Technology stocks plummeted on Thursday as traders assessed the implications of a Democratic sweep in the US midterm elections for cloud data centers and the broader artificial-intelligence buildout. The Nasdaq 100 fell 6.24 percent in one account and 4.5 percent in another, while an exchange-traded fund tracking US-listed semiconductor stocks dropped more than 12 percent, extending losses from Wednesday. The Dow Jones Industrial Average declined 2 percent and the S&P 500 Index fell 3.7 percent, with a separate reading putting the broader index down 3 percent. An 8.5 percent plunge in a gauge of chip giants put the group on track for its worst week since the April 2025 tariff meltdown. Nvidia Corp. slid 7 percent. Qualcomm Inc. and Arm Holdings Plc sank on underwhelming outlooks. Tesla Inc. and SpaceX each lost over 7 percent, with Tesla falling as much as 10 percent shortly after the open and SpaceX declining 9.2 percent. Bitcoin fell 4.5 percent.
The rotation out of technology stocks, the group that has powered a four-year bull run in US equities, came amid growing worries that a Democratic sweep of Congress could bring tighter regulation of US data centers and weigh on semiconductor demand. Democrats took control of the Senate and House of Representatives in Tuesday’s midterm elections and are set to put closer scrutiny on Silicon Valley interests that had largely been spared during President Donald Trump’s first two years in office. The threat is that policymakers turn up the heat on computing hubs essential to AI, slowing the infrastructure buildout and hampering the pace of rollouts that major companies are counting on to boost their bottom lines. Disappointing reactions to earnings from Arm Holdings Plc and Qualcomm Inc. added to the selling pressure. Defensive sectors such as consumer staples, utilities and health care advanced, with consumer staples and utilities stocks gaining at least 1 percent. The S&P 500 Energy Index gained 1.2 percent as Brent crude jumped to trade near $97 a barrel and West Texas Intermediate edged above $89 after falling the most since May in the previous session.
Gina Hinojosa becoming Texas governor is viewed as a worst-case scenario for data center developers, who had already been contending with a suspension of approvals under Greg Abbott. As part of her campaign, Hinojosa had repeatedly called for an immediate moratorium on data center development. “The market is starting to discount that there could be more anti-data center regulations coming from the biggest state for data centers,” said Ohsung Kwon, chief equity strategist at Wells Fargo, referring to Texas. The elections reinforced growing opposition to data centers, particularly in Texas and Ohio, where incoming Democratic governors favor tougher development conditions. Statewide moratoriums have struggled to become law, according to Jordan Jackson and Stephanie Aliaga at JPMorgan Asset Management. “Whether AI adoption remains constrained by energy scarcity, or enabled by energy abundance, may come down to how these negotiations shape up and whether Congress passes permitting reform,” they said. “We expect that the AI boom will remain on track, but may become costlier, slower and more consolidated in the coming years.”
The data-center slowdown due to the political shift is going to be real, and the earnings estimates behind the valuations that were the cornerstone of bullish arguments are no longer valid, according to Michael O’Rourke at JonesTrading. “Investors have no idea where those estimates will reset,” he said. “As a result, they are de-risking until clarity returns, which won’t be for some time.” “The rotation out of chipmakers reflects growing concern about the pace and funding of AI spending due to the risk of more regulations after the blue wave, even as earnings remain resilient and valuations have reset sharply,” said Chris Murphy at Susquehanna International Group. The AI trade is here to stay, but it remains volatile, and investors should not overlook some of the more boring areas of the market, according to Bob Edwards at Edwards Asset Management. “We are not concerned about what the blue wave means for the buildout of AI, since the president still has the veto pen and data centers bring jobs and tax revenue,” he said.
Traders cautioned against interpreting the broader market moves as a fundamental shift in investor preferences. To JPMorgan’s equity derivatives team, the rotation looks more like positioning-driven versus a true fundamental rotation. “I am not seeing customers flipping long or chasing the laggards higher,” Christina Jones at JPMorgan wrote in a note. “To me, the only pocket of the market where there is some true rotation going on is within Technology, Media and Telecommunications.” Jones added that there is a clear propensity to own quality large caps, specifically those with clear access to financing and owners of compute, for instance some of the hyperscalers. “We’re looking at everyone coming down and saying, okay, let’s dig into the weeds a little bit and see what this really means,” Victoria Fernandez, chief market strategist at Crossmark Global Holdings, said on Bloomberg Radio. “It’s these neo clouds that are getting hit so hard. The hyperscalers continue to do a little bit better, but I think people are starting to read into the element that has been supporting our economy for so long now may have to take a step back.”
