Stocks Erase Losses as Big Tech Selloff Eases: Markets Wrap

(Bloomberg) — US stock futures erased losses as dip buyers stepped in after a selloff in some of the biggest winners of the artificial-intelligence boom.

Contracts on the S&P 500 and Nasdaq 100 were little changed and well off early lows after both indexes saw their steepest declines in nearly a month amid worries over stretched tech valuations. The Russell 2000 gauge of small-cap stocks was set for its first gain of the week.

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The Magnificent Seven heavyweights were mixed in premarket trading. Super Micro Computer Inc. plunged on disappointing results, while Advanced Micro Devices Inc. slipped after its update failed to impress.

Treasuries dipped after ADP Research data showed employment at US companies increased in October, signaling some stabilization in the job market after two straight months of declines. Yields rose across the curve, with the rate on 10-year notes two basis points higher at 4.11%. Meanwhile, the Treasury indicated it’s not looking to boost sales of notes and bonds until well into next year.

Gold rose for the first time in four sessions while Bitcoin rebounded above $102,000. The dollar was little changed.

“The selloff was rather driven by profit-taking and less by fundamentals,” said Stephan Kemper, chief investment strategist at BNP Paribas Wealth Management. “With valuations stretched, a correction is always a possibility and might be even helpful as weak hands and leverage are washed out.”

The initial pause in the global stock rally came after the booming outlook for AI and expectations of continued Federal Reserve interest rate cuts sent the US benchmark up more than 35% from its April lows. Those gains, however, have become increasingly concentrated, prompting some Wall Street chiefs to describe a pullback as a healthy reset.

Earlier on Wednesday, South Korea’s Kospi — a major AI play — slid more than 2% in Asia. Tech stocks also led losses in Europe. The selling wiped out about $500 billion in combined market capitalization from the Philadelphia Semiconductor Index on Tuesday and a Bloomberg gauge of Asian chip stocks on Wednesday.

“We want to see a bit of rotation, we want to see a bit of profit taking, and we want to see investors distinguishing between the good and the not-so-good stories,” said Guy Miller, chief strategist at Zurich Insurance. “I don’t think it’s a breakdown at all. That’s healthy.”

Corporate News:

McDonald’s Corp. reported faster-than-expected sales growth in the US in the latest quarter as diners forked over more cash on their visits to the fast-food chain. Novo Nordisk A/S trimmed its forecast for a fourth time this year on lagging sales of its blockbuster drugs Wegovy and Ozempic, underscoring the urgency facing its new chief executive. Pinterest Inc. shares plunged after its revenue projections for the current quarter fell short of analysts’ estimates, a sign that the search platform’s advertising business may not be growing as quickly as expected despite the upcoming holiday shopping season. SoftBank Group Corp.’s Japanese mobile unit and OpenAI will launch AI services for local companies next year, seeking to realize real revenue in the face of growing concerns over sky-high valuations. Toyota Motor Corp.’s shares dropped the most since April after the carmaker’s annual profit guidance disappointed investors, a sign that the impacts of US President Donald Trump’s tariffs are still weighing on its bottom line. Some of the main moves in markets:

Stocks

S&P 500 futures were little changed as of 8:40 a.m. New York time Nasdaq 100 futures were little changed Futures on the Dow Jones Industrial Average were little changed The Stoxx Europe 600 fell 0.1% The MSCI World Index fell 0.1% Currencies

The Bloomberg Dollar Spot Index was little changed The euro was little changed at $1.1481 The British pound rose 0.1% to $1.3036 The Japanese yen fell 0.2% to 153.94 per dollar Cryptocurrencies

Bitcoin rose 2.4% to $102,685.61 Ether rose 4.1% to $3,344.26 Bonds

The yield on 10-year Treasuries advanced two basis points to 4.11% Germany’s 10-year yield was little changed at 2.65% Britain’s 10-year yield advanced three basis points to 4.45% Commodities

West Texas Intermediate crude fell 0.5% to $60.24 a barrel Spot gold rose 1% to $3,971.53 an ounce This story was produced with the assistance of Bloomberg Automation.

–With assistance from Subrat Patnaik, Sujata Rao and Julien Ponthus.

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