The Overnight Bounce Picked Thursday's Losers

Thursday's selloff reached every sector. The S&P 500 fell 4.4% and the Nasdaq 5.5%, leaving the Nasdaq in a correction. The Philadelphia Semiconductor Index lost 12.3%.

Overnight trading ran the ranking in reverse. Nasdaq-100 futures were up 1.4% and Dow futures down 0.9%. S&P 500 futures were up just 0.3%. Micron (MU) and AMD (AMD) were each indicated about 8% higher. Microsoft (MSFT) and AppLovin (APP), two of Thursday's better performers, were lower.

Bonds held most of their gains, with the 10-year near Thursday's 4.84% close. The VIX eased to about 26.7 from 28.18.

Bitcoin held near $76,000 while two miners stepped back from it. Keel Infrastructure (KEEL), formerly Bitfarms, sold its entire bitcoin treasury last quarter and now sells what it mines daily. Core Scientific (CORZ) said it expects to exit mining by year-end.

Market Implication

Overnight trading flipped Thursday's ranking while barely moving the broad market. Buying the hardest-hit chipmakers while selling the names that held is how a pair gets unwound. Fresh buying would lift both sides.

That makes the Nasdaq-100's premarket gain a weak read on appetite for risk. If Micron and AMD keep their gains while Dow futures stay lower, traders are still closing positions, not opening new ones.

Asia's Chip Exit Started Before The Vote

Japan's Nikkei closed down 6.0% Friday. Korea's Kospi fell 6.0%, a day after losing 5.3%, and a circuit breaker paused trading. Taiwan's Taiex fell 4.5% and ended the week down 12.2%.

Thursday's drop coincided with investors weighing the Nov. 3 election results. The flows started earlier. Foreign investors pulled a record $31.8 billion from Taiwanese stocks in October, the Institute of International Finance said. Korean stocks lost $14.6 billion.

Structural Setup

The illusion is that one vote started the selling. The vote came two days before Thursday's drop, and October's record outflows show foreign holders were cutting Taiwan and Korea well before it.

That makes foreign flows in Taipei and Seoul a better gauge than any one-day bounce of whether the exit is finished. If Taiwan and Korea keep losing foreign money at October's pace, the chip trade is still being unwound, whatever New York does.

Tech Fell Together. Overnight, It Split.

Cloudflare (NET) fell 8% Thursday as technology stocks sold off. After the close it reported revenue up 39% to $782.5 million, its fastest growth in nearly four years. It raised its full-year forecast to about $2.96 billion, above the $2.87 billion analysts expected. The stock was indicated about 20% higher.

Atlassian (TEAM) also beat estimates and raised its full-year targets. Its subscription growth forecast rose to about 18.5% from 18%, still well below the 23% it just reported. The stock was indicated about 14% lower.

Airbnb (ABNB) was up about 12% after reporting 19% revenue growth and adding a $12 billion buyback. Lam Research (LRCX), down 16.4% Thursday, was up about 11% after approving a $25 billion repurchase plan.

In private markets, Isomorphic Labs, the drug-discovery company backed by Alphabet (GOOGL), is in talks to raise about $5 billion at a valuation near $50 billion, Bloomberg reported this week. It has no drug in human trials.

Sector Read

On Thursday, technology traded as one block, and Cloudflare and Atlassian fell together.

Overnight they traded more than 30 points apart, though both beat estimates and raised their year. Cloudflare's growth is running at its fastest in nearly four years, while Atlassian's subscription forecast sits well below its latest quarter.

A sector hedge stops covering single-stock risk once the direction of growth, not the quarter, sets the gap between two names. If Cloudflare keeps its gain while Atlassian stays down through the session, company guidance is setting prices faster than group selling can.

The 10-Year Auction Lands On CPI Day

Treasury set next week's borrowing when yields were higher. It sells $125 billion of notes and bonds at unchanged sizes, including $42 billion of 10-year notes Tuesday, the same day as October consumer prices.

The 10-year fell about 6 basis points Thursday as stocks slid, closing at 4.84%. It was above 5.30% last month.

CME FedWatch put a December hike near 70% Thursday, from about 83% on Wednesday, as stocks fell. Fed officials have not moved with it. Cleveland Fed President Beth Hammack said Thursday that policy needs to turn restrictive. New York Fed President John Williams said this morning that inflation is "absolutely too high," and that this is the time to gather more information.

Watch Signal

Supply matters more now that part of the bond rally arrived on a stock selloff. Demand that shows up on a risk-off day can leave when stocks steady, while Treasury's $125 billion arrives on a fixed schedule. Pairing the 10-year sale with the inflation report puts both tests in one session. If that auction clears weakly after a firm inflation print, yields near 4.84% lose the buyer who just set them.

DraftKings Priced A Future Without Sports Contracts

DraftKings (DKNG) was indicated about 19% lower. It cut its 2026 adjusted EBITDA forecast to $175 million to $275 million. The company said the cut mainly reflects $650 million to $700 million of spending on Predictions, its prediction-market business. It plans another $250 million to $350 million next year.

The less obvious number sits in its own downside case, which models sports event contracts ending in July 2028. This year's customers would still pay back before then. Next year's would take 41 months to pay back instead of 18.

Prediction markets are fighting state gambling regulators in several courts. Chief Executive Jason Robins wrote that DraftKings is in "a win-win position no matter how any future court ruling plays out." For scale, Robinhood (HOOD) said its event contracts brought in $173 million last quarter, more than the $120 million it earned from crypto.

The Read

The premarket drop followed this year's profit cut. The larger exposure is next year's spending, underwritten to an 18-month payback that stretches to 41 months in the company's own downside case.

By DraftKings' math, this year's customers are covered either way, so next year's are the ones a court ruling can reach. If courts narrow sports event contracts before July 2028, the $250 million to $350 million planned for next year carries the risk.

Economic Data: October payrolls, with about 65,000 jobs expected and unemployment at 4.2%. Preliminary University of Michigan sentiment. Next week: October consumer prices Tuesday, and the bond market is closed Wednesday for Veterans Day.

Fed Speakers: St. Louis Fed President Alberto Musalem and Vice Chair for Supervision Michelle Bowman. New York's John Williams spoke this morning.

Earnings: Humana (HUM) has reported. Vistra (VST), Charter (CHTR) and Moderna (MRNA) are due today. DraftKings holds its call this morning.

Overnight: Kospi -6.0% | Nikkei -6.0% | Shanghai -1.1% | FTSE -2.2% | DAX -1.8%

Payrolls give the first clean read. If a print near 65,000 lifts December hike odds back toward 83% while Micron and AMD keep their gains, Thursday was a positioning flush. If the odds stay near 70% after a firm number, traders are pricing the Fed off stock prices, and Tuesday's 10-year auction inherits that doubt. One print, two readings.