Wall Street is bracing for more sharp swings in stocks after a tech-led selloff rattled markets late last week. Disappointing earnings from Amazon.com Inc., Alphabet Inc. and Intel Corp. added to concerns about the AI-driven rally, pushing the Cboe Volatility Index to its highest intraday level since April and sending the S&P 500 down its steepest amount since June.
Traders now face two major catalysts: Nvidia Corp. earnings later in November and the US midterm elections. Investors are watching the midterm results for their potential effect on the war in Iran and on domestic economic policy. Options markets have priced in a move of about 0.9% for the S&P 500 in the session following the vote, a level that has remained fairly steady in recent weeks.
Strategists see the selloff as more of a rotation than a broad downturn. "This looks more like a bullish rotation with a derating at its core than the beginning of a broad market deterioration," said Florian Ielpo, head of macro research at Lombard Odier Investment Management. Some investors are positioning for a recovery, buying call spreads on benchmark indexes and beaten-down tech names such as Intel. Others have bought call spreads in Delta Air Lines Inc., United Airlines Holdings Inc. and General Electric Co., which would benefit from easing tensions in the Middle East.
The broader backdrop has been relatively calm. Realized 60-day volatility on the US benchmark recently hit its lowest level in more than a year, and US stocks have largely shrugged off spikes in oil prices and interest rates in 2026. Still, analysts note that leveraged tech ETF rebalancing could amplify moves in semiconductors, and that the path of Iran talks and oil prices after the midterms remains the wild card.
Source: Bloomberg Markets · Summarized by HeadlinesBriefing