On the economic front, weekly jobless claims fell below all estimates, Labor Department data show. Investors will be looking to the US payrolls report on Friday for more clues on the path for interest rates. Federal Reserve Bank of Cleveland President Beth Hammack said Thursday rates need to be restrictive to bring inflation to the central bank’s target, and more frequent moves can reduce the risk that policy falls behind. Meanwhile, the broader market may find support from favorable seasonal trends following the midterm elections. The S&P 500 has averaged a 15.5 percent price gain in the 12 months following outcomes since 1954, rising in every one of the 18 instances, according to Goldman Sachs Group Inc. “Since 1952, the 12 months after a midterm election have been the strongest stretch over the four-year cycle for the S&P 500,” Goldman strategist Ioannis Blekos wrote in a note. In fact, trading desks across Wall Street are encouraging investors to boost their exposure to US stocks on bets of a year-end rally post midterm elections. Earnings results have also been upbeat as the season approaches its final stretch, with about three-quarters of the S&P 500’s market value having reported results. So far, 84 percent of companies have beaten earnings estimates, while 12 percent have missed.
In single stocks, Sunrun Inc. shares rose 3.1 percent after the solar company reported third-quarter revenue that beat the average analyst estimate. Cava Group Inc. sank 12 percent on concern the Mediterranean chain’s momentum is slowing despite the popularity of new dishes such as salmon bowls and barbecue pita chips. AppLovin Corp. shares soared 29 percent after the mobile-app marketing company’s third-quarter results beat expectations and it gave an outlook that is above the analyst consensus estimate. Apple Inc. plans to raise about $7 billion from an investment-grade bond sale, adding to a flurry of tech issuance. In a rush for safety, defensive industries like consumer staples and health care outperformed, but that was not enough to lift the S&P 500. The swoon in tech shares also lifted bonds despite a rebound in oil prices. Haven currencies including the yen and the Swiss franc rose.
Musk Empire and Chipmakers Absorb the Sharpest Hits
Shares of Elon Musk-led companies plunged Thursday, deepening a rout that began after Democrats outperformed in the US midterm elections, as investors worry the billionaire’s efforts to expand his business empire will be stymied. Since Tuesday’s election results, Tesla and SpaceX shares have lost more than $430 billion from their combined market values. The declines come amid a wider market meltdown on Thursday that is hitting AI companies, chipmakers and technology stocks the hardest, with the AI trade quickly unwinding. “Tesla and SpaceX are just a 2-for-1 special as the market attempts to re-price the risk of a material slowing in data center buildouts,” said Joe Gilbert, portfolio manager at Integrity Asset Management. “Momentum is a powerful thing that cuts both ways and there is a rush to the exits in tech until we see some kind of bottoming.” Investors broadly have been closely watching the results in Texas—where both companies are based—amid concerns that a Democratic win will lead to tighter regulations around artificial intelligence. On Tuesday evening, Democrats seized key positions in Texas. The party’s sweeping win in both chambers of Congress adds another layer of risk as many worry that Democratic majority might mean more uncertainty over a potential merger between Tesla and SpaceX.
The cost to protect SpaceX debt against default hit a record high Thursday, extending a move sparked by US election results that raised political risks for Elon Musk’s Texas-based companies. Five-year credit default swaps on SpaceX, the aerospace and space technology company, widened as much as 14.6 basis points to 284.3 basis points a year, according to ICE Data Services. The risk gauge’s most recent high was set on Oct. 30. The move contrasts with tightening in the CDS of hyperscalers since the midterm election sweep by Democrats, including wins in Texas’s gubernatorial and Senate races. Debt investors in big tech stand to benefit from a slowdown in artificial intelligence development if the pace of borrowing slows. “Tougher permitting, grid-cost rules and local opposition could slow the next buildout wave,” Bloomberg Intelligence credit analyst Robert Schiffman wrote in a Thursday note. That “would support credit by curbing capital intensity and external funding needs,” he added. Market watchers warned ahead of the election that a Democratic rout could strengthen the party’s ability to scrutinize Musk’s conduct and impede an anticipated tie-up between SpaceX and Tesla. He is chief executive officer of both firms, which lost a combined $130 billion of market value on Wednesday. SpaceX said last week it signed a roughly $40 billion equipment-finance lease with Apollo Global Management Inc. to pay for chips to fuel its AI ambitions. Banks are in talks to start selling portions of the funding, according to people familiar with the matter.
