Stock Rally Fades, But Amazon’s Deal Fuels AI Bets: Markets Wrap
(Bloomberg) — Wall Street’s broader stock market struggled to make headway, but tech shares kept climbing as Amazon.com Inc.’s $38 billion deal with OpenAI added fuel to the artificial-intelligence trade.
A renewed industry advance drove a gauge of the “Magnificent Seven” megacaps up 1.5%. Amazon jumped 4.5% as its cloud unit will provide the ChatGPT maker with access to hundreds of thousands of Nvidia Corp. graphics processing units as part of a seven-year deal. Despite the AI optimism, more than 400 shares in the S&P 500 actually retreated.
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Monday’s deal saw another industry giant join the ranks of those building or retrofitting data centers to back OpenAI. The animal spirits surrounding the revolutionary technology confronted calls for broader-market consolidation after a relentless surge since April’s meltdown.
Traders also kept an eye on the few economic reports slated for this week. US factory activity shrank in October for an eighth straight month while inflationary pressures continued to ease.
Federal Reserve Bank of Chicago President Austan Goolsbee said he wants to see more data before deciding on rates, but warned he’s more concerned about inflation than the labor market. Fed Governor Stephen Miran said monetary policy remains restrictive.
“Concerns over high valuations persist, and the Federal Reserve’s policy outlook appears murkier amid the ongoing US government shutdown,” said Ulrike Hoffmann-Burchardi at UBS Global Wealth Management. “Despite the strong gains in equity markets this year, we continue to believe that this bull market has room to run.”
The S&P 500 hovered near 6,830. Palantir Technologies Inc., whose stock has surged about 385% over the past year amid AI optimism, will report earnings after the closing bell.
The yield on 10-year Treasuries rose two basis points to 4.10%. The dollar wavered.
“Near-term volatility remains likely as record bullishness increases risks to stocks from less than perfect news,” said Julian Emanuel at Evercore.
Investors’ seemingly unshakeable faith that stocks can only go higher has one of Wall Street’s biggest optimists growing concerned that all the good vibes are waving a contrarian red flag.
Bulls have history on their side, as November is historically the best month for returns over the past three decades. But the question is whether those year-end gains have already been priced into the market following one of the S&P 500’s best six-month stretches since the 1950s.
“There are too many bulls,” says Ed Yardeni, founder of Yardeni Research. “Just one unexpected event could knock stocks down from their highs amid poor market breadth, but that may be tough to do, given that traders are usually optimistic around the holidays.”
History reassures investors that the market’s previously impressive pace should not detract from its typical end-of-year run, according to Sam Stovall at CFRA.
“We think 2025 will be no different,” he said. “Despite a possible short and shallow digestion of recent gains, we continue to see share prices advancing through year-end on an improvement in earnings growth expectations, a further lifting of trade barriers, an end to the government shutdown, and another rate cut in December.”
Corporate Highlights:
Microsoft Corp. has signed a roughly $9.7 billion deal to buy artificial intelligence computing capacity from IREN Ltd., becoming the Australian company’s largest customer. Microsoft is planning to spend more than $7.9 billion on data centers, cloud computing and employees in the United Arab Emirates over the next four years, capitalizing on a US government clearance to ship artificial intelligence chips to the Gulf nation. Nvidia Corp. can add trillions more to its valuation after making history as the first company to ever breach a $5 trillion market capitalization, according to at least one analyst. Loop Capital Markets on Monday raised its price target to a Street-high view of $350, up from $250. Alphabet Inc. is looking at selling about $15 billion of bonds in the US, and launched the sale of €6.5 billion ($7.48 billion) of notes in Europe, adding to a wave of borrowing from technology companies as they invest aggressively in artificial intelligence. Cisco Systems Inc. unveiled a new all-in-one product that’s meant to help retail stores, health care facilities and factories use artificial intelligence with a single rack of equipment, part of the company’s push to take a bigger role in AI. Pfizer Inc. accused Novo Nordisk A/S of trying to stifle competition in the weight-loss market by attempting to acquire obesity startup Metsera Inc., the second lawsuit in four days as Pfizer tries to retain its grip on a deal that Novo upended last week. Kimberly-Clark Corp. agreed to buy Kenvue Inc. in a deal worth roughly $40 billion, providing a lifeline to the struggling Tylenol maker. Eaton Corp. agreed to buy liquid cooling specialist Boyd Thermal for $9.5 billion to capitalize on heavy demand related to artificial intelligence data centers. Permian Basin explorer SM Energy Co. agreed to buy rival Civitas Resources Inc. in an all-stock transaction for about $2.8 billion, the latest move to consolidate the US shale industry. Coeur Mining Inc. agreed to acquire New Gold Inc. for about $7 billion in an all-stock deal that consolidates two midsize North American gold producers as surging bullion prices have reignited investor interest in the sector. Airbus SE delivered 78 aircraft in October, according to people familiar with the matter, as the planemaker inches towards an ambitious annual target that it said remains within reach even as component shortages persist. UBS Group AG is selling its first bonds since a court decision raised questions about the Swiss lender’s possible exposure to previously canceled AT1 debt. Ryanair Holdings Plc expects to exceed its passenger growth target for the full year as the airline receives aircraft early from Boeing Co. and demand for travel remains strong. BP Plc agreed to divest stakes in US shale assets to Sixth Street for $1.5 billion as it seeks to shore up its balance sheet and win back investor confidence. Some of the main moves in markets:
Stocks
The S&P 500 fell 0.2% as of 10:35 a.m. New York time The Nasdaq 100 rose 0.2% The Dow Jones Industrial Average fell 0.8% The Stoxx Europe 600 was little changed The MSCI World Index fell 0.3% Bloomberg Magnificent 7 Total Return Index rose 1.4% The Russell 2000 Index fell 1.5% Amazon rose 4.5% Currencies
The Bloomberg Dollar Spot Index was little changed The euro fell 0.2% to $1.1512 The British pound fell 0.2% to $1.3121 The Japanese yen was little changed at 154.08 per dollar Cryptocurrencies
Bitcoin fell 3.5% to $106,161.83 Ether fell 6.2% to $3,621.05 Bonds
The yield on 10-year Treasuries advanced two basis points to 4.10% Germany’s 10-year yield advanced one basis point to 2.65% Britain’s 10-year yield advanced two basis points to 4.43% The yield on 2-year Treasuries advanced two basis points to 3.59% The yield on 30-year Treasuries advanced four basis points to 4.69% Commodities
West Texas Intermediate crude fell 0.6% to $60.64 a barrel Spot gold rose 0.2% to $4,010.66 an ounce ©2025 Bloomberg L.P.
