【US Stock Market Outlook and Investment Strategy for Nov 9–13: A Correction Phase to Assess CPI Inflation Data and Selective Buying Following the Midterm Elections and the …

The US market last week saw significant volatility, particularly in the high-tech and semiconductor sectors, as political events intersected with shifts in the business environment surrounding generative AI.

Review of Last Week

The US stock market last week (November 2–6) saw a significant increase in selling pressure, primarily in high-tech stocks, leading to a broad correction across major indices.

The closing prices and weekly percentage changes for the major indices are as follows:

• Dow Jones Industrial Average: $51,003.55 (down 1.5% from the previous weekend)

• S&P 500 Index: 7,376.86 (down 2.7%)

• Nasdaq Composite Index: 24,579.43 (down 3.4%)

• Russell 2000 (Small-cap Index): 2,754.11 (down 2.1%)

Additionally, the SOX index (Philadelphia Semiconductor Index), which consists of semiconductor stocks, recorded a sharp decline of over 12%.

The central narrative and four factors that drove the market over the past week are as follows:

1. Democratic victory in the midterm elections and the eruption of ‘data center regulation concerns’

In the US midterm elections held on Tuesday, November 3, the opposition Democratic Party achieved a dominant result, regaining the majority in the federal legislature. As a result, the market was most wary of the risk of stricter regulations on AI and data center construction.

Within the Democratic Party and local governments, there were strong arguments regarding power shortages, excessive water consumption, friction with local communities, and environmental burdens associated with the rapid increase in data centers. With the expectation of the enactment of regulatory bills and delays or stricter conditions for construction permits at the state level, concerns spread rapidly that ‘AI infrastructure investment itself might slow down physically and legally.’

2. A ‘double punch’ to AI monetization (CapEx recovery) concerns and the sharp drop in semiconductor stocks

Since the mega-cap earnings reports in late October (Alphabet, Amazon, etc.), concerns had been simmering in the market about whether free cash flow and profits commensurate with massive capital expenditures (CapEx) could truly be secured.

When the ‘concerns over data center regulation due to the Democratic victory’ were added to this, it negated the optimism surrounding the AI investment growth story and became the direct trigger for the sharp drop in high-tech stocks. On the 5th, extreme capital outflows occurred from semiconductor and IT infrastructure stocks, led by major AI semiconductor companies such as Nvidia (down about 9%), AMD (down over 17%), and Micron Technology.

3. Continued vigilance against inflation due to high oil prices

Although speculation that the US would launch a large-scale attack on Iran after the midterm elections receded after President Trump showed a stance of prioritizing negotiations, there was no major change in the unstable situation in the Middle East, as tankers continued to be damaged in the Strait of Hormuz.

Amid this, as Ukraine resumed attacks on Russian oil refineries, oil prices rose again, with WTI crude oil prices hovering in the high range of around $104 per barrel, and vigilance against inflation stickiness did not dissipate.

4. Strong results from the October US employment report (November 6) and the sudden emergence of expectations for an additional interest rate hike in December

In the October US employment report released on Friday the 6th, the increase in non-farm payrolls was a strong result that significantly exceeded market expectations. With the robustness of the US labor market reaffirmed, the market remains wary of inflation from the FRB (Federal Reserve Board), and speculation has suddenly emerged that ‘an additional rate hike will be implemented at the December FOMC’.

Following this, US long-term interest rates (10-year Treasury yields), which had been trending downward earlier in the week, rebounded and stopped falling at the 4.8% level. The awareness of the triple threat of ‘AI regulation, inflation concerns, and prolonged high interest rates’ became the deciding factor that further intensified selling pressure across the stock market toward the end of the week.

Key Earnings and Important Economic Indicators/Events for This Week

Following the midterm elections and the turbulence in AI-related stocks, the market’s focus this week will shift toward ‘price indicators (inflation trends)’ and ‘current corporate earnings power’.

[Earnings Schedule for Notable Companies]

The earnings announcement cycle for large companies is reaching its final stage, but attention will be focused on the following sectors.

• Retail and Consumer Goods Companies: Their ability to maintain personal consumption amidst high interest rates and high prices will be tested, as will their outlook (guidance) for the year-end shopping season.

• Software and IT Service Companies: While regulatory concerns have emerged regarding hardware (semiconductors and data centers), this will be an opportunity to determine whether substantial AI monetization is progressing within the existing software layer.

For details on the companies announcing earnings this week, please see below.

＜今週の主要・注目企業決算＞
9日（月）:
🅱️コンステレーション・エナジー
🅰️テイクツー・インタラクティブ
10日（火）:
🅰️コアウィーブ
12日（木）:
🅱️ネビウス・グループ
🅰️アプライド・マテリアルズ、シスコ・システムズ https://t.co/ePWHcJPRGs

— アメリカ企業リサーチラボ (@US_Research_Lab) November 7, 2026

[Notable Economic Indicators and Events]

Inflation indicators that influence the FRB’s monetary policy decisions are the main events of the week.

