U.S. Stock Market Outlook (November 2): Intel Records 50-Year Worst Decline, This Week’s Focus on Midterm Elections and Apple Earnings

Written by: Chaoxiang Research

Intel's Q4 guidance came in well below expectations, sending its stock plunging 29% and marking the largest single-day drop since 1974, dragging the Philadelphia Semiconductor Index down over 7%. Amazon's AWS revenue grew 39%, but quarterly capital expenditures of $77.3 billion far exceeded operating cash flow, with free cash flow continuing to deteriorate.

Binance suffered the largest hacker attack in crypto history, losing approximately $6.3 billion, with Bitcoin briefly dropping below $76,000.

This week's focus centers on tomorrow's U.S. midterm elections and Apple's after-hours earnings report tonight.

Tech Stocks Plunge, Nasdaq Hits Largest Single-Day Drop Since June

On Friday, the S&P 500 fell 1.82% to close at 7,580.07; the Nasdaq dropped 2.86% to close at 25,437.00; and the Dow Jones fell 1.09% to close at 51,770.31. The Nasdaq posted its largest single-day decline since June, while the VIX spiked intraday to 23.93 before closing at 19.42, up 12.91% for the day.

Among the S&P 500's 11 sector ETFs, only energy, consumer staples, and utilities closed higher, while all others declined. The information technology sector fell nearly 5%, making it the worst-performing industry of the day. Defensive sectors attracted capital inflows, with healthcare and real estate gaining 2.4% and 2.2%, respectively.

Among the Magnificent Seven, Tesla was the sole bright spot, rising 7.41%. Google Class A shares fell 12.61% (dragged by last week's earnings report, its two-day cumulative loss marks the largest since Alphabet went public), Meta dropped 4.30%, Amazon fell 3.08%, Nvidia declined 3.00%, Apple dipped 0.89%, and Microsoft slid 0.50%.

The Philadelphia Semiconductor Index plummeted over 7.2%, accumulating a decline of more than 15.3% for October. Intel fell 29%, AMD dropped 8.6%, Lumentum sank 8.57%, and Arista Networks tumbled 8.34%.

On a weekly basis, the S&P 500 fell 0.58%, the Nasdaq dropped 2%, and the Dow Jones declined 0.85%. All three major indices fell for the third consecutive week, marking their longest losing streak since March. To close out October, the S&P 500 lost 0.94%, the Nasdaq fell 5.3%, and the Dow Jones gained 1.7%.

Intel Plunges 29%, Worst Single-Day Performance Since 1974

Intel reported third-quarter results after market close on Thursday, with revenue of $16.51 billion, up 21% year-over-year; earnings per share reached $0.52, both beating expectations. Data center business revenue grew 78% YoY, benefiting from expanding AI-related demand.

Weighing on the stock was the fourth-quarter guidance. The company projected Q4 revenue between $15 billion and $16 billion, significantly below the market's estimate of around $17 billion. The PC segment remains the biggest drag; Intel expects Q4 PC shipments to decline 25% to 30% quarter-over-quarter, and forecasts the full-year 2026 PC market will contract by 12%, with a further 10% decline expected in 2027.

Following the announcement, Intel's after-hours price initially dropped over 20%. On Friday, the declines widened at the open, ultimately closing down approximately 29%, marking the largest single-day fall since 1974. Bank of America analysts downgraded the stock from Buy to Neutral, slashing the price target from $145 to $100. Intel's cumulative October loss reached 45%, making it the worst-performing component of the S&P 500 that month.

Amazon AWS Grows 39%, Capital Expenditure Pressure Mounts

Amazon also released third-quarter results after market close on Thursday. Revenue reached $201.9 billion, up 12% year-over-year; operating profit hit $28.1 billion, surging 61% YoY, pushing the operating margin to a record high of 13.9%.

AWS was the standout performer, with revenue climbing 39.3% YoY to $46 billion, posting its fastest growth rate in nearly five years and an annualized run rate of $184 billion. AWS backlog reached $578 billion, more than doubling year-over-year. CEO Andy Jassy stated that AWS revenue growth is expected to exceed 40% in both 2027 and 2028.

Investors are concerned about cash flow. Third-quarter capex stood at $77.3 billion, far surpassing $42.4 billion in operating cash flow, leaving free cash flow negative $42.4 billion over the trailing twelve months. The company estimates full-year 2026 capex at around $220 billion, with Jassy hinting at a "significant increase" in 2027.

