and told The Wall Street Journal: "We'll work with the Democrats, and we'll get along very well with them."

The gains were broad but not universal. There were 376 S&P 500 stocks up and 127 down, and eight of the 11 sector funds rose. The VIX, the market's fear gauge, fell 20.26% to 16.61, its lowest close since Oct 15. The chip index fell 3.13% on the same day.

What it could mean

Divided government has often been welcomed by stock investors because it makes large policy changes harder, and less uncertainty could keep supporting the broad market. It could also bring new risks, including fights over spending and the debt ceiling, more scrutiny of technology companies, and a sharper dispute over the war with Iran once the new Congress sits in January.

Does gridlock give stocks a lasting lift, or was Wednesday mostly relief that the vote was over?

The chip index hit its lowest close since April on data center fears, and analysts disagree on how far they go

The PHLX Semiconductor index fell 3.13% on Wednesday to 10,268.65, its lowest close since Apr 28, on the same day the Dow had its best session since April 2025.

Reuters reported on Thursday that chip and AI-infrastructure stocks were "down once again following the Democrats' election victory including in some key data-center states where public opposition to the industry's rapid expansion has been growing." Reuters also said investors expect a slower AI infrastructure buildout to hurt data center operators and suppliers while helping cash-rich AI giants.

The election did not start this. The chip index was already down about 19.8% from Oct 6 to Tuesday's close, including a 7.20% fall on Oct 30.

Wednesday's moves

• Falling: Vertiv -12.89%, Sandisk -7.91%, Marvell -7.08%, Micron -7.00%, Nvidia -3.17%; Hut 8 about -23%, IREN about -11%, Core Scientific about -10%.
• Rising: Microsoft +6.68% and Apple +5.31%, both to record closes; Amazon +6.12%, Alphabet +3.18%.
• AMD rose 1.01% after strong results on Tuesday night, giving back most of a pre-market gain of about 7%.

The worried camp

"Data center pauses will slow the pace of buildout into 2028," UBS strategists said, "with ~30% of expected 2028 additions now at risk of being impacted," though they also said a lot is already priced into chip stocks, with valuations nearing multi-year lows. Dan Ives of Yorkville Advisors wrote on X: "We estimate 10% of datacenters will not happen now." And Scott Chronert of Citi Research said: "It's pretty clear that the AI trade will face some headwinds there ..."

CNBC reported that Baird analysts see Oracle and CoreWeave as more exposed because of their capital raises. CNBC also reported CoreWeave's bond yield near 15%, a new high, while credit spreads for Microsoft, Amazon and Meta tightened. CoreWeave and Nebius report next Wednesday, Nov 11.

The other camp

Fundstrat's Tom Lee called Wednesday's tech selling a "knee-jerk reaction" in a CNBC interview, as reported by Stocktwits. Han Ji-young of Kiwoom, quoted by The Korea Times, said "data center projects already underway are unlikely to face major delays." A guest in a CNBC recap argued the election was about President Trump, not AI or data centers.

What it could mean

If data center plans really do slip, chip makers, equipment suppliers and heavily indebted operators could face lower estimates, while cash-rich platforms could spend less and keep more. If the fears prove overdone, a group that has already fallen this far could rebound sharply, since prices may already reflect much of the bad news. Next week's CoreWeave and Nebius reports could test both views.

Is the data center scare already in the price of chip stocks, or has the market only begun to count it?

Overnight, Korea fell 5.28% and Taiwan 3.20%, while Hong Kong rose 3.67% and Europe traded higher

Markets heavy in chip stocks fell on Thursday, while most others rose. Each line shows Wednesday's move, then Thursday's.

Asia, at Thursday's close

• Kospi: +0.62%, then -5.28% to 5,383.80
• Taiwan: -0.83%, then -3.20% to 41,574.72
• Nikkei 225: -1.42%, then -1.79% to 61,077.90
• Shanghai Composite: +2.16%, then +0.10% to 3,689.91
• Hang Seng: +1.67%, then +3.67% to 24,796.98
• S&P/ASX 200: -0.59%, then +2.61% to 9,065.10
• Nifty 50: +0.63%, then +2.40% to 24,536.60

Europe, still trading at 12:20 GMT

• Stoxx 600: +1.82%, then +0.54%
• DAX: +2.22%, then +0.61%
• FTSE 100: +1.79%, then +0.65%

The gains were smaller than Wednesday's. Rheinmetall fell as much as 16% after cutting its 2026 guidance, while Maersk raised its profit guidance.

