Strong CoreWeave Results Revive Confidence in AI-Related Equities While Hawkish Fed Expectations Continue to Support Dollar’s Rally
What’s happening: Strong CoreWeave results, with third-quarter revenue up 168% to USD 3.7 billion and full-year guidance of USD 13.0–13.3 billion, revived confidence in AI equities, lifting Taiwan stocks 3.6%, KOSPI 2.60%, Nikkei 1.31% and Nasdaq-100 futures nearly 2%. Meanwhile, hawkish Fed expectations extended Dollar’s rally, with DXY moving toward 102.52 as CME FedWatch assigned 85.6% to a 25bps December hike and 14.4% to 50bps.
Why it matters: The two moves respond to different developments, so they can coexist, but higher yields could eventually weigh on technology valuations and AI financing. Nasdaq 26,000 and DXY 103 are the two benchmarks for whether each move can last.
Global markets are showing two distinct signs of recovery as strong results from CoreWeave revive confidence in AI-related equities, while hawkish Fed expectations continue to support Dollar’s rally. Asian semiconductor stocks led gains, European technology shares followed, and Nasdaq futures pointed to a strong rebound on Wall Street. Meanwhile, Dollar extended its advance, with DXY approaching 103 as markets priced a faster pace of US monetary tightening. The simultaneous strength in technology equities and Dollar raises two questions: whether the AI rebound can develop into a sustainable rally, and whether Dollar can extend its rise even as risk appetite improves. Nasdaq’s 26,000 level and DXY’s 103 mark provide two straightforward benchmarks for assessing these developments.
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CoreWeave Revives AI Optimism, but Nasdaq Still Faces a Recovery Test
AI-related equities received a boost from CoreWeave’s stronger-than-expected quarterly results, which offered reassurance about demand for the infrastructure supporting artificial intelligence.
CoreWeave reported 168% revenue growth to USD 3.7 billion in the third quarter and projected full-year revenue of USD 13.0–13.3 billion, exceeding market expectations of approximately USD 12.86 billion. Its adjusted operating income guidance also surpassed forecasts, while approximately USD 9 billion in customer prepayments and deposits provided further evidence of demand for its computing capacity. The results helped lift CoreWeave shares by double digits in premarket trading.
The positive sentiment spread across global semiconductor markets. Taiwan equities gained 3.6%, South Korea’s KOSPI rose 2.60%, and Japan’s Nikkei advanced 1.31%. European chipmakers also rallied, while Nasdaq-100 futures climbed nearly 2%, substantially outperforming the broader S&P 500 and Dow futures.
CoreWeave and the AI Rebound at a Glance
- CoreWeave third-quarter revenue: up 168% to USD 3.7 billion
- CoreWeave full-year revenue guidance: USD 13.0–13.3 billion, against expectations of approximately USD 12.86 billion
- Customer prepayments and deposits: approximately USD 9 billion
- Taiwan equities: up 3.6%
- South Korea’s KOSPI: up 2.60%
- Japan’s Nikkei: up 1.31%
- Nasdaq-100 futures: up nearly 2%
The rebound suggests investors are reassessing the strength of AI infrastructure demand after the recent selloff. However, the recovery remains concentrated in technology rather than reflecting a broad improvement in equity sentiment.
CoreWeave’s results also do not resolve concerns about the financing requirements of AI expansion, stretched valuations or potential regulatory constraints on data-centre development. These issues contributed to the recent correction and could continue to influence investor confidence.
The speed of the previous reversal offers another reason for caution. Nasdaq Composite suffered a decline of approximately 5.5% last Thursday, more than reversing the preceding session’s relief rally.
Nasdaq Composite closed Tuesday around 25,066, still approximately 9.6% below its record high. The immediate question is whether the latest rebound can reclaim the 26,000 region, which stands near the index’s 55-day moving average.
A sustained rise above that area would strengthen the case that the recent correction has completed. Failure to regain it would leave open the possibility that the latest advance is another temporary relief rally.
Nasdaq 26,000: Two Outcomes
| Scenario | Implication |
|---|---|
| Sustained rise above 26,000 | Strengthens the case that the recent correction has completed |
| Failure to regain 26,000 | Leaves open the possibility that the latest advance is another temporary relief rally |
For now, CoreWeave has provided a credible catalyst for recovery, but the sustainability of the AI rebound remains unproven.
Dollar Extends Rally as Markets Price More Fed Tightening
While AI-related equities are responding to improved earnings prospects, Dollar is drawing support from a separate development: a substantial reassessment of the Fed’s tightening outlook.
October’s stronger-than-expected US CPI and a series of hawkish Fed comments have reinforced expectations for further rate increases. Rather than revisiting the individual speeches, the more important development is how substantially market pricing has shifted.
