A Morning Rally Reverses Into the Lowest Closes Since July, as Chips Slide and Oil Drops

A morning rally reversed, and the S&P 500 and the Nasdaq closed at their lowest since July

The S&P 500 and the Nasdaq Composite opened higher on Monday and ended near their lows of the day.

The S&P 500 was up as much as 1.08% around 10:25 a.m. Eastern, and the Nasdaq Composite as much as 1.42%. Both slid through the afternoon and closed near their lows.

• S&P 500: 7,541.40, down 0.51%, its lowest close since July 31; the day's low was 7,539.38
• Nasdaq Composite: 25,164.32, down 1.07%, its lowest close since July 30; the day's low was 25,145.95

From its high to the close, the S&P 500 gave up about 1.6%. The Nasdaq's swing from its high to the close was about 2.5 percentage points. It was the third straight down day for both indexes, after the Nasdaq lost 5.2% in October.

These are the lowest closes in three months, not new lows for the year. The S&P 500 is 3.55% below its record close of 7,818.93 from Oct. 6 and still up 10.17% for 2026. The Nasdaq is 8.82% below its own Oct. 6 record.

The Dow Jones Industrial Average did not reverse into a loss: it rose 0.41%. The selling was concentrated in technology and the AI trade (see the chip, Marvell and Oracle stories below), and most S&P 500 stocks rose.

The fear gauges

The VIX volatility index closed at 21.15, up 8.91%. It was its third straight rise and its highest close since June 10.

CNN's Fear & Greed Index ended the day at 22.5, in "extreme fear," down from 26.2, in "fear," on Friday. A week earlier it stood at 29.8, and a month earlier at 38.2. It slid into extreme fear on a day when the Dow and most stocks rose.

What it could mean

A close at a three-month low can be read two ways. Very low sentiment readings have often come before rebounds, and an index that holds near a prior low can draw buyers who see support there. But if the selling in the largest technology companies continues and the indexes close below these levels, the decline could widen and fear could deepen.

Are the S&P 500 and the Nasdaq testing their lows on the way to something bigger, or about to bounce off them?

The chip index fell 3.4% to its lowest close since April as Intel extended Friday's plunge

The PHLX Semiconductor index fell 3.37% on Monday, to its lowest close since April 29. No single reason was given for the day's chip selling.

• Intel: $59.97, down 8.80%, after Friday's 28.58% drop; its lowest close since April 8
• AMD: $466.84, down 7.52%, a day before it reports third-quarter results after Tuesday's close
• Seagate: down 7.88%
• Western Digital: down 7.52%
• Sandisk: down 6.59%
• Micron: $833.59, down 5.78%
• Nvidia: down 1.26%, its fourth straight drop
• Broadcom: down 1.18%

Intel's Friday plunge had its own cause: last week the company guided fourth-quarter revenue to $15 billion to $16 billion, against about $17 billion expected. Monday's further drop came with no new company news.

Nvidia opened higher and gained as much as 2.6% before turning lower. Among the other tech giants, Microsoft fell 2.83%, its fifth straight down day, and Meta lost 1.34%. Amazon rose 2.20% and Tesla 1.00%.

What it could mean

Selling this steep in one group has at times run its course quickly, and AMD's results after Tuesday's close may offer the next test of whether the worries about AI spending are overdone. If those worries deepen instead, chip stocks could stay under pressure, and that could weigh on the S&P 500 and the Nasdaq, where these companies carry heavy weights.

Is the chip sell-off nearing exhaustion, or is the market repricing how much AI spending will last?

Marvell agreed to buy Lumentum in a deal valued at about $115 billion, and both stocks sank

Marvell Technology agreed on Monday to buy Lumentum in an all-stock deal valued at about $115 billion when it was announced. Investors sold both stocks.

• Lumentum: $684.40, down 18.59%, the worst performer in the S&P 500 and its worst day since April 3, 2025
• Marvell: $171.41, down 12.72%, its second double-digit drop in three sessions (it fell 13.24% on Oct. 29)

The terms

Lumentum shareholders will receive 4.5 Marvell shares for each Lumentum share, and will own about a third of the combined company. The $115 billion is Lumentum's implied enterprise value at the prices when the deal was announced. Because Lumentum holders are being paid in Marvell stock, Lumentum's price tends to follow Marvell's: as Marvell fell, so did the value of the offer. Marvell expects more than $1 billion in annual cost savings, a larger addressable market of $550 billion, and a boost to earnings in the first year after closing. The deal is expected to close in the first half of 2028.

