Stocks Extend Losses on Tech Valuation Concerns: Markets Wrap
(Bloomberg) — Global stocks extended losses after suffering their steepest drop in nearly a month on concerns over elevated valuations. Bonds extended gains and investors sought the safety of haven currencies such as the yen.
US equity-index futures slipped in early Asian trading, signaling further losses for the S&P 500 and Nasdaq 100 indexes after the gauges pulled back with tech shares hit the hardest. Sentiment was further dented as Super Micro Computer Inc. shares tumbled in late trading and Advanced Micro Devices Inc. failed to impress investors with its revenue forecast. Asian shares also opened lower, led by South Korean equities, which fell over 4%.
As investors sought safety, Treasuries advanced across the curve, with the yield on the 10-year falling two basis points to 4.07%. The yen strengthened to 153.24 against the dollar. Cryptocurrencies recouped some of the losses from the prior session, when Bitcoin briefly slipped below the $100,000 mark.
The pause in the global stock rally came after the booming outlook for artificial intelligence and hopes the Federal Reserve will keep cutting rates sent the US stock benchmark up by almost 40% from its lows in April. But those gains have been confined to fewer shares as sentiment and technical indicators showed signs of overheating, leading Wall Street chiefs to note the possibility of a retreat as a healthy development.
“The stock market is ripe for some sort of material pullback over the near-term, no matter where it’s going over the intermediate/longer-term,” according to Matt Maley at Miller Tabak.
Warnings about frothy stock valuations are easy to find after a record-breaking rally pushed prices to levels typically associated with exuberance. Optimism has turned intense in recent months, with many traders focused on chasing gains rather than questioning lofty prices.
Yet those solid gains, combined with the recent narrowness of the advance, spurred vulnerability worries.
Corporate earnings are strong but “what’s challenging are valuations,” Mike Gitlin, chief executive officer of Capital Group, said during a financial summit organized by the Hong Kong Monetary Authority on Tuesday.
Contracts for the S&P 500 dipped 0.4% and those for the Nasdaq 100 index 0.7% after US stocks fell amid warnings from Wall Street executives for investors to prepare for a market pullback.
Advanced Micro and Super Micro shares fell in extended trading.
“The bar is simply getting higher, so now a modest earnings beat does not translate into price reaction,” Anna Wu, a cross-asset strategist at Van Eck Associates in Sydney said in a Bloomberg TV interview.
MSCI’s gauge for Asian shares fell 1.2% with losses in Japan and Australia. South Korea briefly halted sell orders for program trading after Kospi 200 futures dropped more than 5%, triggering a so-called sidecar for the first time since April. A gauge of technology shares in the region dropped almost 2%.
Elsewhere, the Australian dollar surged to a 12-year high against the Kiwi early Wednesday after a jump in New Zealand’s jobless rate.
Oil fell for a second day after an industry report indicated the biggest increase in US inventories in more than three months. Gold held the biggest drop in more than a week after the US dollar rose to the highest since May, blunting demand.
“It’s a sea of red across broad markets, and one that offers a gloomy and damp portrayal of risk,” Chris Weston, head of research at Pepperstone Group, wrote in a note to clients.
Corporate News:
Advanced Micro Devices Inc., the main contender to Nvidia Corp. in the artificial intelligence chip market, failed to impress investors with its revenue forecast after an eye-popping rally sent expectations soaring. Super Micro Computer Inc. shares tumbled in late trading after the server maker missed reduced estimates for first-quarter sales and profit and gave a disappointing earnings forecast for the current period. Apple Inc. is preparing to enter the low-cost laptop market for the first time, developing a budget Mac aimed at luring away customers from Chromebooks and entry-level Windows PCs. Some of the main moves in markets:
Stocks
S&P 500 futures fell 0.4% as of 9:53 a.m. Tokyo time Japan’s Topix fell 1.3% Australia’s S&P/ASX 200 fell 0.4% Euro Stoxx 50 futures fell 0.9% Currencies
The Bloomberg Dollar Spot Index was little changed The euro was little changed at $1.1484 The Japanese yen rose 0.2% to 153.38 per dollar The offshore yuan was little changed at 7.1332 per dollar Cryptocurrencies
Bitcoin rose 0.2% to $100,443.98 Ether rose 0.6% to $3,233.92 Bonds
The yield on 10-year Treasuries declined two basis points to 4.07% Japan’s 10-year yield declined 1.5 basis points to 1.660% Australia’s 10-year yield declined four basis points to 4.31% Commodities
West Texas Intermediate crude fell 0.5% to $60.23 a barrel Spot gold was little changed This story was produced with the assistance of Bloomberg Automation.
–With assistance from Abhishek Vishnoi.
©2025 Bloomberg L.P.