CME FedWatch now assigns 85.6% probability to a 25bps December hike and 14.4% to a larger 50bps increase, effectively eliminating the possibility of unchanged rates.
More significantly, expected cumulative tightening through June 2027 has increased from approximately 44bps last Friday to 76bps. That represents more than one additional 25bps hike incorporated into the market-implied policy outlook.
Fed Repricing at a Glance
- December 25bps hike: 85.6% probability
- December 50bps hike: 14.4% probability
- Expected cumulative tightening through June 2027: 76bps, up from approximately 44bps last Friday
The repricing drove a sharp rise in US Treasury yields on Tuesday, with the two-year yield jumping 18bps to 4.746% and the ten-year yield climbing to 5.000%.
Dollar has continued strengthening even as technology equities recover. DXY rose approximately 0.5% on Tuesday and extended its gains toward 102.52, with the greenback advancing against several major currencies.
The index is now approaching the 103 resistance region, just above its recent high at 102.945.
A decisive break through 103 would strengthen the case for continuation of the broader Dollar uptrend, suggesting that Fed tightening expectations are providing sufficient support despite improving equity sentiment.
Conversely, failure to overcome this region could indicate that much of the near-term policy repricing has already been reflected in the currency.
DXY 103: Two Outcomes
| Scenario | Implication |
|---|---|
| Decisive break through 103 | Strengthens the case for continuation of the broader Dollar uptrend, with Fed tightening expectations providing sufficient support despite improving equity sentiment |
| Failure to overcome 103 | Could indicate that much of the near-term policy repricing has already been reflected in the currency |
With US Treasury trading closed for Veterans Day, fresh confirmation from bond yields will have to wait until the market reopens.
Can AI Stocks and Dollar Continue Rising Together?
The simultaneous recovery in AI stocks and Dollar is not necessarily contradictory. There are three reasons why both rallies could continue, even though higher interest rates would normally create challenges for equity valuations.
First, the two markets are responding to different immediate developments. AI equities are benefiting from stronger earnings and expectations for infrastructure investment, while Dollar is drawing support from the Fed’s tightening outlook. These forces can operate independently, allowing technology stocks and Dollar to advance simultaneously.
AI Equities vs Dollar: Different Drivers
| Market | Immediate driver |
|---|---|
| AI equities | Stronger earnings and expectations for infrastructure investment |
| Dollar | The Fed’s tightening outlook |
Second, sustained AI investment could support broader US economic activity, giving the Fed greater room to tighten monetary policy without significantly undermining growth. In this scenario, strong AI-related demand could reinforce expectations for higher interest rates, supporting Dollar even as investors remain optimistic about technology earnings.
Third, improving AI sentiment could encourage investors to shift funds out of safe-haven US Treasuries and back into equities. Such a rotation would put downward pressure on Treasury prices and push yields higher, potentially providing additional support for Dollar. However, this remains a possible transmission channel rather than a confirmed development. With the US Treasury cash market closed for Veterans Day, whether such a rotation is occurring cannot be assessed from fresh yield movements until trading resumes on Thursday.
There are also limits to how long these forces can coexist. If higher borrowing costs begin to weigh more heavily on technology valuations or the financing of AI infrastructure projects, the same rise in yields supporting Dollar could eventually undermine the equity rebound.
For now, two round-number levels provide useful reference points. Nasdaq 26,000 will help gauge whether the AI recovery is gaining traction, while DXY 103 will test whether Fed repricing can sustain Dollar strength despite improving risk appetite.
A decisive recovery through both levels would strengthen the case that AI optimism and a hawkish Fed outlook can coexist. Conversely, failure at either level could reveal which of the competing market forces is beginning to dominate.
Related Coverage
Fed Repricing and Its Market Impact
- Fed’s Logan Calls for Two More Hikes as Officials Warn Inflation Risks Are Becoming Entrenched: Dallas Fed President Lorie Logan called for at least two additional 25bps interest rate hikes, warning that faster tightening this winter may be needed to prevent inflation from becoming entrenched. Kansas City Fed President Jeff Schmid described monetary policy as fairly accommodative, while Philadelphia Fed President Anna Paulson supported gradual increases unless inflation risks intensify. Chicago Fed President Austan Goolsbee called October’s CPI report “borderline disturbing” after core inflation held at 0.3% mom for a third consecutive month. The remarks suggest broad agreement among these officials on further tightening, but differing views on how quickly rates should rise.
- USD/JPY Eyes 159 Breakout as Fed Repricing Meets Japan’s Intervention Threat Near 160: USD/JPY is approaching pivotal 159.02 resistance as hawkish Fed repricing pushes US Treasury yields sharply higher. The two-year yield has gained more than 23bps since Friday, yet USD/JPY has advanced only around 0.2%, suggesting that Japan’s intervention threat may be restraining Dollar buying. Japanese authorities have spent approximately JPY 27.1 trillion supporting the yen across disclosed interventions this year, including coordinated action with the US. A decisive break above 159.02 would bring the 159.72–160.38 resistance region into focus, where intervention concerns could intensify.