The pitch

Marvell chairman and CEO Matt Murphy made the case on CNBC's "Squawk on the Street" on Monday morning, with Lumentum CEO Michael Hurlston beside him:

"We're putting the two together to create the category leader in AI connectivity."

"You need scale-up technology that needs semiconductors and optical working seamlessly together," Murphy told CNBC. "We are going to create a new category of company here." He also called the deal "a double down on supporting Nvidia, who is the ecosystem leader in this area."

The verdict

The mood among retail traders was upbeat early: Stocktwits showed sentiment on Marvell as "bullish" and on Lumentum as "extremely bullish" as of 7:30 a.m. Eastern. By the close, both were down by double digits.

What it could mean

A deal this large can be read as a vote of confidence that AI data centers will keep needing more optical connections, which could support suppliers across the chain over time. The selling may also reflect doubt about the price, the long wait until the 2028 close, and how much new Marvell stock Lumentum holders will receive. If the market keeps marking down the acquirer, other companies may think harder before paying in stock.

Was Monday's selling a judgment on the deal itself, or on the AI trade as a whole?

Oracle fell almost 9% after filing to raise $20 billion in stock and bonds for its AI build-out

Oracle filed on Monday to sell $10 billion in common stock and $10 billion in senior notes to pay for its AI build-out. The plan was outlined at the company's investor day last week; Monday's filings made it formal.

The stock closed at $119.10, down 8.85%, its lowest close since July 29. Oracle is down 38.8% in 2026 and about 64% below its record close of $328.33 from Sept. 10, 2025.

The cost of protecting against an Oracle default has climbed. Its five-year credit default swap spread sits at 296, up 270% in a year, which S&P Global Market Intelligence's Gavan Nolan said is more in line with a high-end junk bond rating.

Two camps

The doubters focus on execution. Pat Nerney, head of investment solutions at Dynasty Financial Partners, wrote in an email to CNBC:

"Can they do what they say they are going to do? We view this as the narrative across the AI space."

"If they have to come back to market in the back half of '27 after telling everyone this was the last of the capital needed ... look out," Nerney added.

Others saw no surprise. "This seems to be exactly what they previewed," said Rob Oliver, senior research analyst at Baird. "So I'm not sure why the market is freaking about it."

And on the same day, Stephens upgraded Oracle to overweight from equal weight, with a $213 price target. "We believe the market needs to give Oracle more credit for the execution on delivering compute that continues to happen," analyst Brett Huff wrote.

Oracle was not the only AI spender borrowing: Alphabet is set to raise about 6 billion euros in bonds, Bloomberg reported. Alphabet shares closed down 0.30%.

What it could mean

Large new stock sales dilute existing shareholders, and heavy borrowing can raise questions about a company's balance sheet, which may keep pressure on the most leveraged AI builders. On the other hand, money raised now funds capacity that customers have already asked for, and if that capacity turns into revenue on schedule, the worry about the raise could fade.

Is Oracle's raise a sign of strong demand for computing power, or of strain in how the AI build-out is being paid for?

Oil fell more than 7% on hopes for US-Iran talks, even as reports pointed to possible new strikes

Oil prices fell sharply on Monday. US crude (WTI) fell more than 7%, to about $96 a barrel, and Brent, the global benchmark, also fell more than 7%, to about $104. Settlement prices were still preliminary on Monday night.

Hopes for talks

The drop came on hopes for talks between Washington and Tehran. Over the weekend, Secretary of State Marco Rubio told reporters that President Trump "hasn't made a decision," adding: "But we would prefer to do it peacefully." Iranian state media reported that the country's foreign minister said an agreement is possible if the US "demonstrates goodwill."

Axios reported that Trump has said he wants to give diplomacy with Tehran another shot, even as Israeli Prime Minister Benjamin Netanyahu has pressed the White House for a forceful round of strikes on Iran.

The tension is not over

Nothing has been decided, and reports suggest both sides are gearing up for more strikes after the midterm elections.

• Iran: On Saturday, Supreme Leader Mojtaba Khamenei called for Tehran's armed forces to meet "any level or type of threat" with "an immediate, impactful, and geographically unrestricted response."
• The US: Washington has not explicitly stated it plans to resume attacks on Iran, but The Wall Street Journal and The New York Times have reported that the US is preparing for possible renewed military action after Tuesday's midterm elections.
• Trump, on Sunday: "Either they'll make a deal, or we'll just end it."

