The Private Equity-Owned Data Center Behind Giant CME Outage

Stocks

Summary:

This critical piece of infrastructure to global markets dates back to 2009, when CME started building the facility to host its electronic trading infrastructure.

About 45 minutes west of downtown Chicago lies a rather unassuming, glass-encased data center that some of the world’s largest markets depend on. By one 2018 estimate, at least $25 quadrillion of notional trade volume passes through the facility every day.

The Aurora, Illinois, complex has served as the primary hub of digital operations for the world’s largest futures exchange operator CME Group Inc. for nearly two decades. The 450,000-square-foot facility is famous among high-frequency traders and Wall Street firms, who’ve long jostled for position around the site to gain a leg up on competitors. At one point, DRW Holdings mounted an antenna on a utility pole near the complex to cut down on the latency. Rival Jump Trading bought property across the street for its own antenna. Scientel erected a tower, too.

Traders want to be close to the data center to reduce latency, minimizing the distance data must travel in order to shave microseconds off their trades. As a former executive of the data center’s operator once put it: “If you read the book , you can get a real quick lesson on what’s going on.”

On Friday, the data center — located in the Chicago suburb probably best known for serving as the setting of the comedy film — became infamous to all who trade across equities, foreign exchange, bonds and commodities markets globally. A malfunction in the cooling system at the complex took down virtually all CME futures and options trading platforms, wreaking havoc for traders around the world. The operator of the data center, CyrusOne, said that its teams were working “around the clock” to respond to the cooling system issue but didn’t respond to further questions.

This critical piece of infrastructure to global markets dates back to 2009, when CME started building the facility to host its electronic trading infrastructure, essentially serving as the backbone for CME’s futures and options trading platform Globex.

In 2016, CME decided it wanted to shift away from owning infrastructure and sold the site to Dallas-based CyrusOne. As part of the deal, CME agreed to rent space from CyrusOne for 15 years so it could continue to house the computers at the site that keep its markets running, essentially outsourcing its day-to-day operations.

CyrusOne knew what it was getting into. Gary Wojtaszek, the company’s chief executive officer at the time, described the data center to analysts as “ground zero” for high-speed trading and the “epicenter for all the futures trading.” In laying out the business case for a new tower that the company was building there in 2018 to boost connectivity, he emphasized that “speed is of the essence there.”

With that, CyrusOne added Aurora to a broader portfolio of roughly 50 data centers across the US, UK, Germany and Singapore that serve customers spanning the technology, financial services, energy, medical, research and consulting industries.

CyrusOne’s business case is built on going after big clients like CME that are buying virtually all of the space in a data center, according to Tobias Bopp, a manager of strategy and transactions at the consulting firm EY-Parthenon. “They’re building a lot of new data centers, and their position in the market right now is pretty important,” Bopp said in an interview.

Lauren Eccles, a senior principal consultant specializing in data center recruiting for First Point Group, described CyrusOne as one “the big boys in the game,” pointing to the company’s strong presence in Germany in particular. Generally speaking, she said, “They’re a big player, and they’ve got a really good name.”

In 2021, that reputation caught the attention of private equity. As the artificial intelligence boom began sending data center demand soaring, KKR & Co. and Global Infrastructure Partners agreed to buy CyrusOne in a deal that was worth roughly $11.4 billion. It was held up at the time as an illustration of how private equity investors were looking to cash in on the surging computing needs of AI model developers and tech giants such as Amazon.com Inc., Alphabet Inc.’s Google and Meta Platforms Inc. Wojtaszek had resigned a year earlier.

It wouldn’t be the only, or the largest, data center deal for GIP. This year, after BlackRock Inc. bought the investment firm, GIP agreed to buy Aligned Data Centers in a $40 billion deal, marking one of the asset manager’s largest infrastructure investments ever.

KKR referred all questions on CyrusOne to the data center operator. A spokesperson for GIP owner BlackRock declined to comment.