Qualcomm Inc. shares tumbled by the most in almost six months after the company gave a lackluster profit forecast, a sign the largest maker of smartphone processors is still grappling with higher component prices. Earnings will be $2.15 to $2.35 a share in the three months ending in December, the company said in a statement Wednesday. The midpoint of that range fell short of the $2.32 estimated by analysts on average, according to data compiled by Bloomberg. In delivering the forecast, Qualcomm cited a “broad-based increase” in costs for components and manufacturing. Like many chipmakers, the company is dealing with higher expenses caused by shortages in its own supply chain and a dearth of memory chips—largely fueled by the surge in demand for data center equipment. Qualcomm is raising its own prices to cope with the crunch. The shares plunged as much as 14 percent to $149.08, their biggest intraday decline since May 12. If the decline holds through the close of trading it would be its worst day since 2020. The outlook overshadowed a robust quarterly sales forecast, which was lifted by a push into new markets. Revenue will be $10.4 billion to $11.2 billion in the period, Qualcomm said. Analysts had projected $10.55 billion.
On the bright side, demand from manufacturers of vehicles and data center gear is helping make up for a slowdown in the smartphone market. Phone suppliers, which remain Qualcomm’s biggest customers, have scaled back production as they deal with soaring prices of memory chips and other components. Arm Holdings Plc, another chip company heavily reliant on the smartphone market, delivered its own mixed results on Wednesday. Though the company’s forecast met analysts’ estimates, investors were looking for a bigger payoff from a push into AI computing. Its shares slipped about 1 percent on the news. Both companies expect the smartphone industry’s shipments to flatten out next year. Qualcomm’s sales fell 8 percent to $10.3 billion in the fiscal fourth quarter, which ended Sept. 27. Earnings came in at $2.17 a share. Analysts had estimated revenue of $10.1 billion and profit of $2.16 a share. Chief Executive Officer Cristiano Amon has been pushing into categories such as personal computers, vehicles, networking and—most recently—data centers. Qualcomm has announced large customers for technology used in AI computers, arguing that its experience making power-efficient devices gives the chipmaker a unique offering. But investors have remained cautious, leaving the stock down in recent months. Qualcomm has been dogged by concerns that new revenue won’t arrive soon enough to make up for the slump in its main business. Earlier Wednesday, Qualcomm’s push to diversify its customer base got a boost from SpaceX, which plans to use the company’s components in a nationwide terrestrial wireless network. For now, the phone market remains a burden on Qualcomm’s results. Revenue from the segment tumbled 26 percent last quarter to $5.14 billion. Analysts projected $5.25 billion. Internet-connected devices generated sales of $1.89 billion, up 4 percent, while revenue from the vehicle electronics market grew 89 percent to $2 billion. Both figures beat estimates.
Republican Leadership Fractures Open Path for 2028 Contenders
The Republican Party’s generational collapse in this week’s midterm elections ushered in a wave of finger-pointing largely aimed at the Oval Office, exposing deep fissures within the party and opening the door for 2028 hopefuls to hone their message. Vice President JD Vance, the GOP’s presumed frontrunner, on Wednesday distanced himself from both President Donald Trump and the war against Iran. He blamed the party’s defeat on the war, the cost of living and US-Israel ties, saying the conflict cost his party the Senate for at least six years. To those who are angry and “want to say, ‘I told you so,’” Vance wrote in a lengthy social media post, “you’re right, you did tell us so.” Florida Governor Ron DeSantis, who has downplayed his interest in the 2028 race, seized on his state’s status as a rare, moderate bright spot for Republicans to position himself as the party’s rightful heir. “Let’s just be clear about what happened last night—this is close to an extinction-level event for Republicans in many parts of the country,” DeSantis said at a news conference. After polls showed voters ranked government corruption near the top of their list of concerns, DeSantis demanded that Congress outlaw stock trading by lawmakers—and extend the prohibition to the executive branch. It was hard to view the comment as anything other than a jab at Trump, who made tens of thousands of securities trades during his first year in office, according to financial disclosures. The White House has said Trump’s investments are independently managed and there is no conflict of interest. A person familiar said DeSantis’ campaigning for his successor, Florida gubernatorial candidate Byron Donalds, helped him boost his own standing after his presidential hopes flamed out in the 2024 GOP primary. The person cast DeSantis as still popular with his state’s Republicans even amid the broader midterm turmoil.