Ryan McKay, director of commodity strategy at TD Securities, said much of oil's recent gain was a risk premium, but added: "so long as there is no concrete conclusion to the war, and tanker and Houthi attacks remain prevalent, we do not anticipate a complete erosion of the risk premium via diplomacy headlines alone." The most active Brent contract has swung between roughly $70 before the war began and $120 in March.

Winners and losers

Companies with big fuel bills rose: United Airlines +4.80%, Carnival +4.18%, Southwest +3.63%. Energy was the weakest sector fund (XLE -3.93%, its worst day since May 6), with Exxon down 4.01% and Chevron down 3.26%.

What it could mean

If talks take hold, cheaper oil could ease inflation worries, help bring yields down, and support airlines, cruise lines and consumer spending. But oil has reversed direction quickly throughout this conflict, and if strikes resume after the election, the risk premium could return just as fast, lifting energy stocks and hitting the same stocks that rallied on Monday.

Is Monday's drop the start of a lasting decline in oil, or one more swing in a market driven by headlines from the Middle East?

The Nasdaq fell 1.1% and the S&P 500 slipped, but 346 S&P 500 stocks rose and the Dow gained

The headline numbers said stocks fell. Most stocks did not.

Inside the S&P 500, 346 stocks rose and 156 fell, more than two of every three. The median S&P 500 stock gained 1.07%, and the equal-weight S&P 500 fund (RSP) rose 0.76%. The Dow Jones Industrial Average rose 0.41%, while the S&P 500 slipped 0.51% and the Nasdaq Composite fell 1.07%.

The S&P 500 weights each company by its market value, so losses in a few of the largest tech companies outweighed gains in hundreds of others. Energy (XLE -3.93%) and technology (XLK -2.94%) were the weakest of the sector funds. The median stock rose in eight of the 11 sectors and was about flat in health care, led by consumer discretionary (+2.91%), consumer staples (+2.16%) and industrials (+2.08%).

Old-economy names lifted the Dow: Sherwin-Williams rose 5.97% and Home Depot 3.62%, and Honeywell, 3M and Boeing gained more than 2% each.

It was the third time in eight trading days that the equal-weight fund beat the S&P 500 by more than 1.25 percentage points while the index fell (Oct. 22, Oct. 29 and Nov. 2).

Testing the lows, or a bounce?

Some see a chance for a turn. Deutsche Bank's Parag Thatte wrote in a Friday note to clients that tech's "relative performance is now at the bottom of its long-run trend channel, a level from which it has V-turned up 5 times in the last 2 1/2 years," adding: "The risk-reward now favors going overweight again."

Chris Larkin, managing director of trading and investing at E-Trade, said: "The stock market's longer-term bullish narrative may have taken some hits in recent weeks, but it's still intact." He added that the market's "ability to bend but not break under pressure has been a positive sign."

Others see a risk that reaches beyond the market. In a report Monday, BofA Global Research economists called a sustained correction in the AI trade "one of the larger risks to the US and global economy."

What it could mean

Broad participation under a falling index can be read two ways. Money moving out of a few crowded giants and into the rest of the market has often supported a wider advance, and tech has turned up from similar relative levels before, as Deutsche Bank's note points out. Or the weakness in the market's largest companies may keep dragging the indexes lower even while the average stock holds up.

Is this rotation a sign of a healthier market, or a warning that its leaders are losing their grip?

Apple beat on revenue and iPhone sales after the bell in John Ternus's first report as CEO

Apple reported fiscal fourth-quarter results after Monday's close, the first since John Ternus took over as CEO from Tim Cook on Sept. 1.

• Revenue: $114.48 billion, against $113.39 billion expected (LSEG), up 12% from $102.5 billion a year earlier
• iPhone revenue: $57.58 billion, against $56.54 billion expected
• Earnings per share: $2.10
• iPad: sales came up short of estimates

The shares closed the regular session at $338.32, down 1.83%, ahead of the report. Apple was the single heaviest weight on the S&P 500 on Monday. Apple and Nvidia were neck and neck as the world's most valuable company, at around $4.91 trillion each; Apple had taken the top spot at Friday's close. The after-hours move had not settled when this story was written.

Two camps going in

Needham analyst Laura Martin told CNBC's "Squawk on the Street" that Apple has "bet the farm" on the smartphone's continuing relevance, while companies like Meta and Google experiment with new hardware: "Almost every other AI company is going to try to change that form factor."