It’s unclear whether CyrusOne tried to migrate CME’s operations at Aurora to another data center after the cooling units failed on Thursday.

And while CME’s disaster recovery plan calls for moving operations to a data center in the New York area, the exchange opted to restart its matching engine from Aurora, according to a person familiar with the matter. The decision was made because the information the exchange had at the time signaled that the cooling issue would be resolved more quickly than it was, the person said.

According to CyrusOne’s website, the data center features additional chiller units to protect against failures.

The cooling failure might suggest an issue with the design of the system, according to Thomas Solelhac, a partner at EY-Parthenon. “Normally, in data centers of this type, there is a lot of redundancy to avoid this kind of problem with power and cooling,” Solelhac said.

CME had expected its 2016 deal with CyrusOne to open it up to more computing resources. While fighting a proposal by Illinois lawmakers to tax trading on exchanges in 2016, CME Executive Chairman Terry Duffy, who is now CEO, suggested that the firm’s deal with CyrusOne would give it access to CyrusOne’s other data centers and not just Aurora.

“If we need to leave Illinois because of any irrational decisions coming out of the state,” Duffy had said at the time, “we have 29 data centers to choose from.”

Source: Bloomberg

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Stocks

U.S. stocks gained in a shortened session, as investors shrugged off a CME Group outage that disrupted futures trading overnight.

The Dow industrials, Nasdaq composite and S&P 500 rose 0.5% or more. Some chip makers, including Micron Technology, Analog Devices and Intel, logged bigger gains.

Nonetheless, the Nasdaq composite registered its first monthly loss since March, after a choppy period when concerns about an AI bubble fueled market volatility. The index fell about 1.5% in November; the S&P 500 and Dow industrials posted small monthly gains.

CME said its derivatives markets reopened at 8:30 a.m. ET. Before then, traders hadn’t been able to buy or sell CME futures and options, including for U.S. indexes, Treasurys, gold and oil due to cooling problems at a key data center.

Analysts said the CME outage lowered trading volumes on what was already expected to be one of the quietest trading days of the year.

Global markets were little changed, with the Stoxx Europe 600 and Japan’s Nikkei 225 gaining less than 0.3%. Hong Kong’s Hang Seng Index fell 0.3%.

Shares in some U.S. retailers rose as shoppers flocked to snap up Black Friday bargains. Walmart was up over 1%. The National Retail Federation forecasts a record 186.9 million people to shop between Thanksgiving and “Cyber Monday” on Dec. 1.

Markets expect the Federal Reserve to cut interest rates again next week, following signs that the labor market is cooling. Allies of Fed Chair Jerome Powell have laid the groundwork for him to push a cut through a divided committee. Traders have doubled their bets over the last week on a cut to around 87%, according to the CME’s FedWatch tool.

Silver futures jumped Friday, topping $55 per troy ounce. Analysts attributed the surge to a supply squeeze, with Chinese inventories at the lowest level in a decade, as well as expectations for another Fed cut. Gold futures also rallied.

The dollar held broadly steady against a basket of other currencies, after slipping earlier this week. Treasury yields edged up, but remained around their lowest levels since late October.

Bitcoin topped $92,000 before paring some gains. It has regained ground after sliding toward $80,000 last week, but remains far off its October peak above $126,000. Shares in Coinbase and bitcoin-buyer Strategy gained.

Source: TWSJ

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Economic

The S&P 500 may end November essentially flat, but the path forward looks meaningfully clearer as volatility calms down, stock market breath improves and trend-following strategies turn into buyers, according to Goldman Sachs Group Inc.’s trading desk.

Several indicators point to stabilization heading into December. Market breadth, measured as the five-day average of S&P advancers minus decliners, collapsed earlier this month to minus 150, indicating “a pretty bad damage beneath the surface,” Goldman’s Lee Coppersmith wrote in a note to clients. Heading into Thanksgiving, it rebounded back to the +150 area. “It’s a big shift – broader participation, not just a narrow squeeze, and another sign that the market cleared a decent amount of stress mid-month,” he added.

