Key facts (updated Nov. 5, 2025):
- Wall Street slid on Tuesday (Nov. 4): S&P 500 -1.2% to 6,771.55; Nasdaq -2.0% to 23,348.64; Dow -0.5% to 47,085.24. Tech weakness (e.g., Nvidia) led the decline. [1]
- Fed backdrop: The Fed cut rates 25 bps on Oct. 29 to 3.75%–4.00%, but Chair Jerome Powell said there are “strongly differing views” about cutting again in December amid a government data drought from the shutdown. Vote was 10–2 (split in both directions). [2]
- Overnight spillover: A tech-led selloff pushed Asia lower today; Nikkei fell as much as 4.7% and KOSPI 6.2% intraday. Haven demand lifted the yen and Swiss franc. [3]
- Global outperformance: After a year of “Trump 2.0,” benchmarks in China, Europe and Canada have beaten the S&P 500 in USD terms since Nov. 2024; breadth widened beyond U.S. megacaps. [4]
- Policy + prices: A year of tariffs and policy shocks saw the dollar net down ~4% from its post‑election pop; gold and bitcoin hit record highs in October before retreating. [5]
- Today’s data watch: The ADP employment report is due 8:15 a.m. ET (Nov. 5); other services/PMI updates follow. [6]
- Live snapshot (approx. 10:40 UTC): SPY 675.24 (‑1.2%), QQQ 619.25 (‑2.0%), GLD 362.32 (‑1.8%), Bitcoin $101,355 (‑2.2%). Dollar index near 100.15 overnight. Prices are indicative. [7]
What just happened on Wall Street
U.S. stocks stumbled Tuesday, with the S&P 500 down 1.2% and the Nasdaq off 2%, as the same AI and megacap names that led 2025’s rally sank, including a sharp pullback in Nvidia and Palantir. The Russell 2000 fell 1.8%, underscoring broader risk‑off sentiment beyond Big Tech. [8]
The risk-off mood didn’t stay home. By Wednesday in Asia, the selloff deepened: Japan’s Nikkei plunged up to 4.7% and Korea’s KOSPI fell as much as 6.2% before trimming losses. The yen and Swiss franc caught safe‑haven bids as investors scaled back near‑term bets on Fed easing. [9]
Semiconductors were at the epicenter — a sign that concerns are rotating from policy to valuation in AI supply chains. A global semis index fell ~4% within Tuesday’s action, while financials eked out small gains, hinting at a defensive rotation. [10]
The policy backdrop: a Fed that just cut — and then said “maybe not again (yet)”
On Oct. 29, the Federal Reserve delivered a quarter‑point cut, but Chair Jerome Powell cautioned that another move in December is “not a foregone conclusion”, citing “strongly differing views” on the committee and unusual uncertainty as the government shutdown starves policymakers of official data. The decision featured a rare two‑way dissent (some wanted a bigger cut; others wanted none). [11]
That split matters for markets. As Tim Duy of SGH Macro Advisors put it, “the power flows from the Board,” but a “rowdy and disorderly” path could increase volatility if the split persists, echoed by James Egelhof at BNP Paribas. [12]
Near‑term catalyst: today’s ADP report (8:15 a.m. ET) will act as a proxy while some official series are delayed. Recent ADP guidance suggests only a modest rebound in private hiring from September’s softness. [13]
A year of whiplash: tariffs, “TACO,” the dollar — and a rare global leaderboard flip
One year into Trump’s second term, the conventional wisdom that higher U.S. tariffs would cement American equity dominance has not held. Instead, global benchmarks — from Europe to China and Canada — have outpaced the S&P 500 in USD terms since the 2024 election, a notable reversal of a decade‑long trend. [14]
Why? Part of the story is policy volatility and FX. After surging post‑election, the dollar is ~4% lower on net, and investors learned to trade the White House’s rhetorical shocks. The so‑called “TACO” trade — “Trump always chickens out” — reflects a pattern of tariff threats followed by partial retreats. Meanwhile, gold and bitcoin notched all‑time highs in October amid geopolitics and “crypto‑friendly” policy signals before easing. [15]
As Piotr Matys (In Touch Capital Markets) reminds, in stress the dollar often remains the “cleanest dirty shirt.” Recent haven flows into JPY/CHF show the reflex is alive even as DXY hovers near 100. [16]
Europe’s role has been pivotal. Defense and industrials helped power the Stoxx 600 earlier this year, while a weaker dollar buoyed Asia’s exporters. By mid‑year, even institutional surveys found a majority of strategists expected Europe to outperform in 2025. And MSCI flagged a double‑digit performance gap in early 2025 favoring non‑U.S. equities, alongside shifting fund flows. [17]
Market snapshot (as of ~10:40 UTC)
- SPDR S&P 500 (SPY): 675.24 (‑1.2% on day)
- Invesco QQQ (QQQ): 619.25 (‑2.0%)
- SPDR Dow (DIA): 470.90 (‑0.5%)
- iShares MSCI EAFE (EFA): 93.56 (‑1.0%)
- GLD (Gold ETF): 362.32 (‑1.8%)
- Bitcoin (BTC): $101,355 (‑2.2%)
- U.S. Dollar Index (DXY): ~100.15 overnight
Indicative only; intraday figures fluctuate. [18]
What to watch next (Nov. 5–8)
- Jobs pulse:ADP today; ISM services and PMIs due; with the shutdown curbing official releases, private indicators carry extra weight for the Dec. 9–10 FOMC outlook. [19]
- Cross‑asset stress: Follow yen/CHF and front‑end Treasury yields for signals that risk aversion is broadening beyond equities. [20]
- Earnings + guidance: Any AI capex push‑out or margin commentary from megacaps could amplify the valuation debate in semis and cloud‑exposed names. [21]
The outlook: three scenarios, one constant (volatility)
Base case — “Sideways with spikes.”