Analysts at Barclays wrote in a preview over the weekend that they "remain cautious on the stock given iPhone uncertainties this cycle, limited monetization of AI, and renewed fears on the App Store."

This year Apple has often moved against the chip stocks: on the 46 days in 2026 when the chip index fell 2% or more, Apple rose on 30. Monday was not one of them.

What it could mean

A revenue and iPhone beat in a new CEO's first quarter could ease worries about the iPhone cycle and give the market's largest weight some support. But the reaction may hinge on the outlook and the call rather than the headline figures, and a soft iPad line or cautious guidance could revive the doubts Barclays raised.

Will Apple's beat steady the market's biggest stock, or will the questions about AI and the iPhone cycle linger?

Palantir reported third-quarter revenue up 96% and raised its full-year revenue guidance

Palantir reported third-quarter results after Monday's close.

• Revenue: $2.313 billion, up 96% from a year earlier and 20% from the second quarter
• US commercial revenue: $984 million, up 148%
• Diluted earnings per share: $0.44
• Guidance: the company raised its full-year 2026 revenue guidance

CEO Alex Karp said in the release:

"The Sovereign AI movement is imposing the most dramatic dichotomy between haves and have nots that I have witnessed in 30 years of business."

The stock closed the regular session at $178.34, down 3.13%, its fifth straight down day. No after-hours move had settled when this story was written.

The results came after a day of selling in many AI names, from chipmakers to Oracle.

What it could mean

Revenue nearly doubling is evidence that some companies are earning real money from AI software, which could support the case for AI spending and for software names that sell to businesses and governments. But after a long run of strong growth, expectations are high, and a stock already under pressure may react more to the size of the guidance raise and the outlook than to the quarter itself.

Can results like Palantir's turn the mood on AI stocks, or will the market keep looking past strong numbers?

Factory data beat forecasts as prices rose more slowly; construction spending fell the most since 2020

The Institute for Supply Management's manufacturing index rose to 55.5 in October from 54.5 in September, above economists' forecasts. Readings above 50 signal growth.

• Production: 59.0, up 2.3 points and the highest since November 2021
• New orders: 55.5, from 55.3
• Employment: about 52.4, from 52.7
• Prices paid: 75.2, from 77.9, meaning prices were still rising, but at a slower pace

A second survey, from S&P Global, also showed factories expanding but more slowly: its manufacturing index fell to 54.9 from 55.9, below an earlier preliminary reading of 56.0.

Construction spending was weaker. The Commerce Department said it fell 1.9% in September, the biggest monthly decline since April 2020, and was down 2.7% from a year earlier.

Rates and the Fed

The 10-year Treasury yield ended at about 4.9%, a little lower on the day as oil fell. Earlier in the day, fed funds futures priced in 76% odds of a quarter-point rate hike in December, according to CME data.

BofA Global Research economists wrote that with US growth spreading beyond AI and running hot for years, "it is hard to justify the Fed's inaction." Fed Chair Kevin Warsh said at his Oct. 28 press conference: "Interest rates get in the cracks. Interest rates affect directly or indirectly almost everything."

What it could mean

Strong factory output points to an economy that is still growing, which could support earnings outside the AI trade. The same strength, with prices still rising, may keep the Fed leaning toward a hike, which could pressure stocks and bonds. A slower rise in prices paid and Monday's drop in oil could ease that pressure, and Friday's jobs report may tip the balance.

Does a stronger economy help this market more than the higher rates it could bring?

Bitcoin slipped to about $76,700 as last week's $6.3 billion Binance hack still weighed on crypto

Bitcoin traded at about $76,700 on Monday afternoon, down about 1.5% to 2% over 24 hours (figures differ by source). Coinbase shares fell 3.98%.

The crypto market is still dealing with the hack at the exchange Binance. Binance was hit late Thursday, Oct. 29, by a hack that investigators said affected roughly $6.3 billion in funds, with about half of those assets frozen. It has been described as the largest crypto hack in history.

The FBI said in a press release that North Korea "was responsible for the theft of more than $6 billion USD in virtual assets from cryptocurrency exchange Binance, on or about October 29, 2026."

Binance's response

Customer withdrawals were briefly suspended, and co-CEO Richard Teng promised the exchange would cover all losses. On Monday, Binance said it had covered about 95% of the affected amount; the rest is in smaller, less liquid tokens that will take longer to source. Binance said it processed $4.649 billion in withdrawals and about $1.01 billion in deposits, and that the resulting net outflows represent 2.1% of its $171 billion in total assets.