Goldman’s Volatility Panic Index is telling a similar story. It currently sits at five, just above its three-year average and well below its early-November highs.

Positioning among so-called systematic strategies has also reset. Roughly $16 billion of S&P 500 Index selling hit the tape over the past month, Goldman traders estimate, adding that those moves contributed to the stock market declines. With that de-risking largely absorbed, the bank’s baseline for the next month flips to modest net buying of about $4.7 billion.

“That leaves us heading into December with a cleaner starting point than we had a few weeks ago,” Coppersmith wrote.

The S&P 500 is on course to post a 0.2% loss in November, with equities erasing nearly all of their declines on expectations for an interest rate cut at the Federal Reserve’s next meeting and positive momentum stemming from the artificial intelligence trade.

Source: Bloomberg

To stay updated on all economic events of today, please check out our Economic calendar

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Commodity

Commodities strategists at Wall Street's top investment banks expect 2026 and 2027 to be tough years for the oil industry. And that's after a nearly 20% decline in oil prices this year.

Under a base case set by JPMorgan's commodities team led by Natasha Kaneva, Brent crude oil (BZ=F) — the international benchmark price — will fall to $58 per barrel in 2026, with West Texas Intermediate crude oil (CL=F), the US benchmark, trading $4 below this level. In 2027, the firm sees prices falling by another $1 per barrel.

"At the risk of flogging a very dead horse, our message to the market has remained consistent since June 2023," JPMorgan strategists wrote. "While demand is robust, supply is simply too abundant."

At Goldman Sachs, the bank's commodities desk, led by Daan Struyven, forecast a similar base case for Brent and WTI to trade hands next year at $56 and $52, respectively.

Goldman sees healthier price support in subsequent years, however, with Brent and WTI rising to $80 and $76 per barrel by 2028. This forecast assumes oversupply doesn't continue to dominate the market.

"We expect oil prices to pick up in 2027 as the market returns to balance and shifts focus to incentivizing investment given the reduction in oil reserve life, the maturing of US shale, and solid demand growth," Goldman Sachs analysts wrote.

Oversupply has been, and will likely continue to be, the dominant narrative for oil through this year, and this theme is expected to continue in the year ahead. While demand has remained healthier than expected, global supply has kept climbing.

The OPEC+ cartel has unwound production cuts every month since April, increasing output levels across the bloc by more than 2 million barrels per day. Meanwhile, US shale producers are expected to reach a record-high production level in December, according to data from the Energy Information Administration.

Through the first half of 2025, heavy stockpiling by China to the tune of millions of barrels per day had absorbed much of the extra supply on the market, supporting prices.

Demand from the Middle East has held steady, and Indian refiners have increased their purchases of Urals crude from Russia, according to several oil analysts who spoke with Yahoo Finance.

At the same time, there are more than 1 billion barrels sitting in tankers at sea globally, the highest level for on-the-water buildups since 2023. In its latest report, the International Energy Agency called for the widely foreseen 2026 supply glut to reach an overhang of 4 million barrels per day.

Given the "extraordinary oversupply anticipated" in the oil market, Macquarie analysts wrote, the Australian bank is modeling a similarly bearish price outlook for 2026.

"As a base expectation, [current market conditions] sets up for punishing oversupply in Q4 '25/Q1 '26, which we believe may necessitate a pronounced step lower in oil prices and OPEC policy pivot," Macquarie analysts wrote in a note to clients, targeting $60.75 for Brent and $56.63 for WTI in 2026.

The base cases from all three banks assume that the market will be forced to react and cut back on production as "low 2025-2026 prices take their toll on non-OPEC supply, and very few projects come online later this decade after 15 years of low investment," Goldman Sachs analysts wrote.

Even state-directed producers such as Saudi Aramco (2223.SR) and the UAE's Abu Dhabi National Oil Company in the Middle East need to turn a profit, and other geopolitical factors like the war in Ukraine have complicated the picture.

