US equities slide on AI and chip sell-off; Europe ends mixed

European traders are heading home, with the focus on the sell-off in US equities. Semiconductor and AI names are suffering the most as investors assess the outlook after the US midterm elections. The previous day saw the Dow surge almost 1,600 points, even as some AI-related trades struggled. Today, the Dow has given back most of that gain, the Russell 2000 is down more than 4%, and the Nasdaq 100 has fallen more than 5%. The selling has extended from chipmakers into power and infrastructure companies tied to the AI buildout.

The Nasdaq indices have bounced off their session lows, but the Dow and Russell remain at their troughs. For the S&P 500, the September low near 7,511 is the first level that buyers need to reclaim to relieve some downside pressure. If it stays below that, the 200-day moving average near 7,323 and the swing area at 7,300–7,321 come into view.

European equity markets ended the session mixed as the Bank of England raised rates. Spain’s IBEX 35 led with a gain of 0.59%, followed by France’s CAC 40 at +0.34%. Germany’s DAX and the UK’s FTSE 100 each fell 0.43%, while Italy’s FTSE MIB dropped 1.03%, the weakest among the major indexes.

The Bank of England raised Bank Rate by 25 basis points to 4.00%, as expected. The vote was 8–1 in favour of the quarter-point move, with Catherine Mann preferring a 50-basis-point hike. Governor Andrew Bailey said there was a case for another quarter-point hike if the war continued. UK construction PMI fell to 43.6 from 46.1, missing the 46.4 forecast. GBP/USD reached 1.3506 before easing back to 1.3481.

Federal Reserve officials favour a gradual approach to rate hikes as Treasury yields decline. Cleveland Fed President Beth Hammack said policy needs to become restrictive to bring inflation back to 2% and favoured smaller, more frequent rate increases. Richmond Fed President Tom Barkin described policy as roughly neutral and also favoured a gradual pace of hikes. He said he sees little sign that inflation is coming down and noted that firms are still looking to pass on higher costs.

On the data front, initial jobless claims fell to 189K versus 196K expected and a revised 195K previously. Continuing claims rose to 1.718 million from a revised 1.695 million. Third-quarter nonfarm productivity rose at a 3.6% annualized pace, while unit labour costs fell 0.7%. The next test comes Friday at 8:30 a.m. ET with the October employment report.

Treasury yields moved lower across the curve, with the biggest declines at the short end. The 2-year fell 9.2 basis points to 4.489%, the 5-year fell 7.8 basis points to 4.610%, the 10-year fell 5.7 basis points to 4.835%, and the 30-year fell 2.8 basis points to 5.252%. In Europe, Germany’s 10-year yield fell 3.1 basis points to 3.248%, while Italy’s rose 4.5 basis points to 4.364%. That widened the Italy–Germany spread by about 7.6 basis points.

The US dollar was mixed. USD/JPY fell to 157.75, near its session low of 157.68, and USD/CHF slipped to 0.8148. EUR/USD edged up to 1.1236. The Australian dollar took the biggest hit among the majors shown, with AUD/USD down 0.76% at 0.6951, near its 0.6949 session low. NZD/USD fell to 0.5611, while USD/CAD edged up to 1.3984.

Spot gold rose 1.20% to $4,109.17 as T reasury yields fell. Silver gained 0.29% to $52.40, while copper fell 2.29% to $6.2820. WTI crude rebounded 2.66% to $90.46. Bitcoin was down 5.56% at $75,960, trading more like the Nasdaq than gold in this session.

For the rest of the US session, traders will watch whether the Nasdaq bounce can get some help from the Dow and the Russell. Both are still leaning on their lows. A break below those lows would put sellers back in position to extend the move.