US Stock Futures Drift Amid Valuation Concerns: Markets Wrap

(Bloomberg) — Equity markets took a breather at the end of an up-and-down week dominated by speculation about the sustainability of the blistering global equity rally.

Contracts on the S&P 500 were steady, with the gauge on track for a modest weekly gain after it closed at record highs twice before pulling back the next day. Intel Corp. rose in premarket trading after the US government-backed chipmaker introduced new products. Qualcomm Inc. declined as China started an antitrust probe into its acquisition of a connected-vehicle technology firm.

Crude oil fell for a second day as a deal to end the war in Gaza took shape. The dollar slipped after a four-day rally, while Treasury yields ticked lower. Gold clawed back some of Thursday’s sharp losses to trade around $4,000.

Global stocks have rebounded more than 30% from their April lows, leading investors to reassess stretched valuations in the tech sector against the backdrop of easier Federal Reserve policy and a resilient economy. Traders are looking to the upcoming earnings season to gauge whether share prices have run ahead of fundamentals.

“Dips in the equity complex should still be viewed as buying opportunities, with the path of least resistance continuing to lead higher amid resilient underlying economic growth, robust earnings growth, and a looser Fed policy backdrop,” said Michael Brown, senior research strategist at Pepperstone Group Ltd.

While tech has led the way in the S&P 500’s rebound, other sectors such as electrical equipment makers and construction firms have also benefited from AI spending, broadening the rally, according to Wolf von Rotberg, an equity strategist at Bank J Safra Sarasin. But with the benchmark now at its most expensive in almost 25 years, based on the estimated price-to-earnings ratio, valuations are looking too rich for comfort, he said.

“Even though the AI narrative has been undisrupted lately, we would caution against chasing the market after such a strong rally and at these valuations,” Von Rotberg said.

The Stoxx Europe 600 benchmark slipped, led by energy companies and miners. France’s CAC 40 index fluctuated as President Emmanuel Macron continued his search for a new prime minister capable of holding together a fragile budget accord among rival lawmakers.

Among individual movers in Europe, Stellantis NV gained after the carmaker reported that third-quarter deliveries climbed 13% on surging sales in North America.

Elsewhere, the yen extended gains against the dollar after Japan’s ruling coalition collapsed Friday. Nikkei 225 futures in Singapore fell and Japanese bond futures rose.

Some of the main moves in markets:

Stocks

S&P 500 futures rose 0.1% as of 8:20 a.m. New York time Nasdaq 100 futures rose 0.2% Futures on the Dow Jones Industrial Average rose 0.2% The Stoxx Europe 600 was little changed The MSCI World Index fell 0.1% Currencies

The Bloomberg Dollar Spot Index fell 0.1% The euro was little changed at $1.1574 The British pound fell 0.1% to $1.3287 The Japanese yen rose 0.3% to 152.54 per dollar Cryptocurrencies

Bitcoin rose 0.3% to $121,571.78 Ether rose 0.1% to $4,343.45 Bonds

The yield on 10-year Treasuries declined four basis points to 4.09% Germany’s 10-year yield declined three basis points to 2.67% Britain’s 10-year yield declined five basis points to 4.70% Commodities

West Texas Intermediate crude fell 1.4% to $60.64 a barrel Spot gold rose 0.3% to $3,989.71 an ounce This story was produced with the assistance of Bloomberg Automation.

–With assistance from Anand Krishnamoorthy and Jan-Patrick Barnert.

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