At JPMorgan, strategists predict that without some market stabilization efforts, Brent could change hands in the $30s per barrel by 2027, a level not seen since the depths of the 2020 oil crash at the start of the COVID-19 pandemic.

Such a move would bring prices near or below the break-even point of around $51 Brent and $43 WTI per barrel for US oil and gas operators.

But strategists at JPMorgan and Goldman Sachs believe the oil and gas industry will be forced to act on limiting supply long before prices reach these extremes.

"The magnitude suggested by market imbalances is unlikely to fully materialize in practice. Adjustments are expected on both the supply and demand sides," JPMorgan strategists wrote.

"We expect the market will find equilibrium through a combination of rising demand — driven by lower prices — and a mix of voluntary and involuntary production cuts."

Source: finance.yahoo

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Commodity

Gold (GC=F) futures settled near $4,240 per ounce on Friday, closing out their fourth straight month of gains and bringing the yellow metal back within shouting distance of its record high on firming expectations for a December rate cut.

Dovish commentary from Federal Reserve officials has raised the odds that policymakers will decide to cut interest rates by at least 25 basis points next month. Since gold doesn’t produce income, its relative attractiveness improves when interest rates fall.

Gold hit a record high of $4,336 per ounce on Oct. 20 before falling about 10% through the first week of November. This year, the price of gold has risen more than 60%.

An easing in the US dollar (DX-Y. NYB) and expectations of continued fiscal spending and "run-it-hot" government policies heading into 2026 are also expected to support bullion prices.

"We have a tremendous deficit ... we also have a tremendous amount of government spending, and on top of that, we have a tremendous amount of central bank buying," Michele Schneider, Marketgauge.com chief strategist, told Yahoo Finance on Friday morning.

On Thanksgiving, President Trump said he aims to end the income tax, citing revenue expected from his tariff policy.

"Over the next couple of years, I think we'll substantially be cutting, and maybe cutting out completely ... income tax," Trump said. "We could be almost completely cutting it because the money we're taking in is going to be so large."

Trump's comments come after floating the idea earlier this month of a tariff “dividend of at least $2,000” for non-high-income earners.

“All of this [talk from Trump] is very inflationary, and that’s what gold is really responding to. I think $4,700 would be a good next target,” Schneider said, referring to her 2026 price forecast.

Following the largest one-day sell-off in over a decade, Wall Street analysts have remained bullish on the price of gold. The precious metal remains on pace for its best year since 1979, driven by central bank purchasing and increased inflows into exchange-traded funds (ETFs).

"We still expect continued central bank buying, alongside private investor flows under Fed easing, to lift gold prices to $4,900 by end-2026, with significant upside if the private investor diversification theme were to gain more traction," Goldman Sachs analysts wrote earlier this month.

Meanwhile, UBS recently raised its price target on the precious metal to $4,500 per ounce by mid-2026.

"Our view on gold remains bullish," UBS analysts wrote earlier this week. "We think gold’s role as a portfolio diversifier and geopolitical hedge is undiminished."

Source: Yahoo Finance

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Commodity

After its longest technical outage in recent years, CME said that all futures trading activity, including gold and silver markets, has resumed just ahead of North America’s trading session.

Trading on the CME was halted overnight following a technical disruption.

“Due to a cooling issue at CyrusOne data centers, our markets are currently halted. Support is working to resolve the issue in the near term and will advise clients of Pre-Open details as soon as they are available,” the CME Group said in an official statement.

Despite the overnight disruption, over-the-counter spot markets continue to show solid demand for the precious metals.

CME is the biggest exchange operator by market value. Although the outage has impacted some activity in gold and silver, the precious metals also trade on over-the-counter markets which continued to rally overnight.

The gold market has seen solid demand this week, with spot prices testing resistance at $4,200 an ounce overnight. The precious metal last traded at $4,175 an ounce, up 2.7% this week and trading near a two-week high.