Senator Ted Cruz of Texas, another possible Republican contender in 2028, cast the election as a historic repudiation triggered by a backlash to tariffs, the Middle East war and unfettered data center construction. “We need to listen and respond. We need to champion economic policies that make a real difference in working people’s lives and we need to deal with the consequences,” Cruz said on his podcast. “Texas is blue.” Wednesday’s events marked the opening salvos in the coming fight over how Republicans will rebuild their party ahead of the next election. After a decade of Trump controlling the GOP with an iron grip, the early signs show the next generation of leaders will look to shape it in a different image. Other longtime GOP figures offered an I-told-you-so message. Senator John Cornyn of Texas wrote in a Wall Street Journal op-ed that Republicans made a series of “unforced political errors,” including being told to embrace scandal-plagued nominee Ken Paxton, who defeated him in a primary race. Mitt Romney, the GOP’s 2012 presidential nominee, slammed candidates’ embrace of Trump’s tariffs, “impulsive” war and “apparent corruption,” among other missteps. “Bad policy, bad character make bad politics,” he posted on X. “Hoping for a course correction, for the country and for my party.”
Trump, for his part, held court at the construction site of the White House ballroom on Wednesday, a sign he’s unlikely to radically shift his focus away from controversial pet projects during his final two years in office despite voters rendering a damning verdict of his leadership. Taking questions from reporters, Trump downplayed the results and the notion that there’s any tension with Vance. He also denied a CBS News report that he was quizzing allies on ousting Defense Secretary Pete Hegseth. “No, I think he’s doing a very good job,” Trump told reporters. The White House responded to a request for comment by referring to Trump’s earlier remarks to reporters. The president has publicly dismissed the likelihood of a major staff shakeup in his administration. One person familiar with his thinking, who requested anonymity to discuss internal dynamics, said Trump isn’t in the mood to make big changes, saying there was no ketchup being thrown at the wall—a reference to testimony that Trump hurled his lunch in the aftermath of his 2020 election defeat. The president denied at the time that he did such a thing. Still, several lower-level staff are ready to leave their posts, the person said. Some Trump allies continue to speculate about the future of White House Chief of Staff Susie Wiles, though the president previously said she will “be here for a long time.”
The Tuesday election dealt an unrelenting series of blows to the Republican Party. It lost at least seven Senate seats and Democrats are expected to gain their biggest margin in the House of Representatives since the post-Watergate period in the 1970s. Republicans lost in deeply conservative states, including Texas, South Carolina and Kansas, and were swept in other battlegrounds. In total, Democrats will control at least 54 Senate seats and are expected to end up with 258 House members, compared to 177 for Republicans, according to NBC News. In the wake of the defeats, Speaker Mike Johnson intends to step down as the top House Republican next year, kicking off a fractious leadership contest. The blast radius amounted to something of a worst-case scenario for Vance. The Ohio native campaigned heavily in that state, along with Trump, only to see Republicans lose the gubernatorial race and a Senate special election for the remainder of Vance’s own term. Vance can only distance himself from Trump so much. The vice president now faces the prospect of trying to run for president while tied inextricably to an unpopular leader and after failing to deliver key races on his home turf. “Vice President Vance has a steep hill to climb if he wants to run for president in 2028. Like it or not, this is the Trump-Vance administration,” said Meghan Hays, a former aide in Democratic President Joe Biden’s White House. “They are rejecting the administration’s failed economic policies and do not want more of the same. It’s hard to see what message Vance could run on that would resonate with voters.”
During his several Ohio visits, Vance backed gubernatorial candidate Vivek Ramaswamy’s controversial advertisement that featured Democratic candidate Amy Acton’s estranged mother. The ad sparked widespread backlash and Acton ultimately became the first Democrat to win an Ohio governor’s race in 20 years. “JD Vance will be remembered for standing behind Vivek and his ad. A man who wrote a book about Catholicism. It’s a disgrace,” former New Jersey Governor Chris Christie, who twice sought the GOP presidential nomination, posted on X. While Trump told reporters Wednesday he more or less agreed with Vance’s post on Iran and Israel, he also suggested his vice president might sit out the 2028 race. “Maybe he won’t run. I don’t know who’s going to run,” Trump said. Trump’s fingerprints are also all over the week’s defeats. The president backed Paxton over Cornyn, pushed the party to nominate Darline Graham in South Carolina and backed ally Michael Whatley in North Carolina’s Senate race after incumbent and Trump bête noire Thom Tillis declined to seek reelection. Republicans lost all three seats. Republicans barely hung on to Louisiana, where Trump forced another Senate incumbent to bow out. He also vociferously supported the Ramaswamy ad. Trump’s former acting chief of staff, Mick Mulvaney, said there was no grand plan behind his maneuvers. “It wasn’t a consultant. There was no focus group. It was DJT,” he tweeted Wednesday, referring to the president.
