Nasdaq Futures Sink as AI Trade Shows New Cracks: Markets Wrap
(Bloomberg) — A global rally in technology shares faltered after disappointing earnings from two industry heavyweights revived doubts over whether billions of dollars in artificial intelligence spending will deliver sufficient returns.
Nasdaq 100 Index futures fell 1.3%, signaling that the underlying gauge’s three-day rally was set to end. Contracts for the S&P 500 Index dropped 0.5
%. Futures held the declines after data showed the US economy grew faster than expected in the third quarter.
The technology sector was under pressure as Alphabet Inc. slumped 11% in US premarket trading after sales underwhelmed, reinforcing concerns that Google is losing ground to AI rivals despite pouring hundreds of billions of dollars into the technology. Samsung Electronics Co. slid 4.1% as the lack of a new shareholder return plan disappointed investors, profit from chip operations missed estimates and capex increased.
The latest earnings have exposed fresh cracks in the AI complex, raising doubts about whether massive spending on the technology can deliver returns quickly enough to justify higher valuations. Amazon.com Inc.’s results Thursday, followed by Apple Inc. next week, will test sentiment further, with investors increasingly demanding evidence that heavy investment is translating into stronger profits.
“The market isn’t questioning whether Alphabet has an AI opportunity; it’s questioning how much investors should pay for that opportunity while the cash-flow consequences of building it remain so substantial,” said Chris Weston, head of research at Pepperstone. “Investors remain willing to reward companies demonstrating clear AI-driven revenue momentum, but they’re becoming increasingly unforgiving when spending, margins and cash generation fall short of expectations.”
Microsoft Corp. shares rose 3.7% in premarket trading on solid cloud sales, before paring most of the advance after kicking off its first high-grade bond sale since 2017, joining the borrowing spree to finance AI investment.
Shares in software companies were broadly lower after disappointing quarterly results from ServiceNow Inc. and Fortinet Inc. added to concerns about the industry’s prospects in a world awash with AI. Fortinet plunged 27%, while an EFT tracking the tech-software sector was down 4.6%.
Meanwhile, earnings from other sectors continued to roll in. Caterpillar Inc., whose biggest unit makes power equipment for AI data centers, plunged 10% after forecasting “moderate” fourth-quarter sales growth, while Merck & Co. climbed after boosting its guidance. Eli Lilly & Co. jumped after a beat.
Marvell Technology Inc. plunged 12% after Bloomberg reporter it’s in advanced talks to buy data center optics maker Lumentum Holdings Inc. Shares of Lumentum gained 4.5%. DoorDash Inc. gained after agreeing to buy rival Instacart.
Europe’s Stoxx 600 index rose 0.6% as gains for energy and telecommunications stocks offset declines in banks. Shell Plc advanced after announcing a big increase in its share buyback. BBVA SA, Spain’s second-biggest lender, fell after profit in its home market declined.
ING Groep NV dropped after missing third-quarter profit estimates as costs rose and and it set aside more money for souring loans. The Dutch lender also said it will cut about 400 staff to refocus its wholesale banking business.
In fixed-income markets, Treasuries were steady after the Federal Reserve held off from raising interest rates on Wednesday. The yield on the rate-sensitive two-year note hovered around 4.7% after falling seven basis points yesterday. The yield on the 10-year was flat at 5%.
Oil dropped as traders assessed fresh diplomatic efforts in the Middle East to avert a potential restart of US military strikes on Iran. Global benchmark Brent declined 1% to $114.10 a barrel.
What Bloomberg Strategists Say…
“Core PCE in the US is forecast to show that price pressures picked up in September, but an overshoot is what will rattle bonds. Treasury front-end bonds have rallied in the past month, with the two-year yield having declined about 25 basis points, so any suggestion that the Federal Reserve still has a long way to go to quell inflation will spur traders to take some money off the table.”
— Ven Ram, cross-asset strategist. Click here for more.
After the Fed voted 10-2 to hold rates steady, attention turns to the European Central Bank’s monetary policy decision Thursday and the Bank of Japan’s on Friday. Both are expected to keep rates unchanged.
“No change in policy is expected by the ECB, though it may look to calm fears about Eurozone sovereign debt risks by stressing it has the tools to ward off systemic threats to the economy,” Peter Dragicevich, currency strategist for APAC at CorPay, wrote in a note.
Corporate News:
Societe Generale SA reported surging equities trading in the third quarter, making it the latest bank to benefit from a tide lifting the entire industry. Deutsche Telekom AG’s plans to combine with its American arm T-Mobile US Inc. have hit a snag, people familiar with the matter said, casting doubt on what would be the largest-ever public merger. Renault SA confirmed its financial outlook for the year in a challenging environment for European automakers, which are restructuring to better compete with fast-moving rivals from China. Anheuser-Busch InBev’s volumes missed analyst estimates last quarter as sluggish sales of beer and weak demand in China offset growth elsewhere at the world’s biggest brewer. Adidas AG’s hot-selling apparel and sports products propelled its growth in the third quarter as the German brand looks to extend the momentum built with retro sneakers like the Samba. Amundi SA Chief Executive Officer Valérie Baudson said the recent turmoil in France hasn’t had an impact on the Paris-based asset manager, which reported a higher profit in the third quarter. Volkswagen AG swung to a loss after absorbing another round of writedowns as the carmaker fights to get on top of a fast-deteriorating environment led by declines in China. Air Liquide SA revenue grew to its highest in nearly four years, propelled by increased demand in its artificial intelligence-exposed unit. Lloyds Banking Group Plc beat profit estimates in the third quarter, driven by both an increase in interest income and fees, and maintained its guidance through the end of the year. Some of the main moves in markets:
Stocks
S&P 500 futures fell 0.5% as of 8:37 a.m. New York time Nasdaq 100 futures fell 1.3% Futures on the Dow Jones Industrial Average fell 0.4% The Stoxx Europe 600 rose 0.6% The MSCI World Index rose 0.2% Currencies
The Bloomberg Dollar Spot Index was little changed The euro was little changed at $1.1144 The British pound was little changed at $1.3332 The Japanese yen was little changed at 157.95 per dollar Cryptocurrencies
Bitcoin fell 1.6% to $79,980.62 Ether fell 1.7% to $2,317.53 Bonds
The yield on 10-year Treasuries was little changed at 5.01% Germany’s 10-year yield was little changed at 3.37% Britain’s 10-year yield declined one basis point to 5.31% Commodities
West Texas Intermediate crude fell 1% to $101.73 a barrel Spot gold fell 1% to $4,026.59 an ounce This story was produced with the assistance of Bloomberg Automation.
©2026 Bloomberg L.P.
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