"This was a complex attack," Teng said last week. "The attacker also used a self-destruct mechanism that destroyed tooling and tracers."

About $3.24 billion remains in addresses linked to the theft, according to Tom Robinson, chief scientist and co-founder of blockchain analytics company Elliptic. The total crypto market lost about 3%, or $80 billion, in value over the past seven days, according to CoinMarketCap data.

What it could mean

A hack of this size can shake trust in exchanges and keep pressure on crypto prices and crypto-linked stocks while the funds are traced. On the other hand, Binance's quick coverage of most losses and the modest net outflows suggest the system absorbed the shock, and once fears fade, selling driven by a single event has sometimes reversed.

Will the Binance hack leave a lasting mark on crypto prices, or will it fade as the losses are covered?

IDEXX jumped almost 22% on its results; Tempus AI and Rivian also rallied

Away from the AI trade, several stocks made big moves on company news.

Up

• IDEXX Laboratories +21.85%, the S&P 500's best performer and its best day since Aug. 4, 2025. The veterinary diagnostics company beat third-quarter earnings and revenue estimates and raised its 2026 revenue and earnings forecasts, while lowering its operating-margin outlook.
• Tempus AI +8.67% after third-quarter earnings, revenue and adjusted EBITDA beat estimates, and it raised its forecast.
• Rivian +8.47% after UBS upgraded the stock to buy.
• Marriott +4.26% after reporting strength for its hotels around the world. Even in the Middle East, CEO Anthony Capuano said that "trends improved meaningfully" from the spring.
• Amazon +2.20% after PhillipCapital upgraded it to buy. "Aggressive CapEx creates FCF pressure, but strong demand visibility supports sustained infrastructure investment," analyst Helena Wang wrote.
• SpaceX +1.22%, after a larger gain earlier in the day faded.

Howmet (+6.89%) and DoorDash (+6.19%) also rose sharply; no specific reason was reported.

Down

• Krystal Biotech -10.95% after the company said data for several treatments will be pushed back to 2027, including the readout for KB801, a gene therapy for neurotrophic keratitis.

Ciena (-11.38%), Astera Labs (-11.22%) and Everpure, formerly Pure Storage (-10.40%), also fell by double digits; no specific reason was reported for those drops.

What it could mean

Big moves on results and upgrades outside the AI trade show investors are still paying for companies that deliver, which could support a market where gains spread beyond a few giants. But single-stock jumps on earnings can fade if the broader market weakens, and several data center suppliers still fell by double digits on Monday.

Is the market rewarding company results again, or are these moves a sideshow to the AI trade?

The close: the S&P 500 and the Nasdaq fell for a third day as the Dow rose

A morning rally faded, and the S&P 500 and the Nasdaq Composite closed near their lows of the day.

• S&P 500: 7,541.40, down 38.67 points (-0.51%)
• Nasdaq Composite: 25,164.32, down 272.68 (-1.07%)
• Dow Jones Industrial Average: 51,983.98, up 213.67 (+0.41%)
• Nasdaq 100: 27,989.82 (-1.39%)
• Russell 2000: 2,805.88 (-0.21%)
• VIX (the fear gauge): 21.15, up 1.73 (+8.91%), its third straight rise and highest close since June 10

It was the third straight loss for the S&P 500 and the Nasdaq. The S&P 500 closed at its lowest since July 31 and the Nasdaq at its lowest since July 30. The S&P 500 is 3.55% below its record close of 7,818.93 from Oct. 6 and still up 10.17% for the year; the Nasdaq is 8.82% below its own Oct. 6 record.

Elsewhere:

• Oil: US crude fell more than 7%, to about $96 a barrel (preliminary settlement)
• Gold: December futures rose 1.43%, to $3,954.70 an ounce; silver gained 3.09%
• 10-year Treasury yield: about 4.9%, a little lower on the day
• Dollar index: 101.77 (-0.11%)
• Bitcoin: about $76,700

What's next

Tuesday brings the US midterm elections and AMD's results after the close. The October jobs report is due Friday.

What it could mean

A third straight decline for the S&P 500, with volatility at its highest since June, suggests a market still under strain, and this week's election, earnings and jobs data could add to the swings. At the same time, most stocks rose on Monday and the index remains within 4% of its record, so the pullback is concentrated in a few large names rather than spread across the market.

Will this week's busy calendar steady the market, or add to the pressure on its biggest stocks?