Microsoft Recalibrates Exposure to Struggling Neocloud Operators
Microsoft Corp. helped create the “neocloud” boom, signing tens of billions of dollars in contracts with upstart data center operators in an effort to sate the crushing appetite for its cloud and AI services. Now, as neocloud companies grapple with delays, regulatory snags and high costs, some key Microsoft leaders have developed a case of buyer’s remorse. The company is tightening oversight of some data center projects from Nebius Group NV, IREN Ltd., and Nscale Plc, stepping away from ones it deems risky and debating internally whether to ink new neocloud deals, according to people familiar with the matter. The friction was on display during Microsoft’s most-recent earnings call, when Chief Financial Officer Amy Hood said that delays in the delivery of some third-party capacity was disrupting the company’s spending plans. It was the third time she has called out such issues on an earnings call. Some of the recent hiccups involved issues with cabling at a site in Texas being developed by IREN, according to people familiar with the situation. Data center servers are connected by intricate networks of fiber-optic cables. IREN, an Australian firm that pivoted from cryptocurrency to AI in 2023, also suffered a generator fire at the campus in April and disclosed hardware delivery delays there in August. IREN and Microsoft officials met last week and negotiated a revised timeline that may push back the site’s completion by several weeks or months, according to people familiar with the events. Microsoft manages relationships with infrastructure partners “against our requirements and customer demand, including monitoring delivery and adjusting plans when circumstances change,” a company spokesperson said. “These are normal and responsible practices for managing large, complex infrastructure projects, and they help us bring capacity online reliably and efficiently.” IREN declined to comment. Shares of IREN and Nebius both fell about 20 percent on Thursday amid a broader selloff of AI infrastructure stocks.
It is a perilous moment for the neoclouds, which were created to capitalize on a shortage of computing power by speeding up the deployment of artificial intelligence infrastructure, including chips from Nvidia Corp. Industry analyst Gartner Inc. recently estimated that 80 percent of neocloud providers could be consolidated or closed by the end of the decade. Elon Musk—whose SpaceX also sells computing power—offered a similarly bleak outlook of “guppy-level death” for many neoclouds because they’re struggling to raise sufficient funds to operate. These fears were compounded after a series of victories this week by Democratic candidates for governor, who made more aggressive data center regulation a central part of their campaigns. Texas Governor-elect Gina Hinojosa in particular has called for an immediate moratorium on data center development until more thorough regulation is established. Microsoft was the nascent industry’s most crucial early patron, providing the likes of CoreWeave Inc. and Nscale with massive contracts that let them get big quickly. Even though Microsoft has a huge fleet of data centers, it was willing to pay up to meet demand it couldn’t handle on its own. “We’ve had to pinch our nose and borrow GPUs from some of our competitors,” Microsoft Executive Vice President Mat McBride said of the company’s neocloud deals during a conference hosted by Evercore in June. “We’ve done that because we have a very, very strong demand signal.”
Each week, CFO Hood chairs a meeting about computing capacity—when it’s coming online, from where and which part of the company will get it. A common point of discussion at these sessions is whether the neoclouds’ timelines are credible and what Microsoft can do to accelerate them, according to people who’ve been involved with the meetings. Increasingly, Microsoft is putting boots on the ground. In recent months, the company has dispatched workers to neocloud sites to make sure facilities are being built to its specifications and following regulations, according to job listings and people familiar with the matter. For example, Microsoft sent workers to a Nebius site in New Jersey that was fined $1 million for running generators without permits. Microsoft has also sent people to projects in Texas being built by Nscale and IREN. In other cases, Microsoft is walking away from sites it no longer considers tenable, including multiple Nscale projects. It declined to expand its deal with Nscale in Texas, and some of that capacity ended up being taken by Figure AI. Microsoft also stepped away from a letter of intent to lease 1.35 gigawatts from the company in West Virginia. And last month it cancelled a roughly $3 billion Nscale deal tied to a UK data center owing to multiyear delays in getting grid power, according to people familiar with the deal. Nscale said at the time that the UK withdrawal didn’t impact its other deals with Microsoft. The Information and Financial Times previously reported some details of Microsoft’s IREN and Nscale deals.
