To The Moon

The US stock market staged an impressive rebound on Monday, November 9, but investors are about to face another major test: October inflation data.

The Nasdaq-100 ETF (QQQ) jumped 3.54%, while the S&P 500 gained 2.35%. After recent volatility and concerns about the sustainability of the AI trade, the rebound provided some relief to investors.

However, not every technology stock participated. Nvidia fell 4.27%, while AMD surged 13.26% following its Google Cloud partnership announcement.

This divergence is important. It suggests that investors are becoming more selective rather than simply buying every technology stock.

Now attention is turning to the October Consumer Price Index (CPI), due on Tuesday, November 10, at 8:30 a.m. Eastern Time.

For investors in New Zealand, that is 2:30 a.m. Wednesday, November 11.

The market is expecting headline CPI to increase by 0.3% month over month, compared with September’s 0.6%. Core CPI, which excludes food and energy, is expected to rise 0.2%, down from 0.3% previously.

The question is whether inflation is finally cooling enough to support another leg higher in technology stocks.

1. Why this CPI report matters so much

Inflation remains one of the biggest factors influencing the Federal Reserve’s interest-rate decisions.

When inflation slows, investors may become more confident that the Fed has room to reduce interest rates in the future. Lower interest rates generally support growth stocks because their expected future earnings become more attractive when discounted at a lower rate.

This is particularly relevant for technology companies.

Many AI and semiconductor stocks trade on expectations of strong earnings growth over several years. When Treasury yields rise, those future earnings become less attractive, potentially putting pressure on valuations.

A softer CPI report could therefore provide another reason for investors to return to technology stocks.

However, one monthly inflation report will not determine the Fed’s next move. The market will also consider employment conditions, economic growth and the broader inflation trend.

2. Headline CPI versus core CPI

Investors should look beyond the headline inflation number.

Headline CPI includes food and energy prices, which can move significantly from month to month. Core CPI excludes these categories and can provide a clearer picture of underlying inflation pressures.

The current consensus is:

• Headline CPI: +0.3% month over month, compared with +0.6% in September.

• Core CPI: +0.2% month over month, compared with +0.3% in September.

If both figures come in below expectations, markets could interpret this as evidence that inflation pressures are easing.

But if headline inflation falls while core inflation remains firm, the reaction may be less positive.

Investors should pay particular attention to shelter, services and other persistent components. A decline in energy prices alone would not necessarily demonstrate that underlying inflation is under control.

3. Treasury yields could determine the market reaction

One of the most important indicators to watch after the CPI release is the US 10-year Treasury yield.

Why does it matter?

Treasury yields influence borrowing costs, bond valuations and the discount rates investors use when valuing future corporate earnings.

If inflation comes in softer than expected and Treasury yields move lower, technology stocks could benefit.

However, if inflation surprises to the upside, yields could rise again. That may encourage investors to take profits, particularly in stocks that have already experienced substantial gains.

The reaction of bond markets could therefore be just as important as the CPI headline itself.

A softer inflation reading accompanied by falling yields would provide a more convincing signal than a softer reading that fails to change interest-rate expectations.

4. Three possible outcomes for QQQ

I see three broad scenarios.

Scenario 1: CPI comes in below expectations

This would be the most supportive outcome for growth stocks.

If headline and core inflation both show signs of cooling, Treasury yields could decline and expectations for future rate cuts could improve.

QQQ could extend Monday’s rebound, with technology and semiconductor stocks potentially attracting further buying.

However, investors should still look for broad market participation rather than relying on a few large companies to drive the entire index higher.

Scenario 2: CPI matches expectations

An in-line report may produce a more mixed reaction.

The market has already priced in a degree of inflation improvement. If the numbers simply meet expectations, investors may wait for additional evidence before committing more capital.

In this situation, earnings guidance, AI spending and individual company developments could become more important drivers of stock performance.

Scenario 3: CPI comes in hotter than expected

This is the biggest risk to Monday’s rebound.

A stronger-than-expected inflation reading could push Treasury yields higher and reduce expectations for further monetary easing.

Technology stocks with expensive valuations may face renewed selling pressure.

The concern would be particularly significant if core services and shelter inflation remain persistent, suggesting that underlying price pressures are not easing as quickly as expected.

5. Monday’s rally was not a complete recovery for technology

Another detail worth watching is the divergence between Nvidia and AMD.

While QQQ gained 3.54%, Nvidia declined 4.27%. AMD, meanwhile, surged 13.26% after confirming that its EPYC processors would support Google’s TPU 8tx systems.

This shows that money is still moving within the technology sector.

Investors are weighing individual company developments, competitive positioning and valuations rather than treating all AI-related stocks equally.

For QQQ, this matters because its performance is heavily influenced by a relatively small group of large technology companies.

A sustainable recovery would ideally involve broader participation across software, semiconductors, cloud computing and other major holdings.

If only a handful of stocks drive the next rally, the overall market may remain vulnerable to another reversal.

6. What I would watch before buying the rebound

I would focus on four indicators:

1. Core CPI: Does underlying inflation continue to slow, or are services and shelter keeping price pressures elevated?

2. US 10-year Treasury yield: Does the yield decline after the report, confirming a more favourable reaction from bond investors?

3. Market breadth: Are more technology stocks participating in the recovery, or is the rally concentrated in a few names?

4. Trading volume: Is there sustained buying interest, or does the rebound quickly lose momentum?

I would also avoid making a decision based on the first few minutes after the release. CPI can trigger sharp initial movements, but Treasury yields and equity prices sometimes reverse as investors digest the details.

My take

Monday’s 3.54% gain in QQQ was encouraging, but I would not call it confirmation that the technology sell-off is over.

The upcoming CPI report could help determine whether investors are comfortable returning to growth stocks or whether inflation concerns will keep valuations under pressure.

My preferred scenario would be a softer core CPI reading, accompanied by falling Treasury yields and broader participation across technology stocks.

That combination would provide stronger evidence that the rebound has room to continue.

But if inflation surprises on the upside and yields rise, Monday’s rally could turn into another opportunity for profit-taking.

The next move in QQQ may depend less on how much inflation has fallen and more on whether the data gives the bond market a reason to believe that interest rates can eventually move lower.

For discussion purposes only, not financial advice.