Powell’s “not a foregone conclusion” stance on December encourages a range‑bound S&P 500 into year‑end with sharp, policy‑headlines‑driven swings. Historical patterns around split FOMCs suggest wider error bands on data surprises. If ADP and private surveys show tepid hiring, the Fed may pause to gather more data, keeping front‑end yields capped — supportive for duration‑sensitive tech but not enough to offset valuation air‑pockets. [22]
Rotation case — “The world catches up.”
If the dollar softens further and Europe’s fiscal/security impulse persists, non‑U.S. equities can extend their relative edge that emerged in early 2025, especially in defense, industrials and exporters tied to Asia. Fund‑flow and breadth metrics from spring 2025 support that possibility. [23]
Shock case — “Tariff torque.”
Renewed tariff volleys (or a prolonged shutdown) could re‑ignite inflation fears, forcing the Fed to slow cuts. In that path, gold/crypto regain leadership while cyclical equities wobble; the dollar’s haven bid returns despite policy unpredictability — the “cleanest dirty shirt” dynamic. [24]
Strategist targets & context: Big banks have trimmed or tempered 2025 targets at various points this year — for example, one prominent shop cut its S&P 500 year‑end view to ~6,200 in March on tariff and growth uncertainty — underlining how sensitive forecasts are to policy path and megacap positioning. [25]
Why this matters to investors
- Breadth vs. beta: The U.S. rally’s leadership remains narrow; days like Tuesday show how concentrated risk can swing the tape when AI and semis wobble. [26]
- Policy premium: A split Fed and tariff overhang raise the “policy premium” embedded in valuations. Powell’s message — “not on a preset course” — means data dependency is back with a vengeance. [27]
- Diversification math: 2025 has been the first year in a while where non‑U.S. equities offered meaningful diversification and, at times, outperformance — a reminder to revisit geographic and factor balance rather than simply chasing the largest U.S. names. [28]
Sources & further reading
- Wall Street close (Nov. 4): Associated Press via Washington Post. [29]
- Fed Oct. 29 decision & Powell quotes: Reuters. [30]
- Global outperformance in 2025: Bloomberg. [31]
- Year of Trump 2.0 — tariffs, TACO, dollar, gold/bitcoin records: Reuters explainer. [32]
- Asia FX and equity spillover, Nov. 5: Reuters currencies wrap. [33]
- ADP timing (Nov. 5, 8:15 a.m. ET): ADP. [34]
- Strategist/flow context on non‑U.S. outperformance: MSCI; Natixis survey (June 2025). [35]
Note: This article is for general information only and is not investment advice. Markets move quickly; check real‑time quotes before making decisions.
References
1. www.washingtonpost.com, 2. www.reuters.com, 3. www.reuters.com, 4. www.bloomberg.com, 5. www.reuters.com, 6. adpemploymentreport.com, 7. www.marketwatch.com, 8. www.washingtonpost.com, 9. www.reuters.com, 10. www.reuters.com, 11. www.reuters.com, 12. www.reuters.com, 13. adpemploymentreport.com, 14. www.bloomberg.com, 15. www.reuters.com, 16. www.reuters.com, 17. www.im.natixis.com, 18. www.marketwatch.com, 19. adpemploymentreport.com, 20. www.reuters.com, 21. www.reuters.com, 22. www.reuters.com, 23. www.msci.com, 24. www.reuters.com, 25. www.reuters.com, 26. www.washingtonpost.com, 27. www.reuters.com, 28. www.msci.com, 29. www.washingtonpost.com, 30. www.reuters.com, 31. www.bloomberg.com, 32. www.reuters.com, 33. www.reuters.com, 34. adpemploymentreport.com, 35. www.msci.com