Microsoft is currently focused on expanding its own data centers rather than adding new neocloud deals, according to those who’ve spoken with leaders inside the company. The company hasn’t entirely sworn off new neocloud deals, but many company leaders express strong reluctance, the people said. Over the last year, Microsoft has added more than $200 billion of new data center lease commitments. Some of this includes neocloud capacity, according to a spokesperson. All of this spending is being directed toward major expansion of its own server farm capacity in the coming years, Bloomberg previously reported. Buying third-party computing capacity was always controversial at Microsoft. Executives were concerned that even partial outsourcing would help prop up would-be competitors. They also fretted that Microsoft would be exposed to higher costs and execution risks because neoclouds had limited experience building and operating server farms. Some of the competition fears came true: CoreWeave hired a handful of key executives from Microsoft, then did a deal directly with close partner OpenAI last year. This rankled many leaders inside Microsoft, according to employees who were present at the time. A CoreWeave spokesperson said that Microsoft was one of its first partners and collaborators, “and we continue to have a great relationship.” Nebius has been unusually upfront with its competitive strategy. It will scale up by inking contracts with big customers like Microsoft or Meta Platforms Inc. knowing that they’ll abandon neoclouds in the long run, Nebius CEO Arkady Volozh said during a March conference hosted by Morgan Stanley. “We treat this business as temporary,” Volozh said, referring to his company’s deals with customers like Microsoft and Meta. “They just cannot cope with the speed now—that’s why they’re outsourcing.” Meanwhile, demand for computing power remains much higher than supply—and is expected to for the foreseeable future. So even if Microsoft decides not to sign new neocloud deals, Anthropic PBC and Alphabet Inc.’s Google have been accelerating their own commitments to the upstart data center operators.
Paraguay’s Banking Collapse Forces Presidential Exit
Paraguayan President Santiago Peña stepped down Thursday after the collapse of a major commercial bank with ties to his government plunged the South American nation into financial and social turmoil. Regulators seized Ueno Bank SA early Tuesday, freezing the savings of millions of Paraguayans, including pensioners, and sparked widespread protests in a country where roughly one in three people held deposits at the lender. Peña, a key ally of US President Donald Trump, was facing impeachment proceedings. “I do it thinking of the stability of our country, social peace and preservation of our democracy,” Peña said in a video announcing his resignation. The turmoil marks a tectonic shift within the Colorado Party, which propelled Peña to power in 2023. Divided into rival factions, the party has dominated Paraguayan politics for most of the past seven decades. Lawmakers kicked off discussions to impeach the president Thursday morning, when Horacio Cartes—the powerful former president and leader of the ruling Colorado Party, which holds a majority in Congress—publicly backed his ouster. The escalating crisis is weighing on Paraguayan assets. Paraguay bonds dropped across the curve, posting some of the worst performances in emerging markets. Notes due in 2055 were down about 1.8 cent to a session low as of 12:03 p.m. in New York. The country’s currency, the guaraní, fell 5.2 percent to trade at 6525 per dollar. The Trump administration has forged close ties with Peña’s business-friendly government. Last month, Deputy Secretary of State Christopher Landau met with Peña in Asuncion and said Paraguay “plays a very key role in the region” for US diplomacy as Trump seeks to bring Latin America closer. After the visit, Peña flew to Washington and met with Treasury Secretary Scott Bessent to discuss critical minerals and economic cooperation.
Housing Market Reflects Generational Wealth Transfer
First-time homebuyers are not only historically old but also increasingly reliant on family wealth. A record 10 percent of first-time homebuyers paid all cash in the year through June, with 28 percent of those transactions backed by inheritance, according to a report from the National Association of Realtors released Thursday. “The housing market is beginning to see a generational transfer of wealth,” Jessica Lautz, deputy chief economist at NAR, said in a statement. “Because people are living longer, the generation receiving that wealth is no longer young adults.” The median age of first-time homebuyers held at a record high of 40. But these buyers still make up just a fraction of the market. First-time homebuyers accounted for 22 percent of purchases—close to a record low. One in 10 first-time homebuyers used inheritance for their down payment, also a record. A fourth used gifts or loans from family and friends. The figures underscore how elevated home prices and mortgage rates have raised the financial hurdles to owning a home, particularly for younger Americans. Repeat buyers—who saw their home values surge during the pandemic—continue to make up the vast majority of those purchasing homes. Frustration over the inability to buy a home was an issue that drove some voters, like Keith Bullard, to the polls this week. “We can’t save enough money to buy a home because they’re so expensive out here,” said Bullard, a 52-year-old teacher living with his wife in Odessa, Texas. Even when they did find a home within their price range, they were outbid by a repeat homeowner looking to buy and flip the house. Bullard said he voted down-ballot for Democrats this election cycle for the first time.
