Stocks Lose Ground as Traders Await Truce Update: Markets Wrap
(Bloomberg) — US stocks pulled back from record highs as investors looked for progress toward a longer-term peace deal in the Middle East.
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The S&P 500 slid 0.1% after the benchmark closed above the 7,000 mark for the first time. The Nasdaq 100 also struggled to stay in the green. The early hours of the session saw a sharp rally in technology stocks after Taiwan Semiconductor Manufacturing Co.’s upbeat revenue outlook highlighted the resilience of AI chip demand.
Brent crude hovered around $98 a barrel as movements through the Strait of Hormuz remained all but paralyzed. Treasury yields edged higher after initial jobless claims for the week through April 11 fell more than expected. The dollar snapped an eight-day losing streak while gold tested $4,800 an ounce.
Delegates at the International Monetary Fund and World Bank meetings in Washington have cautioned that markets are underestimating the war’s economic damage.
In the latest developments in the conflict, Pakistan stepped up efforts to help the US and Iran prolong a ceasefire that’s set to expire next week.
“Investors have become conditioned to buy every dip,” said Michael Bell, head of market strategy at RBC BlueBay Asset Management. “The outlook is binary, either Hormuz reopens soon or it doesn’t. With equity markets already assuming Hormuz will reopen soon, the upside is perhaps limited.”
Retail, media and technology stocks fueled gains in Europe where the Stoxx 600 rose more than 0.4%. A gauge for the sector in Asia climbed to a record high, while Taiwan’s total market cap topped $4.1 trillion to overtake the UK.
“TSMC describing AI demand as ‘extremely robust,’ pushing capex to the upper end of a $52 billion to $56 billion range, and signaling that the next three years of investment will significantly exceed the last three; that is not the language of a cycle nearing its peak,” said Amanda Lyons, information technology sector lead and head of research at Energy Group Capital.
Microsoft Corp. outperformed among the Magnificent Seven with a 0.5% advance. News that Elon Musk’s staff sought quotes for chipmaking equipment for his envisioned Terafab added to the upbeat mood in tech. Allbirds Inc. tumbled after soaring on Wednesday.
Technology stocks have been snapped up in recent weeks after lagging the market for much of the year, putting the Nasdaq 100 on course for its longest winning streak since 2017 if the gauge extends gains on Thursday.
Claudia Panseri of UBS Wealth Management said her exposure to artificial intelligence stocks is focused on the US and China and is “more selective” than two years ago. “We also prefer companies which are still investing using cash, rather than companies issuing bonds,” Panseri told Bloomberg TV.
What Bloomberg’s Strategists Say:
“A record high for stocks doesn’t imply that risks have returned to where they were in January; investors just seem to be underpricing how much riskier the world is now. The S&P 500’s fresh peak suggests, on the surface, that risks have diminished below where they were at the end of February. Yet investors are still demanding a higher risk premium now versus then.”
—Sebastian Boyd, Macro Strategist, Markets Live
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Corporate News:
Charles Schwab Corp. reported first-quarter assets that topped estimates as the brokerage continued to attract the wealth of retail investors even amid geopolitical uncertainty. Sales of Tesla Inc.’s Cybertruck have been propped up in recent months by Elon Musk’s other companies, an unusual arrangement that further indicates the polarizing pickup is failing to appeal to everyday buyers. PepsiCo Inc.’s quarterly revenue and earnings beat expectations, as the maker of Doritos and Lay’s sees improvement in salty snacks volume following recent price cuts. Pernod Ricard SA expects the war in the Middle East to drive sales down as much as 4% for the year as it continues to struggle with weak demand in the US and China. Taiwan Semiconductor Manufacturing Co. booked a 58% surge in profit, a sign that the Middle East war in its first few weeks did not depress booming AI investment. Elon Musk’s lieutenants have reached out to chip industry suppliers including Applied Materials Inc., Tokyo Electron Ltd. and Lam Research Corp. for his envisioned Terafab, early steps in an audacious and likely arduous attempt to break into the production of cutting-edge chips. EasyJet Plc shares fell the most since 2022 after the UK budget airline warned of a loss in the first half of this fiscal year because of disruptions from the Iran war. Some of the main moves in markets:
Stocks
The S&P 500 fell 0.2% as of 9:57 a.m. New York time The Nasdaq 100 fell 0.3% The Dow Jones Industrial Average was little changed The Stoxx Europe 600 was little changed The MSCI World Index was little changed Currencies
The Bloomberg Dollar Spot Index rose 0.1% The euro fell 0.3% to $1.1769 The British pound fell 0.2% to $1.3537 The Japanese yen fell 0.2% to 159.25 per dollar Cryptocurrencies
Bitcoin fell 1.6% to $73,652.32 Ether fell 2.6% to $2,302.9 Bonds
The yield on 10-year Treasuries was little changed at 4.29% Germany’s 10-year yield declined two basis points to 3.02% Britain’s 10-year yield was little changed at 4.82% Commodities
West Texas Intermediate crude rose 2.2% to $93.33 a barrel Spot gold was little changed This story was produced with the assistance of Bloomberg Automation.
–With assistance from Neil Campling, Subrat Patnaik and Ruhell Amin.
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