• Wednesday the 10th: October US Consumer Price Index (CPI)
  This is the primary focus that will move the entire market. If the growth rates of the headline and core CPI exceed market expectations, there is a risk that interest rates will rise again due to rate hike concerns, suppressing the recovery of high-tech stocks after their decline. Conversely, if inflation shows signs of slowing, it will be viewed as a factor for market recovery.

• Thursday the 12th: US Initial Jobless Claims
  This will be checked from a micro perspective to see if there is any stalling in the employment situation.

• Friday the 13th: October US Producer Price Index (PPI)
  The PPI, which indicates corporate procurement costs, is also considered important for measuring the impact on corporate profit margins.

The most notable theme this week: ‘Concerns over AI infrastructure investment constraints’ and the selection of ‘high-quality cash flow companies’

The main theme of the stock market that investors should watch most closely this week is the ‘strict polarization (selective buying) of stocks based on AI regulation and infrastructure constraints’.

The ‘wall of over-investment’ highlighted by policy and environmental risks

Following last week’s midterm election results, the market has recognized that the premise that ‘Big Tech can increase data centers indefinitely if they invest capital’ has collapsed. ‘Physical and institutional constraints’ such as power grid capacity limits, environmental protection regulations, and municipal regulations may slow the execution speed of AI capital investment.

Evaluation criteria and investor perspectives for this week

In such a market environment, the phase where stocks are bought across the board simply because they are AI-related has ended, and from this week onward, it is expected that capital will concentrate on companies that meet the following criteria.

1. Highly efficient companies with a substantial order book and customer base that do not rely too heavily on increasing CapEx (capital expenditure)

2. Companies specializing in power efficiency technology or software algorithms capable of generating profit even under constraints

3. Financially sound companies with little to no debt and abundant free cash flow, even in a high-interest-rate environment

While attention is focused on whether ‘dip buying (autonomous rebound)’ will occur following last week’s sharp decline, the outlook is for a shift toward selective buying of stocks with solid financials and regulatory resilience, rather than mere rebound hunting.

Advice and Points of Caution for Japanese Investors

With political shifts and concerns over an AI bubble intersecting, and the exchange rate (USD/JPY) hovering in the 157–158 range, I will explain specific asset management approaches for individual Japanese investors from the perspective of a Certified Financial Planner (CFP).

1. ‘Accumulation Investment’ utilizing NISA (Regular purchases via the Tsumitate and Growth investment quotas)

It is easy to feel anxious when seeing news of sharp declines in the Nasdaq or SOX indices, but for investors accumulating index funds (such as the S&P 500 or total US stock market funds) through NISA, this is a phase where ‘dollar-cost averaging’ truly proves its worth.

• Prioritize continuing the accumulation If you stop your accumulation during a market downturn, you forfeit the greatest benefit of dollar-cost averaging: ‘buying more units at a lower price.’ Since US demographics and innovation power will lift the market in the long term, please continue your fixed-amount accumulation according to your rules without getting emotional.

• Preparing for currency risk At the current weak yen level of around 158 yen to the dollar, some express concern about ‘valuation losses due to future yen appreciation.’ However, to avoid the risk of being biased solely toward yen-denominated assets in long-term wealth building, holding diversified foreign currency assets through accumulation is essential. By utilizing time diversification, currency timing risk is also smoothed out.

2. Risk management in individual US stock investment

For those investing in individual stocks, this is a good opportunity to review a theme-heavy investment style.

• Sector diversification away from ‘AI/Semiconductor concentration’
  As painfully realized in last week’s market, if you are concentrated in the high-tech and semiconductor sectors, your entire portfolio will suffer significant damage from political regulations or disappointing earnings announcements. It is necessary to incorporate defensive sectors (healthcare, consumer staples) or the financial sector, which benefits from high interest rates, to suppress the overall volatility of your portfolio.

• Avoid ‘easy averaging down’ and check financial indicators (FCF)
  It is dangerous to immediately increase your position (averaging down) in semiconductor stocks that have plummeted simply because ‘they have become cheaper.’ Please make investment decisions only after confirming earnings and fundamentals, such as whether free cash flow (FCF) can remain positive for the current and next fiscal year, and whether capital expenditure plans are realistic.

• Securing USD-denominated cash on hand (dry powder)
  To prepare for the possibility of a prolonged market correction, keeping a certain percentage of liquidity (cash) in instruments like US dollar MMFs, rather than deploying all available investment funds at once, allows for staggered buying and leads to mental and operational stability.

[Disclaimer] This report is intended for informational purposes based on factual data and reliable sources, and is not intended as a recommendation to buy or sell specific stocks or as specific investment solicitation. Please make final investment decisions based on your own judgment and responsibility.