Defense Startup Shield AI Expands With Major Radar Deal
Shield AI is buying a radar company for $5.3 billion, and raising $2.5 billion in new funding for it, the company plans to announce on Thursday. The new backing, which Shield AI is raising to support the acquisition, includes $1 billion in Series H funding at a $28.8 billion valuation. That’s more than double the valuation the startup struck earlier this year, when it raised $2 billion at a $12.7 billion value in March. The remainder of the $2.5 billion consists of $1 billion in structured equity financing provided by Blackstone Inc. and $500 million in debt from JPMorgan Chase & Co. The defense tech startup, which makes autonomous aircraft systems for militaries, is set to acquire Echodyne Corp., which sells radar sensors to government and commercial customers. The deal includes $4.8 billion in cash and equity, as well as an additional $500 million that is conditional on Echodyne hitting certain milestones, according to Shield. The $2.5 billion financing will be completed when the acquisition closes and won’t proceed if the deal falls through, Shield said. Echodyne is Shield’s fifth acquisition and its second this year. In June, the company bought visual simulation company Aechelon Technology Inc. As Shield supports military operations in regions such as Ukraine and Iran, it’s weighing long-term ambitions to expand into more areas beyond defense like public safety. Founded in 2015, Shield sells an AI-enabled software system to US and allied militaries called Hivemind, which powers aircraft for autonomous missions. It also makes a drone for surveillance and reconnaissance called the V-BAT. This week, the company unveiled its second-ever aircraft design, an autonomous fighter jet called the X-BAT. Chief Executive Officer Gary Steele said at a Bloomberg Tech event in London on Tuesday that Shield plans to conduct its first X-BAT test flight before the end of the year and to start production in 2029 or 2030. The company plans to raise more than $1 billion early next year to fund that production, Steele said. Shield has already committed $200 million to the jet’s development, alongside a $200 million commitment by the US Navy. The startup has surged as venture capital firms pour money into defense tech. Shield AI has raised $5.4 billion in equity capital to date, from backers including Andreessen Horowitz and Point72 Ventures. Bloomberg Beta, the venture firm backed by Bloomberg LP, has also invested in Shield. Shield AI has more than doubled its headcount in the past year to nearly 2,300 employees, Steele said, and expects to more than double its revenue in the current fiscal year ending March 2027. While Shield has some partnerships with commercial entities, the startup has exclusively served government end users to date, Steele said in an interview. Successful operations involving Shield’s technology in countries including Taiwan and India have drawn in more international governments as customers, Steele said, adding that more than half of the company’s current revenue today comes from international markets. The acquisition of Kirkland, Washington-based Echodyne marks Shield AI’s first steps into “dual-use” hardware, Steele said, citing the radar company’s growth in powering counter-drone technologies, including for the US military, as well as its work in commercial security systems. Steele said Echodyne’s tech, and its customer base, will serve as something of a foundation for Shield’s future work beyond military applications. “Think about public safety—whether it’s the Super Bowl or FIFA, just literally every single thing is going to need protection from drones,” he said. He also highlighted commercial aviation as an area of interest for Shield’s future expansions. While President Donald Trump has significantly expanded the US military’s spending on defense technologies in his second term, some have posited that Tuesday’s midterm elections in the US, which saw both the House of Representatives and the Senate flip to majority Democratic Party control, could result in more oversight or even cuts. Steele said at the Bloomberg Tech event on Tuesday morning that Shield wasn’t concerned about how the results of the election might affect its business. “Even with the midterms, I think there will be a common view of what needs to be done on defense,” he said.
