Brazil ETF EWZ falls 19.8% as Lula win drives Ibovespa’s worst day since 2020

The iShares MSCI Brazil ETF, AEWZ', fell 19.8% to $34.15 on heavy volume Monday after President Luiz Inácio Lula da Silva won a fourth term in Sunday’s runoff. The fund had been down more than 25% earlier in the session. About $10.2 billion of shares traded, more than six times the fund’s median daily volume over the prior 20 sessions.

Lula took 51.79% of the vote to Senator Flávio Bolsonaro's 48.21%, a margin of 4.4 million votes, the BBC reported. Bolsonaro, the son of former president Jair Bolsonaro, had led the first round on Oct. 4. He has refused to recognize the result and has called for it to be annulled.

Reuters reported that Brazil's stock market hit a record high after that first round pointed to a Bolsonaro win, boosting investor hopes for a more fiscally disciplined government and a wave of pro-business policies. Mauricio Monge, senior Latin America economist at Oxford Economics, said this in a report.

"Lula's victory triggered a sharp market selloff as investors reassessed the fiscal outlook under his fourth term."

B3, the São Paulo exchange, halted trading for 30 minutes after the Ibovespa Brazil's benchmark stock index, fell 10% from Friday's close, Reuters reported. That was the São Paulo exchange's first circuit breaker since the pandemic.

At the end of the day, the Ibovespa closed down 13.88% at 176,608.23, its biggest one-day drop since March 2020. At its low, the index was down 17.34% on the news.

The real, Brazil's national currency, gained as much as 12% in morning trading, but ended the day having weakened against the dollar by about 8.3%. Because AEWZ is priced in dollars, the weaker real deepened the losses for U.S. investors.

Smaller Brazilian companies fell harder. The iShares MSCI Brazil Small-Cap ETF, BEWZS, fell 31.6%.

U.S. stocks rise as Nvidia announces IPO plans

U.S. stocks rose after Anthropic, the AI developer behind Claude, publicly filed for an initial public offering. The State Street SPDR S&P 500 ETF (ASPY) gained 0.7%, matching the S&P 500’s close at 7,676.80.

Nvidia rose 2.4% and was the largest single contributor to the gain. Chipmakers gained, too: iShares Semiconductor ETF (ASOXX) rose 2.9%. The State Street Technology Select Sector SPDR ETF (AXLK) rose 1.7% — the best of the 11 sector funds.

State Street SPDR S&P 500 ETF, ASPY, rose 0.7%. The Wall Street Journal said U.S. stocks rose as Anthropic's filing for an initial public offering stemmed anxiety about a potential AI bubble. The chipmakers did rise. Meta did not.

Nvidia rose 2.4% and was the largest single contribution to the S&P fund's gain. The iShares Semiconductor ETF, ASOXX, rose 2.9%. State Street Technology Select Sector SPDR ETF, AXLK, rose 1.7%, the best of the 11 S&P 500 sector funds.

Apple fell 1.1%, and Alphabet fell 1%.

Anthropic, an AI developer, filed an S-1 showing $16.3 billion in revenue for the first half of 2026 alongside steep losses. The company plans to list Class A shares on the Nasdaq Global Select Market under the ticker ANT. The number of shares and price range are yet to be determined, and the registration is not yet effective.

Before the open, Meta Platform's Oct. 26 prospectus announced before the open that it plans to raise up to $95 billion in new equity to fund AI infrastructure.

Meta Platforms announced before the open that it plans to raise up to $95 billion in new equity to fund AI infrastructure.

The first $35 billion comes now, split between about $22.5 billion of Class A common stock and about $12.5 billion of mandatory convertible preferred stock. The other $60 billion would come through an at-the-market program, which lets a company sell shares gradually at market prices. That program would use new nonvoting Class C shares and will commence sometime after the New Year, the company said. Nvidia, AMD and Broadcom have indicated interest in buying up to $5 billion of the common stock.

Meta expects capital spending of $135 billion to $145 billion this year. Meta shares fell 1.9% today to $630.56.

State Street Communication Services Select Sector SPDR ETF, AXLC, fell 1.6%, a fourth straight down session. Meta is 22% of that fund. Alphabet is another 22%, and it fell too.

"The AI trade is entering a more demanding phase, with investors scrutinizing whether future returns justify rising capital commitments, wrote Schwab strategist Alexandra Semenova in a pre-opening briefing. "Pressure on free cash flow, as highlighted by Meta's earnings, is placing sharper focus on the sustainability and financing of that spending."

Fed rate decision due Wednesday

The Federal Reserve announces its rate decision at 2 p.m. ET Wednesday. Its target range is 3.75% to 4% after a quarter-point increase in September, and futures traders see little chance of another increase this week. The 10-year Treasury yield held just under 5%.

Collin Martin, head of fixed income research and strategy at the Schwab Center for Financial Research, said he does not expect clear guidance from Fed Chair Kevin Warsh and expects another increase in December.

Upcoming earnings announcements

Alphabet and Microsoft report after Wednesday's close, and Amazon reports Thursday.