Chip slump and Iran headlines meet Election Day as the Nasdaq 100 sits in a correction

Explain terms

The one thing that matters today

The Nasdaq 100 closed Monday more than 10% below its all-time closing high, confirming a technical correction (Reuters). That came alongside growing doubts about returns on AI spending, with a Bloomberg gauge of US chipmakers down 12% over a three-day slide. Today two other things land on top of it: the US midterm elections and renewed Middle East tension after a US official said the US struck Iran's Qeshm Island (Reuters).

The question for today is less about the vote than about the AI trade. Results tonight could shape the outlook for spending and deficits, but the selloff in chips started before the election, and much of the overnight weakness in Asia ran through semiconductor stocks.

Before (overnight)

Asia.

South Korea's Kospi fell 4% to 5,626.08, and Taiwan's Taiex slid 3.8%, per AP. Samsung Electronics and SK Hynix each fell more than 4%, Bloomberg reported.
Hong Kong's Hang Seng rose 0.6% to 23,525.97, while the Shanghai Composite fell 0.8% to 3,608.10 (AP).
Tokyo markets were closed for a holiday.

Korea's semiconductor-heavy market is "back on the front line of the global AI trade's repricing," and investors look to be rotating away from crowded AI trades rather than leaving stocks altogether.^{Hebe Chen, Vantage Global Prime}

"Markets are mostly in a risk-off mood against the background of increasing AI concerns and the US midterm election." He noted the S&P 500 has been higher six months after every US midterm since 1950, while warning it could be a rocky week.^{Kieran Calder, Union Bancaire Privée}

Australia. The Reserve Bank of Australia raised its cash rate target 25 basis points to 4.85%, an 18-year high per Bloomberg. Six board members voted for the hike and three voted to hold at 4.60%. The RBA said "there is an increasing risk that higher inflation expectations will become embedded," and that it will be attentive to the data in guiding its decisions.

The Australian dollar fell 0.3% to 69.81 US cents (Bloomberg), while the S&P/ASX 200 rose 0.3% (AP). The three votes to hold suggest the board is divided on how much further to go.

China. The yuan weakened as much as 0.4% to 6.6760 per dollar, ending a 13-day winning streak, after the People's Bank of China asked banks to hold more foreign currency in reserve (Bloomberg).

Europe. The STOXX 600 was down 0.4% at 647.13 at 3:55 AM CT, with technology stocks down 1.6% (Reuters). STMicro and ASML each fell more than 1.1%.

Bayer rose 4.4% after raising its 2026 profit forecast, and Philips gained 4.3% after a preliminary agreement with the US Justice Department tied to its 2021 device recall.

European valuations have cooled while earnings momentum remains positive.^{Gilles Guibout, BNP Paribas Asset Management}

Oil. Brent crude rose 1.7% to $106.58 a barrel, after a 7.6% drop on Monday (AP). The move came after an Iranian official said a deal to end the war was far off, and a US official said the US struck Iran's Qeshm Island (Reuters). Asked by reporters on Monday whether he was considering striking Iran after the midterms, President Trump said "no."

US futures. As of 4:06 AM CT, per Reuters:

Nasdaq 100 E-minis were up 130.5 points, or 0.46%.
S&P 500 E-minis were little changed, up 1.5 points (0.02%).
Dow E-minis were down 219 points, or 0.42%.

Futures were weaker earlier in the session (AP had S&P 500 futures down 0.3% at 3:27 AM CT), so the picture firmed into the European morning.

The big US movers.

Apple fell 4.5% premarket after warning on Monday that rising memory-chip costs will pressure its holiday-quarter gross margin.
Palantir fell 6.3% even after forecasting fourth-quarter revenue above estimates.
Nvidia rose 1.6% after four straight losing sessions, and AMD rose 2.8% ahead of its results after the bell.

Gold. Spot gold fell 1.1% to $3,904.69 an ounce and December gold futures fell 1.4% to $3,914.70 at 4:02 AM CT (Reuters). That follows a gain of about 2% on Monday, after gold hit its lowest level since October 2025 last Friday. Reuters said higher oil prices stoked inflation fears. Spot silver fell 3.4% to $48.93.

"Higher oil prices tend to put inflationary pressures up."^{Nitesh Shah, WisdomTree}

The calendar

Time CT	Event	Consensus	Why it matters
All day	US midterm elections	n/a	Control of Congress shapes the outlook for spending, deficits and policy
Before the bell	Earnings: Pfizer, Archer-Daniels-Midland, Marathon Petroleum	n/a	Health care, food and refining read-throughs
9:00 AM	JOLTS job openings (Sep)	Expected to tick higher (Bloomberg); August was 7.08M	A read on labor demand ahead of Friday's jobs report
After the bell	Earnings: AMD	n/a	A direct test for the chip and AI trade
Evening and overnight	Election results	n/a	Market reaction may start in overnight futures

Friday's October jobs report is expected to show about 65,000 jobs added, with unemployment holding at 4.2% (Bloomberg). No Fed speakers are on the Fed's calendar today. The Treasury holds a 6-week bill auction; there is no note or bond auction.

What's priced in

The Fed held its target range at 3.75%–4.00% on October 28 in a 10–2 vote. Lisa Cook and Beth Hammack dissented in favor of a quarter-point hike.

CME FedWatch showed traders pricing about a 75% chance of a Fed rate hike in December (Reuters, Tuesday). It was 76.6% on Monday, down from 80% a week earlier (Reuters).

On Monday, he said weaker oil prices had provided "some relief" on inflation concerns, though the market is still expecting a December hike.^{Peter Grant, Zaner Metals}

The elections should help remove a major market overhang, and the US correction that began in June is in its "final innings."^{Morgan Stanley}

"Concerns around government spending and deficits have continued to build, contributing to market volatility."^{Societe Generale}

What could move NQ, ES and gold (general tendencies, not predictions)

Oil and Iran headlines: Higher oil tends to raise inflation expectations and hike odds, which has generally weighed on gold and on rate-sensitive tech this week. Signs of progress toward a deal have tended to do the reverse.
The AI and chip trade: NQ is more concentrated in chipmakers and mega-cap tech than ES, so news on AI spending, including AMD's results tonight, tends to hit the Nasdaq 100 harder.
JOLTS at 9:00 AM CT: A strong labor-demand number would generally support the case for a December hike, and a weak one would cut against it. Moves on one data point are often short-lived.
Election results overnight: Results usually arrive after the cash close, so any reaction tends to show up first in overnight futures. Markets often focus on what a result means for fiscal policy and regulation rather than on the parties themselves.
Gold's balance: "Deficits should persist no matter the outcome of the midterms," which keeps the US debt and interest burden a longer-term support for gold (Monday).^{Carsten Menke, Julius Baer}

What we're watching

Whether chip stocks can hold Monday's partial rebound into AMD's report.
Whether Brent stays above $100 as Iran headlines develop.
Whether December hike odds move from about 75% after JOLTS.
How overnight futures react as election results come in. We will cover the reaction, not the politics.

The short version (the what and the result)

Asian chip stocks fell sharply overnight (Kospi down 4%) as doubts about AI spending spread, with the Nasdaq 100 now in a correction.
Oil rebounded above $100 after a reported US strike on Iran, and gold fell about 1% to around $3,905.
US futures were mixed early: Nasdaq 100 up 0.5%, S&P 500 flat, Dow down 0.4%.
Today: midterm elections, JOLTS at 9:00 AM CT and AMD after the bell. Traders price about a 75% chance of a December Fed hike.