Korea and Japan

It was the Kospi's worst day since Oct 15 and its lowest close since Apr 3. Samsung Electronics fell 7.57% to 201,500 won and SK hynix fell 9.46% to 1.26 million won. The Korea Times tied the fall to concerns over tighter US AI regulation and data center development after the Democratic wins, weighing on demand for Korean chips. In the same report, Han Ji-young of Kiwoom said "data center projects already underway are unlikely to face major delays."

Japan showed the same split inside one market. Advantest fell 11.69%, Lasertec 11.76% and Tokyo Electron 9.89%, and SoftBank lost more than 6%. The broader Topix rose 1.16% while the Nikkei fell.

Hong Kong moved the other way. The Hang Seng Tech index rose more than 5%, with Alibaba up 6.36% and Tencent up 6.42%. No specific reason for the rally was found in the reporting.

What it could mean

If the selling stays inside chip-heavy markets, gains in Hong Kong, India and Australia could point to a global version of the rotation seen in the US, with gains spreading across more markets. The risk runs the other way too: Korea and Taiwan have been closely tied to worldwide AI spending, and continued weakness there could weigh on chip stocks everywhere and on the wider market.

Was Thursday's fall in Korea, Taiwan and Japan a reaction confined to one industry, or an early warning for markets that have held up so far?

Before the open: Dow futures up, Nasdaq-100 futures down, Qualcomm off about 9% and AppLovin up about 20%

Wednesday's split carried into Thursday's pre-market session. These are pre-market readings in thin trading, not closes, and they move.

Futures and funds

At 7:25 am New York time, futures showed:

• Dow: +0.51%
• Russell 2000: +0.34%
• S&P 500: +0.09%
• Nasdaq-100: -0.67%

The VanEck chip fund (SMH) was down 2.98% at 7:34 am, and the equal-weight S&P 500 fund was up 0.47% at 7:31 am.

Earnings movers after Wednesday's close

• Qualcomm: -9.32% at 7:33 am. Fourth-quarter results beat estimates, but smartphone chip sales missed and the first-quarter outlook fell short. The stock had risen 5.33% on Wednesday.
• AppLovin: +19.80% at 7:35 am, after third-quarter profit beat estimates and guidance came in better than expected. The stock had also risen 10.69% on Wednesday.
• Arm: -5.25% at 7:35 am, even though adjusted earnings of 52 cents a share beat the 47 cents expected. No specific reason for the fall was found in the reporting.
• Snap: -9.62% at 7:35 am, after third-quarter revenue missed estimates.
• Fair Isaac: about -8% to -9%, after fourth-quarter profit missed estimates.
• Expedia: about -6% to -7%, on weaker fourth-quarter guidance. The stock had risen 10.54% on Wednesday.

Chips and the big platforms

At about 7:06 am, chip stocks were still lower: Sandisk -4.04%, Marvell -3.35%, Micron -3.14%, AMD -3.01%, TSMC's US shares -1.86%, Broadcom -1.53% and Nvidia -0.79%. CoreWeave was down 3.43%.

The big platforms were higher: Amazon +1.49%, Alphabet +1.32%, Meta +1.27%, Apple +0.87% and Microsoft +0.28%. Tesla was down 1.81%. Banks were also higher, with Goldman, JPMorgan and American Express each up more than 1%.

"We may be headed for more volatility as investors digest the election results and potential policy implications," said Jordan Watson of Tandem Investment Advisors.

What it could mean

Pre-market moves often fade or grow once full trading begins. If they hold, Qualcomm's drop could add to the pressure on chip stocks, and the Nasdaq could lag the Dow again. Strength in banks and the big platforms could offset that for the broad indexes, and a reversal in chips after a fall of this size would change the morning's picture quickly.

Do Thursday's earnings moves say more about these individual companies, or about a market still separating chips from everything else?

The October jobs report comes on Friday, with markets leaning toward another Fed hike

The next big test for the market is the October jobs report on Friday at 8:30 am New York time. The estimate is a gain of 59,000 jobs.

The Federal Reserve raised rates in September, and markets lean toward another hike next month. The 10-year Treasury yield is about 4.9%.

Layoff announcements gave one early reading on Thursday. Challenger reported 43,994 job cuts in October. Andy Challenger said: "Employers are holding on to the workers they have heading into the holidays."

