Author: Davis Finke, CFA
Markets capped off another week with heightened volatility as new inflation reports reignited concerns regarding interest rates and the future path of monetary policy. Tuesday’s release of the October Consumer Price Index (CPI) showed a headline increase of 0.4% month-over-month, lower than September’s reading of 0.6% but above forecasts for a 0.3% increase. Energy prices remained a significant source of inflationary pressure, rising 0.7% for the month, including a 1.0% increase in gasoline prices. Core CPI, which excludes the more volatile food and energy categories, also exceeded forecasts, coming in at 0.3%. Importantly, October’s reading pushed the three-month annualized pace of core CPI up to 3.7%, more than doubling from the 1.6% rate in July and signaling that underlying inflationary pressures have firmed in recent months. Following the report, multiple Federal Reserve officials expressed concern, with Chicago Fed President Goolsbee calling the report “borderline disturbing” and Cleveland Fed President Hammack stating that inflation is continuing to move in the wrong direction. As a result, futures markets are now fully pricing in at least a 25-basis-point hike at the Fed’s December meeting, with roughly a 11% probability of a larger 50-basis-point increase. Further adding to this week’s volatility was the resignation of Nvidia’s long-time CEO, Jensen Huang. Nvidia, one of the largest companies in the world by market capitalization, has become a cornerstone of the AI investment boom, with Huang serving as one of the industry’s most prominent advocates, helping communicate the technology’s potential to investors and the broader public. His sudden departure comes at a particularly challenging time, as AI-related technology companies have faced increased scrutiny over the sustainability of their spending, adding another layer of uncertainty to an industry already under pressure.
While Nvidia’s stock price fell over 12% this week following Huang’s resignation, the broader market fallout remained relatively contained. Given Nvidia’s significant weighting in major equity indexes, the fact that all three major U.S. indexes managed to finish the week higher was particularly notable. Remarkably, the tech-heavy Nasdaq was the best performer this week, finishing up 3.61%, as a rotation away from Nvidia resulted in gains for multiple competitors. The S&P 500 followed suit, finishing the week up 2.52%, marking one of its best weeks since August. The Dow Jones also posted solid gains, finishing the week up 2.07%. At the sector level, all 11 sectors finished the week higher for the first time since October 2025. Energy led the way, finishing the week up 5.37%, followed by industrials (+3.73%), communications services (+3.71%), and technology (+3.32%). Helping support markets this week was a further reduction in oil prices, with Brent crude oil down 1.92% this week and 15.25% since the beginning of November. Also contributing to this week’s strong performance were better-than-expected third-quarter earnings results from CoreWeave, an AI-focused cloud-computing company. In addition to reporting strong results, management indicated that demand remains robust and raised its full-year revenue and adjusted operating income guidance. The results provided investors with some reassurance regarding the outlook for AI infrastructure spending, helping to offset concerns surrounding Nvidia and providing a meaningful boost to the broader technology sector.
Looking ahead to next week, investors will be focused on two of the most anticipated earnings reports remaining this quarter. Nvidia is scheduled to report earnings after the market closes on Tuesday, followed by Walmart on Thursday before the open. As investors continue to assess whether the rapid pace of AI infrastructure spending can be sustained against a shifting political and interest-rate backdrop, Nvidia’s results will be a key component in shaping market sentiment heading into the final weeks of 2026 and the start of 2027. Management’s commentary will also be closely watched for insight into the company’s direction following Huang’s sudden resignation and the appointment of CFO Colette Kress as interim CEO. On the economic calendar, multiple Federal Reserve officials are scheduled to give speeches, including Chair Warsh on Monday, which could provide investors with insight into how policymakers are viewing recent inflation reports and the interest-rate outlook. Additionally, the minutes from the Fed’s October meeting will be released on Wednesday, providing further insight into policymakers’ views on monetary policy. Lastly, investors will get a look at the health of consumer spending with the October retail sales report being released on Tuesday.
