Despite the Dow reaching an all-time high, the ongoing correction of AI and Mega Tech is adding volatility to the S&P and NASDAQ. This morning, the NASDAQ is down 1.1%, the S&P 0.6% while the even-weighted S&P is down only 0.1%. This is being led by semiconductors down 1.7%, with the Magnificent 7 down 1%. NVIDIA is down 3% this morning and is now up only 0.5% for the trailing month, while semiconductors are up 3%. This is making NVIDIA’s earnings next week more important than ever. A robust outlook by CEO Jensen Huang is key to a strong year-end for the stock market. The market is hungry for economic data now that the government is reopened. Non-government-supplied data is showing a fairly ugly employment market, with low hiring and large layoffs. This may be skewed by all the government employees furloughed during the shutdown. While a weakening employment picture should push the Fed to cut in December, there may be inflation concerns that give them pause. Food costs continue to rise, though falling housing costs may offset this. But no one is forecasting a move close to the Fed’s 2% target. Longer term, the sustained deflation in China should put downward pressure on global inflation. The US Treasury market is moving in the wrong direction today, with the 2-year yield up 3 bps and the 10-year +2 bps. Bets on a quarter-point Fed cut in December have fallen below 48%. This is happening while Trump is hailing the end of QT (Quantitative Tightening) and calling for an immediate launch of QE (Quantitative Easing). The market isn’t buying this will occur, but it may come to pass when Powell is replaced next spring. Gold and silver both traded higher overnight, but have pulled back after interest rates rose and stocks fell. Nevertheless, gold is up 5% in the trailing week, silver +10%. Copper is modestly higher today, up 3.5% in a week. Crude oil remains below $59/bbl, but natural gas is up 2.2%, +7.7% in a week. Gasoline is up 7% in a month, adding to inflation concerns. The energy sector is up 1% today, +5.9% in a month, as it is seen as undervalued with low P/Es. Crypto remains under pressure with Bitcoin at $101.2KIt’s a defensive day with only healthcare, consumer staples, and energy in the green. The news isn’t helping with Verizon (VZ) just announcing a 15K layoff and Disney (DIS) reporting a revenue miss and mixed earnings, sending the shares down 9.7% (-5.4% YTD). The VIX has risen above 19. The year-end rally continues to look for footing.