What else is on the calendar

Thursday, Nov 5

• Weekly jobless claims and third-quarter productivity, scheduled for 8:30 am New York time. Prior claims were 194,000, and productivity was expected to rise 3%. These results and the Bank of England's decision are not included in this report.
• Fed speakers, including Hammack and Barkin.
• Earnings before the open: ConocoPhillips and Cigna.
• Earnings after the close: Airbnb, Lumentum and Cloudflare.

Friday, Nov 6

• The October jobs report.
• University of Michigan consumer sentiment.
• Fed speakers: Logan, Williams, Musalem and Bowman.

Next week

• New Knesset due to be sworn in on Tuesday, Nov 10, according to one report.
• CoreWeave and Nebius earnings on Wednesday, Nov 11.

What it could mean

With the Fed raising rates, the reaction to jobs data may not be simple. A strong report could lift hopes for growth and also strengthen the case for another hike, which could push yields up and weigh on stock valuations. A weak report could ease the pressure on rates, but it could also raise worries about the economy, especially for the groups most tied to growth.

With markets leaning toward a hike, would a weak jobs number on Friday read as relief or as a warning?

Brent fell 8.67% on Wednesday and turned up about 2% before Thursday's open

Brent crude settled at $94.62 on Wednesday, down 8.67% and its lowest close since Sep 29 on the January contract. WTI settled at $88.12, down 8.29% and its lowest close since Oct 7. Since the Oct 30 close, Brent is down 16.58% and WTI 15.37%.

Oil turned up on Thursday morning. At 7:25 am New York time, Brent was $96.90, up 2.41%, and WTI was $89.56, up 1.63%. Those are pre-market readings, not settlements.

Why it fell

The explanations centered on the war with Iran: bets that the political shift in Washington will hasten its end, and JD Vance's blaming the war for the election losses. Vance wrote on X: "The reason we lost is the war." Peter Boockvar of One Point BFG said: "There's just going to be even more pressure to end the war."

Why it may not stay down

Eurasia Group, as of Nov 5, puts renewed US strikes at 60% (down from 65%), a deal at 10% (down from 20%) and a standoff at 30% (up from 15%), and says escalation could push Brent to $110 to $125. Citi warned that the White House could use executive powers to escalate after the midterms. Commercial inventories in major consuming countries are near 15-year lows. Iran's Revolutionary Guard said two tankers and a tug caught fire on Thursday after using unauthorized Hormuz routes.

Where the war stands

Major combat is paused under a ceasefire, and the US blockade of Iran's ports continues. Axios reported that President Trump is weighing renewed strikes, negotiations or continued pressure through the blockade, with no final choice made. Axios also reported that JD Vance favors a deal, that Ratcliffe and Bessent favor keeping up the pressure, and that the US military is finishing preparations for possible major combat. Officials said: "Preparations are not an order."

Accounts of traffic through Hormuz conflict. Analysts cited by Reuters and CNBC say shipments are close to pre-war levels, while Gulf News tracking counted five commodity vessels on Saturday and none on Sunday, against more than 130 before the war.

What it could mean

If investors keep betting on an end to the war, oil's fall could continue, easing inflation worries and the pressure on rates while weighing on energy stocks. If the talks fail or strikes resume, the risk premium that came out of oil could return quickly, lifting energy and defense stocks and hurting the rest of the market, with low inventories making any supply shock sharper.

Did Wednesday's drop price in the war's end too early, or is this morning's rise only a pause in a longer fall?

President Trump says $4 billion a year in aid to Israel ends this year; Netanyahu's office has not confirmed it

President Trump said on Tuesday that US military aid to Israel will end this year. In a phone interview on "Fox & Friends," Trump said:

"We were giving them four billion. We are, but it gets cut off at the end of the year."

Asked why by Brian Kilmeade, Trump answered: "Because they don't need it, Brian." Trump also said "we made a deal months ago that we're stopping," said of Netanyahu "He brought it up," and added "We'll help Israel if they need it." Trump said Israel can still buy US weapons: "They can buy whatever they want."

What is confirmed and what is not

That is President Trump's account. Netanyahu's office declined to comment on Tuesday, and no statement from it had been found as of Thursday morning. The Times of Israel reported that Finance Ministry officials were surprised, with one saying no formal document had come from the Prime Minister's Office.

The current agreement, signed in 2016, provides $3.8 billion a year ($3.3 billion in financing grants and $500 million for missile defense) and runs to September 2028. Congress must pass the money each year, and the new Democratic Congress sits in January. Trump did not say how the aid would end early.

