Wall Street is attempting to find its footing Monday after last week’s historic AI-driven rout, with futures pointing to a modestly higher open — though the bond market is closed for the Veterans Day holiday, leaving equities to navigate without the usual fixed-income signals.
The S&P 500 posted its worst single-day loss in over two years last Thursday, shedding 4.36% as investors fled AI and semiconductor names after Democrats swept both chambers of Congress, raising fears of tougher regulation, higher taxes on tech giants, and a slower AI buildout. The Nasdaq cratered 5.52% — its deepest one-day drop in 19 months — and officially entered correction territory, down more than 10% from its October 6 record high. An estimated $3 trillion in market value evaporated in a single session.
By Friday, the panic had cooled — but only somewhat. Chipmakers like Nvidia rebounded more than 7%, and the Nasdaq clawed back 1.33%. But the Dow shed another 0.87%, dragged down even as the October jobs report delivered a staggering upside surprise: 165,000 new jobs versus the 65,000 consensus expectation.
The strong payroll number pushed rate-hike expectations sharply higher. Markets now price a 77% probability that the Fed will raise its benchmark rate by a quarter point at the December 8–9 meeting, up from around 67% before the jobs data landed. The current target range sits at 3.75% to 4.00%; another hike would push it to 4.00–4.25% — the highest since 2007.
Oil Collapses, Offering a Silver Lining
One unambiguous piece of good news: crude oil is in freefall. West Texas Intermediate dropped 3.67% on Monday to $87.43 per barrel, extending last week’s 12.8% plunge. Brent crude shed 4.63% to $93.77. The catalyst is diplomatic momentum toward ending the Iran conflict — President Trump signaled last week that further strikes were “highly unlikely” if negotiations progress, and Iran has indicated openness to talks. The EIA’s latest Short-Term Energy Outlook still forecasts Brent averaging $96 per barrel in Q4 2026, but a rapid peace deal could drive prices considerably lower.
For American consumers staring down 3.7% year-over-year inflation, cheaper gas is about the only unambiguous win on the board right now. Gasoline futures are down 18.27% over the past month.
The Week Ahead: CPI Is the Main Event
Tuesday morning brings the October Consumer Price Index — and it’s the most consequential data point of the week. Economists expect the pace of inflation to slow markedly from September’s hot print:
- Headline CPI: +0.2% month-over-month (vs. +0.6% in September)
- Core CPI (ex-food and energy): +0.2% MoM (vs. +0.3% in September)
- Year-over-year headline: 3.8% expected (down from 3.7%… actually current is 3.7%, forecast ~3.8-3.9%)
The Cleveland Fed’s inflation nowcast points to headline CPI at 3.88% YoY and core at 2.77% — neither would be the decisive disinflation signal the Fed is looking for. If CPI comes in hot, the December rate hike becomes a near-certainty. If it cools significantly, the debate reopens.
Friday brings the Producer Price Index, with consensus expecting a sharp deceleration from September’s alarming +1.3% MoM to a more manageable +0.3%. Core PPI is also expected to ease to +0.3% MoM from +0.7%.
Today’s Data: Wholesale Trade and Inflation Expectations
Monday’s calendar is light but not empty. Wholesale inventories for September (10:00 AM ET) are expected to rise 0.6%, matching the prior month’s pace, while wholesale sales — up 1.8% in August — get their September reading. The New York Fed’s Survey of Consumer Expectations drops at 11:00 AM, with median one-year-ahead inflation expectations last pegged at 3.9%. A move above 4% would rattle an already jittery bond market (when it reopens Tuesday).
Atlanta Fed’s GDPNow model currently estimates Q4 growth at a robust 3.4%, though that figure hasn’t yet incorporated any drag from last week’s market turmoil or the tighter financial conditions it implies.
Markets at a Glance (Monday open)
- S&P 500 futures: +0.42% to 7,412
- Nasdaq 100 futures: +0.20% to 27,067
- Dow futures: +0.79% to 51,701
- WTI crude: $87.43/bbl (-3.67%)
- 10-year Treasury: Bond market closed
- Fed rate hike probability (Dec): 77%
Bottom Line
Last week’s selloff was a regime-change moment — not just a rotation but a fundamental repricing of AI risk as Democrats prepare to govern with expanded majorities. Friday’s partial bounce showed the market isn’t in freefall, but the recovery is fragile and entirely dependent on this week’s inflation data. A cool CPI print on Tuesday could reignite the rally; a hot one would validate every fear that sent traders running for the exits last Thursday. Add in a 77% probability of another rate hike in December, and the path forward is narrow. The AI trade isn’t dead — but it’s suddenly competing with peace dividends, inflation anxiety, and a Fed that’s not done tightening.