Meanwhile, silver is once again testing resistance just below $54 an ounce. Spot silver last traded at $53.87 an ounce, up nearly 8% so far this week.

Some analysts note that while CME’s outage has disrupted markets, the impact has been limited due to thin holiday activity. U.S. markets were closed Thursday for Thanksgiving, and on Friday they will only be open for half a day.

“It has been a long while since we’ve seen an outage of this duration. Thankfully, it arrived on a relatively quiet trading day, with many US participants enjoying a long Thanksgiving break,” said Ole Hansen, head of Commodity Strategy at Saxo Bank, in a comment on social media.

The timing of the outage has also raised the ire of precious metals conspiracy theorists, who have flooded social media with comments. The outage occurred just as silver prices were testing new highs above $54 an ounce.

Rising silver demand continues to put significant pressure on the physical market, which remains in a permanent supply deficit.

Hansen dismissed many of the conspiracy theories floating around.

“The #silver conspiracists are having a field day, claiming the @CMEGroup, worried about a thin order book, shut down its entire platform to prevent a breakout. Needless to say, that’s complete nonsense. And before the comment area lights up like a Christmas tree, do note I have been bullish on silver since 2022, and expect prices to climb further in the coming months,” he said.

Source: Kitco

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Stocks

Stocks Edge Higher, But November’s Losing Streak Looks Locked In

Daily S&P 500 Index (SPX)

U.S. equities are drifting higher Friday, though volumes are thin and the action feels more like a placeholder than a statement. A data center cooling issue at CyrusOne halted trading at the CME earlier in the session — the kind of disruption that can whip prices around when liquidity’s already scarce. And it doesn’t get much scarcer than the day after Thanksgiving.

At last check, the Dow was up 86 points, or 0.18%. The S&P 500 added 0.12%, and the Nasdaq ticked up 0.18%. Modest gains, but nobody’s popping champagne. With Wall Street running a shortened session and most desks lightly staffed, moves in either direction could get exaggerated. Traders know it — and they’re treading carefully.

A Tough Month for Tech

November’s been unkind, especially to the growth names. Doubts around AI profitability are creeping in, and investors are questioning whether the hype got ahead of the fundamentals. The Nasdaq’s down about 2% on the month — snapping a seven-month winning streak. The Dow and S&P 500 are also slightly lower, breaking six consecutive months of gains.

Still, some buyers are sniffing around. The thinking: beaten-down valuations could set up a year-end rally if sentiment turns. It’s a reasonable bet, but the market hasn’t fully committed yet. There’s interest, but not conviction.

Weekly Bounce Offers Some Relief

Despite the monthly drag, the week itself has been solid. The Dow’s up more than 2%, the S&P 500 is 3% higher, and the Nasdaq has rallied 4% — a welcome turnaround for tech longs who’ve been watching their screens bleed.

Energy and communication services are leading the charge Friday, up 0.81% and 0.84%, respectively. Consumer discretionary’s adding half a percent on Black Friday optimism. Healthcare’s the laggard, off 0.39%, while tech is barely budging — flat after a week of heavy lifting.

What to Watch

Daily Macy’s Inc.

Black Friday’s bringing modest bids to the big retailers. Macy’s is up 1.5%, Best Buy added 0.4%, and Walmart’s ticking higher. Costco, Target, and Dillard’s are fractionally green. Early reads on holiday spending could shape sentiment heading into December.

Nasdaq 100 and S&P 500: US Stocks Drift Higher as November Losses Loom_3

Elsewhere, SanDisk’s climbing more than 4% ahead of its S&P 500 inclusion — index funds are buying. On the flip side, Tilray cratered 14% after announcing a 1-for-10 reverse split. Never a good look for a stock already trading around a dollar.

Bottom line: the week’s been a winner, but November’s ending on a whimper. Buyers are nibbling, not feasting. The real test comes in December, when the market decides whether this pullback was a buying opportunity — or just the start of something bigger.