Markets Tremble Over Planned China Chip Restrictions, Trump's Election Odds Rise, CrowdStrike Triggers Gl

In a week packed with global breaking events, both the S&P 500 and the Nasdaq 100 indices marked their worst weekly performance in three months, predominantly driven by a broad-based selloff in chipmakers.

A a drop in major equity averages at the end of the week might have escalated significantly if last weekend’s events in Butler, Pennsylvania, had not ended as they did. During a Donald Trump rally, a sniper attempted to assassinate the Republican candidate, narrowly grazing his ear but missing a potentially fatal target.

According to prediction markets, the betting-implied odds of a Trump victory spiked to 75% before dropping to 65% on Friday as Kamala Harris gained traction over Biden.

A black Wednesday hit the semiconductor sector after reports the the U.S. administration is considering accelerating export restrictions if companies continue to ship advanced chips to China. This move mainly targets the Dutch chipmaker ASML Holding N.V. (NASDAQ:ASML) and the Japanese Tokyo Electron.

On Friday, a global tech outage triggered by a CrowdStrike Holdings Inc.‘s (NASDAQ:CRWD) software update affecting Microsoft Corp. (NYSE:MSFT) systems sparked worldwide disruptions among airports, banks, stations, ports, media companies and service-related businesses.

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Powell Lays Groundwork

Fed Chair Jerome Powell affirmed that recent inflation reports have boosted confidence toward the 2% target, a key condition for lowering interest rates. Investors increased their wagers on a September rate cut move, with CME Group's FedWatch tool showing 100% odds for a cut that month after retail sales data showed stagnation in June.

Unemployment Claims Rise

Unemployment claims rose more than expected last week, with new claims reaching 243,000 and continuing claims hitting 1.867 million, the highest since November 2021. This increase reinforces hopes for Federal Reserve rate cuts as signs of a cooling labor market emerge.

Mortgage Rates Drop

Anticipation of Federal Reserve rate cuts has lowered 30-year fixed mortgage rates to 6.87%, the lowest in four months. The improvement in borrowing conditions led to a 3.9% rise in mortgage applications and a 15% increase in refinancing demand last week, with latter soaring to the highest levels in nearly three years. Experts predict a Trump reelection could spark a significant refinance boom and record home sales.

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Goldman Sachs Turns Bearish On Chipmakers, Advises To Hedge Through Put Options: China Remains ‘A Major Risk For The Sector’

Image created using artificial intelligence via Midjourney.

ASMLASML Holding NV

$1480.130.13%

Overview

CRWDCrowdStrike Holdings Inc

$378.90-0.03%

MSFTMicrosoft Corp

$371.700.22%

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Markets Tremble Over Planned China Chip Restrictions, Trump's Election Odds Rise, CrowdStrike Triggers Global Tech Outage: This Week In The Market