It’s a split session so far, with the Dow and small caps, represented by the Russell 2000, moving higher while the Nasdaq lags as the tech consolidation extends. Treasury yields are falling sharply despite higher oil prices and a hotter-than-expected September producer price report.

Under the hood, seven of eleven sectors are in the green, led by Health Care (XLV) as investors rotate into traditional safe havens, with Eli Lilly (LLY) out in front after releasing new data on its Omvoh treatment for ulcerative colitis and Crohn’s disease. Materials (XLB) are the runner-up, with strength in gold miners as gold and other metals climb, as well as strength in building materials and coatings names as yields fall. Energy (XLE) is the biggest laggard despite higher WTI crude, with pipeline and refining names such as Williams (WMB) and Valero (VLO) sliding. Technology (XLK) is being weighed down by hardware and chip names such as Dell (DELL), Lam Research (LRCX), and Advanced Micro Devices (AMD) as pressure on the AI trade persists.

Taiwan Semiconductor (TSM) topped third-quarter estimates on AI-driven demand for high-performance computing and guided fourth-quarter revenue above expectations, citing the ramp of its 2-nanometer technology. Despite this, shares are trading lower amid the broader chip sell-off and a dip in gross margin tied to that ramp.

Economic Data

The Philadelphia Fed Manufacturing Index fell from 37.8 to 20.9 in October, missing consensus of 28.4 but remaining in expansion territory. Meanwhile, the future activity index fell to 33.0 from 52.9, its lowest reading since January. Around 51.4% of respondents expect an increase in activity over the next six months. In terms of the underlying components, new orders fell by 24.9 points, shipments dropped by 12.4 points, and employment slipped by 2.7 points, while prices paid eased by 5.4 points and prices received rose by 8.8 points to their highest level since May 2025.

The Empire State Manufacturing Index jumped 17.9 points to 25.5 in October, its highest level in nearly five years and well above the forecasted 10.3. New orders surged 21.2 points to 23.2, and shipments climbed 16.3 points to 13.1, while employment continued to rise modestly. Prices paid eased 3.6 points to 59.5, and prices received edged up 2.5 points to 30.6, both remaining elevated. Meanwhile, the six-month outlook index fell 8.0 points to 21.0 as optimism moderated.

Retail sales rose 0.8% M/M in September, beating the 0.3% consensus, and August was revised upward to a 1.3% gain from 1.1%. Excluding autos, sales rose 0.9% versus the 0.5% forecast, though much of the strength came from a 6.4% jump at gasoline stations, as sales excluding autos and gas rose just 0.2%. The control group, which feeds into GDP, rose only 0.1% versus expectations of 0.3%. Furniture stores, restaurants and bars, and health and personal care stores also saw gains, while miscellaneous retailers, building materials, and sporting goods declined.