One reading

One reading of it: removing the money removes Washington's financial leash. Israel, as an independent buyer of US arms, would be freer to act against Iran, and Washington could say it neither funds nor directs an escalation.

That is a reading, not a reported fact and not a forecast. No report reviewed for this story ties the aid decision to a planned strike, and no market number tests the idea. Some reporting touches parts of it. Newsweek reported Michael Koplow of the Israel Policy Forum expects Netanyahu to frame the move as greater freedom from US constraints, and Victoria Coates of Heritage says less aid could mean less US leverage. Euronews reported that Netanyahu urged President Trump in a Saturday call to resume strikes after the midterms, which has not been confirmed. The same report said Trump called the call "very good" but wants more time for diplomacy.

The other side

• Trump's stated reasons were that Israel no longer needs the money and domestic politics: "it's almost too easy a target."
• Netanyahu had already proposed ending the aid, though by tapering over about ten years.
• The mechanics are unclear, and Israel still relies on US resupply, diplomatic cover and US approval of arms sales.
• Oil moved the other way. NBC reported Brent fell about 3% to about $101 after the remarks, with traders seeing possible evidence the war could end without escalation. Brent closed that day at $103.60, down 1.12%.
• Views on strikes differ. Reuters cited two sources close to Gulf government circles: "A full-scale assault on Iran now looks less likely, they said." In the same story, Abdulaziz Sager warned that defeat could make Trump more willing to strike. A senior Iranian official told Reuters the sides are "far from a deal." Gulf News reported that Trump told the Financial Times on election night of having no immediate plans to order attacks. Eurasia Group's 60% estimate is for US strikes, not Israeli ones.

What it could mean

If markets come to read this as a green light for escalation, oil, defense stocks and safe havens such as gold, Treasuries and the dollar could rise, and stocks could come under pressure. If it is read as a budget line, or as a step toward the US stepping back, oil's risk premium could keep fading, as it did on Tuesday when Brent fell after the comments. Oil is up about 2% this morning, but no report found ties that move to the aid news.

Green light, or just a budget line?

The close on Wednesday: the Dow rose 3.03%, the S&P 500 1.58%, and the chip index fell 3.13%

These are Wednesday, Nov 4 closes, the last US session before this report.

• Dow Jones Industrial Average: 53,356.12, up 1,569.40 (+3.03%)
• S&P 500: 7,688.62, up 119.70 (+1.58%)
• Nasdaq Composite: 25,736.51, up 364.50 (+1.44%)
• Russell 2000: 2,856.95, up 44.50 (+1.58%)
• PHLX Semiconductor index: 10,268.65 (-3.13%)
• VIX (the fear gauge): 16.61, down 4.22 (-20.26%)

The shape of the day

It was the Dow's highest close since Sep 4, and the Dow remains 1.83% below its Aug 5 record. The S&P 500 had its best day since Aug 4 and its highest close since Oct 29, for two straight gains. The Nasdaq had its best day since Sep 21, but it faded: up as much as 2.67% at the high, it closed up 1.44%.

Under the surface

There were 376 S&P 500 stocks up and 127 down, and the median stock rose 2.57%, beating the index. Eight of the 11 sector funds rose. Consumer discretionary led at +4.26%; technology was flat at -0.01%, industrials fell 1.09% and energy fell 4.74%.

Rates, oil, gold and bitcoin

• 10-year Treasury yield: about 4.9%
• Brent: settled at $94.62 (-8.67%)
• WTI: settled at $88.12 (-8.29%)
• Gold: settled at $4,073.00 (+3.37%), its best day since Aug 5
• Silver: settled at $52.12 (+5.11%), its best day since Jun 12
• Dollar index: 101.51 (-0.35%)
• Bitcoin: about $80,000

Biggest S&P 500 moves

Up: Mosaic +17.37%, Block +15.30%, Zimmer Biomet +13.49%, Moderna +13.11%, Stanley Black & Decker +13.10%.

Down: Fidelity National Information Services -23.67%, Trimble -17.31%, Comfort Systems -15.08%, Datadog -14.42%, Vistra -13.83%.

What it could mean

A session in which the median stock beats the index has often been read as a sign of healthy participation, and a VIX of 16.61 could suggest that fear has eased. The same session also saw the chip index at its lowest close since April and gold posting its best day since August, which could suggest that some investors are still seeking protection. Sharp one-day gains after an election can also fade once the relief has passed.

Was Wednesday the start of a broader advance, or a one-day reaction to the vote?