Earnings per share were $1.89 (compared to a higher prior-year base inflated by investment gains from Anthropic), missing the consensus estimate of $1.96. Revenue also slightly missed expectations. Shares dipped 6% after hours and closed down about 3% on Friday.

Combined with earlier reports showing Google Cloud revenue doubling but free cash flow remaining negative for consecutive quarters, and Microsoft Azure growing 48% alongside doubled capex, the Q3 earnings from these three cloud giants point to a common theme: AI is indeed generating revenue, but the burn rate is faster, and free cash flow is being eroded.

Binance Hit by $6.3 Billion Hack, Crypto Market Turmoil Intensifies

Thursday evening saw the world's largest crypto exchange, Binance, confirm a massive security breach, estimating losses at approximately $6.3 billion. This marks the largest hacking attack in crypto history, far eclipsing Bybit's $1.5 billion hack in February 2025. The attackers are reportedly linked to North Korea.

Binance immediately halted deposits and withdrawals, and collaborated with multiple industry partners to freeze approximately $3 billion in transferred funds. Companies including Ripple and Circle participated in the asset freezing initiative.

Bitcoin briefly plunged to a six-week low of around $76,300 following the news, before bouncing back slightly to approximately $77,300. Ethereum dropped to around $2,237, and BNB fell 5.6% to roughly $679. Over $1.6 billion in positions were liquidated across the market within 24 hours, with long positions accounting for $1.35 billion. The Crypto Fear and Greed Index plummeted from 51 to 30.

The market quickly drew comparisons to the 2022 FTX collapse. However, unlike that event, Binance has explicitly committed to fully covering user losses, and co-founder He Yi thanked the partners involved in the freeze. The situation continues to unfold.

Oil Prices Hit Near-Seven-Week High, Gold Falls to One-Year Low

December WTI crude futures rose 2.08% to close at $104.12 per barrel, setting the highest closing price since September 15. For October, the contract gained over 15%, marking four consecutive months of increases. Brent crude advanced 2.4% to finish at $117.64 per barrel, approaching late-March highs. Attacks on tankers in the Strait of Hormuz intensified supply concerns, helping prop up oil prices despite the tech sell-off.

Gold moved in the opposite direction. December gold futures fell 3.29% to close at $3,898.90 per ounce, hitting a one-year low. Persistently high inflation data coupled with expectations of Fed rate hikes continued to weigh on the metal.

In the New York bond market, the 10-year U.S. Treasury yield fell 6 basis points to 4.929%, marking a seven-week low as the tech rout spurred safe-haven flows into Treasuries. The 2-year yield dropped 8.7 basis points to 4.569%. For the full month of October, the 10-year yield fell approximately 36 basis points, the largest monthly decline since December 2023.

The U.S. Dollar Index closed at 101.96, essentially flat for the week.

Key Events This Week

All times are Beijing Time.

Tonight (Monday) after market close: Apple and Palantir report earnings. Apple will release September quarter results, with consensus expecting EPS of around $2.02. After last week's heavy tech sell-off, Apple's performance will directly influence market sentiment regarding AI spending themes. Palantir options imply a volatility swing of approximately 13.3%.

Tuesday: U.S. Midterm Election Day. All 435 House seats and 35 Senate seats will be up for election. The outcomes will determine congressional control for the second half of President Trump's term, with profound implications for fiscal policy, regulatory direction, and market style preferences. Historical data shows that since 1938, the S&P 500 has risen in 95% of cases within the 12 months following midterm elections.

Tuesday after market close: AMD reports earnings. Consensus estimates call for revenue of around $13.1 billion, up 42% YoY; EPS is expected at approximately $1.94, up 62% YoY. Following Intel's sharp selloff, AMD's data center and AI chip performance will serve as a key benchmark for semiconductor industry confidence.

Wednesday to Thursday: Qualcomm, Arm, Arista Networks, and others report earnings sequentially. Additional data points along the AI infrastructure chain will determine whether tech stocks continue under pressure or stabilize and rebound.

Friday at 21:30: U.S. Non-Farm Payrolls for October. September NFP added just 29,000 jobs, lowering the three-month average to approximately 50,000. Whether the labor market cools further will directly impact expectations for a potential Fed rate hike in December.

All week: ISM Manufacturing PMI (Monday) and Services PMI (Wednesday). September Manufacturing PMI stood at 54.5, with the Prices Paid index soaring to 77.9, indicating ongoing supply-side inflationary pressures.