Nasdaq 100 Rallies on Chip Rebound; Brazil ETF Sinks 21%: Stock Market Today

What happened

The Nasdaq 100 rallied 1.2% to 29,306 as chipmakers rebounded, while the S&P 500 rose 0.8% to 7,681. The iShares MSCI Brazil ETF fell 21.7% by midday after Luiz Inácio Lula da Silva defeated Sen. Flávio Bolsonaro in Sunday's runoff.

Confirmed

Global impact / market context

The Brazil ETF's 21.7% drop shows how quickly political election results can erase stock values, because investors had bet on a business-friendly, fiscally tighter government. Brazil-focused brokerage XP Inc. lost 48.4%, showing that companies earning revenue in Brazil face concentrated country risk.

Analyst inference

US stocks rose as chipmakers rebounded, with Nvidia up 2.2% and Tesla up 6% after a Barclays upgrade, while the VIX fell 5.9% to 18.31, signaling less expected volatility. Meanwhile, Brazil's currency lost more than 10%, heading for its worst day since 1999, which means overseas investors holding Brazilian assets lost value twice.

Analyst inference

What to watch

1. The Brazilian currency lost more than 10% and was heading for its worst day since 1999, while Treasuries firmed at the long end ahead of the Federal Reserve's decision. Confirmed
2. Watch whether the newly elected Brazilian government signals fiscally tighter policies, since investors had built bets on a business-friendly government after Bolsonaro's first-round lead. Proposed
3. Watch Brazil-focused firms such as XP Inc. and Nu Holdings, which lost 48.4% and 19.5%, because further declines could lead investors to sell shares of companies earning revenue in Brazil. Analyst inference

Evidence

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