- Ethereum Is Just Above 2,000. Could a Breakdown Drag Bitcoin to 69,000 and Below?: Ethereum is approaching a decisive technical test at $2,000, where its 61.8% Fibonacci retracement at $2,005.11 is under pressure. Hawkish Fed repricing has intensified selling, but crypto weakness began before the latest inflation surprise. A firm break below $2,000 would raise the risk of Ethereum reversing its rebound from $1,510.07 and potentially resuming its broader downtrend. Bitcoin has held up better, but an Ethereum breakdown could warn of selling pressure spreading across cryptocurrencies, putting Bitcoin’s critical $69,050.80 support and potentially lower levels into focus.
UK Inflation Outlook
- UK Inflation Seen Above Target Until 2030 as NIESR Warns of Persistent Wage Pressures: UK inflation could remain above the Bank of England’s 2% target until late 2030, according to NIESR, as energy shocks linked to the Iran war feed into wages and broader domestic prices. The institute raised its projected inflation peak from 3.8% to 4.4% in February 2027 and expects wage growth to average 3.9% over the next three years. Although its 2026 GDP growth forecast was upgraded to 1.6%, activity is expected to slow significantly thereafter, raising concerns that persistent domestic inflation could complicate efforts to restore price stability without further weakening growth.
FAQ
Why did AI stocks rebound after CoreWeave’s results?
CoreWeave reported 168% third-quarter revenue growth to USD 3.7 billion and projected full-year revenue of USD 13.0–13.3 billion, above market expectations of approximately USD 12.86 billion, with about USD 9 billion in customer prepayments and deposits. The results offered reassurance about demand for AI infrastructure, lifting Taiwan equities 3.6%, KOSPI 2.60%, Nikkei 1.31% and Nasdaq-100 futures nearly 2%. However, the recovery remains concentrated in technology, and financing, valuation and regulatory concerns remain unresolved.
Can AI stocks and Dollar keep rising together?
They can, at least for now, because the two markets respond to different developments: AI equities to stronger earnings and infrastructure investment, and Dollar to the Fed’s tightening outlook. Sustained AI investment could also support US growth and give the Fed more room to tighten, and a shift from Treasuries into equities could lift yields, although that channel is not yet confirmed. If higher borrowing costs begin to weigh on technology valuations or AI financing, rising yields could eventually undermine the equity rebound.
How much more Fed tightening is priced in?
CME FedWatch assigns 85.6% to a 25bps December hike and 14.4% to a 50bps increase, effectively eliminating the possibility of unchanged rates. Expected cumulative tightening through June 2027 has risen from approximately 44bps last Friday to 76bps, more than one additional 25bps hike. The two-year Treasury yield jumped 18bps to 4.746% on Tuesday.
Key Takeaways
- CoreWeave’s third-quarter revenue rose 168% to USD 3.7 billion and full-year guidance of USD 13.0–13.3 billion exceeded expectations of approximately USD 12.86 billion, reviving confidence in AI-related equities.
- Taiwan equities gained 3.6%, KOSPI 2.60% and Nikkei 1.31%, with Nasdaq-100 futures up nearly 2%, but the recovery remains concentrated in technology rather than broad equity sentiment.
- Nasdaq Composite closed Tuesday around 25,066, approximately 9.6% below its record high, and reclaiming the 26,000 region near its 55-day moving average would strengthen the case that the correction has completed.
- CME FedWatch assigns 85.6% to a 25bps December hike and 14.4% to 50bps, while expected tightening through June 2027 has risen from approximately 44bps to 76bps.
- The two-year Treasury yield jumped 18bps to 4.746% and the ten-year reached 5.000% on Tuesday, while DXY rose approximately 0.5% and extended toward 102.52, approaching the 103 resistance region above its 102.945 high.
- Both rallies could continue because they respond to different developments, strong AI investment could support a tightening Fed, and a shift out of Treasuries could lift yields, although the last remains a possible channel rather than a confirmed development.
- With the US Treasury cash market closed for Veterans Day, fresh yield confirmation must wait until Thursday, and higher borrowing costs could eventually undermine the equity rebound.
What to Watch Next
Nasdaq 26,000 and DXY 103 are the two immediate tests. A decisive recovery through both would strengthen the case that AI optimism and a hawkish Fed outlook can coexist, while failure at either level could reveal which of the competing forces is beginning to dominate.
Watch also Thursday, when US Treasury trading resumes and fresh yield movements can show whether funds are rotating out of Treasuries into equities, and whether higher borrowing costs begin to weigh on technology valuations or the financing of AI infrastructure projects.
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