Czech Central Bank Delivers Tightly Contested Rate Hike
The Czech central bank raised interest rates for the second time this year in a rare split vote, calling the move monetary fine-tuning. The seven-member board increased the benchmark rate by a quarter of a percentage point to 4 percent on Thursday, with four members backing the move and three dissenters voting for no change. The koruna weakened as much as 0.3 percent against the euro, in line with regional peers, after the tight decision was announced and investors trimmed bets on more tightening. Combined with the rate hike in June, the latest increase was aimed at anchoring inflation expectations and preventing a spillover from higher energy costs into the broader economy, according to Governor Ales Michl. Elevated longer-term market rates are tightening financial conditions, which should help reduce core inflation and stabilize lending growth, he said. “We agreed that we aren’t starting a new cycle of interest rate increases, but we fine-tuned the monetary policy restriction,” Michl told reporters. “We will consider the next step very carefully, we will assess and discuss everything very carefully.” The rate hike defied pressure from Prime Minister Andrej Babis, who won last year’s elections on promises of more affordable housing and has blamed monetary policy for expensive mortgages. Babis repeated his criticism just hours before Thursday’s rate decision, saying the level of official rates is “incomprehensible.” The Czech decision also contrasts with Poland’s, a country seeing faster inflation but where the central bank left the key rate unchanged at 3.75 percent on Wednesday. While Czech headline price-growth slowed slightly in October, it remained above the 2 percent target for a second month. The bank’s new forecast envisages price growth accelerating “temporarily” toward the end of the year and in early 2027, while economic expansion will be slower than previously expected. Czech central bankers, whose sole mandate is price stability, are concerned about core inflation. This measure, which excludes volatile items like food and energy, has already exceeded the 3 percent upper end of the bank’s tolerance range. Domestic price risks are mainly in elevated services inflation, including the housing market, a possible acceleration in money supply caused by increased lending to households and the government as well as continued rapid wage growth related to tight labor market, the bank said. Investors have trimmed bets on further policy tightening following the recent decline in oil prices, with forward rate agreements now indicating expectations of around two additional hikes over the next 12 months. Further rate hikes might not be needed if domestic pressures gradually ease and energy prices decline, but more increases can’t be ruled out if domestic demand stays strong or the Middle East conflict escalates again, according to Dominik Rusinko, chief economist at Prague-based brokerage Patria Finance. “The tightest-possible majority in favor of today’s rate increase, together with the governor’s comments, suggest that the bank board’s willingness to continue with monetary policy tightening is rather limited,” he said.
Infant Health Risks Rise With Rejection of Vitamin K Injections
Parents of newborns in the US are rejecting once-routine vitamin K shots at an increasing rate, and the number of babies who experience the potentially deadly bleeding that it is designed to prevent is on the rise, a new study shows. The proportion of infants who didn’t get the injection rose to 6.8 percent in 2025, more than double the 3.1 percent rate recorded in 2017, according to a study published in the Journal of the American Medical Association. Children who didn’t get the vitamin shot had a significantly higher risk of bleeding by the time they were 6-months-old, including bleeding in the brain and gastrointestinal tract. They were also more than twice as likely to die during birth hospitalizations with bleeding, the study found. The findings come as skepticism is on the rise about long-established public health measures, including vaccination. While vitamin K isn’t an immunization, it is among the shots given during the first hours of a newborn’s life. Some parents, who want a “natural” alternative, reject it over concerns that it won’t benefit their children, is toxic, will cause pain or trigger an allergic reaction, according to researchers led by Kevin Dysart, who’s from the Children’s Hospital of Philadelphia’s division of neonatology. “These are real numbers of children who are impacted by a bleed of some sort who also had not received vitamin K, and that’s pretty devastating,” Anna Morad, a doctor who runs the newborn nursery at the Monroe Carell Jr. Children’s Hospital at Vanderbilt in Nashville, said. The vitamin K shot was implemented universally in 1961 to prevent newborns from developing severe vitamin K deficiency bleeding, which can be fatal in about 20 percent of cases. The deficiency hinders blood clotting and can lead to dangerous bleeding and neurological disabilities. For every 114 newborns that don’t get a vitamin K shot, one will develop bleeding in their first six months of life, according to the study. The researchers tracked 5.2 million infants from all 50 states to draw their conclusions. “This is known, established science, so this study adds to the abundance of evidence for it,” Morad said. “My question is, what’s going to move the needle for families?” An editorial released with the study called for those involved, from pediatricians to public health agencies and manufacturers like Pfizer Inc., to work together to educate families and create accessible pathways for oral alternatives. The Centers for Disease Control and Prevention doesn’t currently track cases of vitamin K deficiency bleeding and notes that vitamin K shots are safe for newborns.
Looking ahead, investors will monitor Friday’s US payrolls report for further signals on the Federal Reserve’s path, while seasonal patterns historically favor equities in the year after midterms. Czech policymakers will assess the next policy step carefully amid elevated core inflation risks. Shield AI aims for an X-BAT test flight before year-end and further fundraising early next year, and Microsoft continues to prioritize its own data-center expansion even as demand for computing capacity outstrips supply.
