Stocks Slip Amid Trade, Tech and Fed Crosswinds: Markets Wrap
(Bloomberg) — Stocks retreated as traders navigated a US-China trade truce, mixed technology earnings and a cautious Federal Reserve amid a host of moving parts shaping markets.
S&P 500 futures fell 0.2% after the index ended flat on Wednesday. While President Donald Trump hailed an “amazing meeting” with Chinese counterpart Xi Jinping, where both sides agreed to roll back export controls and ease other trade barriers, the summit is expected to stabilize relations rather than resolve deeper differences.
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Meanwhile, shares of the Magnificent Seven tech heavyweights, the driving force behind the US stock rally, diverged widely in premarket trading. Meta Platforms Inc. slumped more than 9% as investors questioned whether the Facebook parent’s heavy spending on artificial intelligence infrastructure would pay off.
Alphabet Inc. jumped 8.7% after posting stronger-than-expected growth in its cloud unit, while Microsoft Corp. fell around 2% as results failed to meet lofty expectations. Together, the three companies spent about $78 billion on capital investments last quarter, up 89% from a year earlier. Amazon.com Inc. and Apple Inc. are due to publish results after the close on Thursday.
Investors are being pulled by cross-currents after global stocks rallied to record highs on optimism over AI’s potential and expectations of Fed policy easing. At the same time, months of tension between the US and China remained in focus as traders looked for an end to the world’s largest trade dispute.
On Wednesday, Fed officials delivered their second straight rate reduction to support a softening labor market and said they would stop shrinking the portfolio of assets from December. Still, Chair Jerome Powell cautioned that another cut this year wasn’t a foregone conclusion, prompting money markets to pare the odds of a quarter-point move to about 60% from near certainty.
“After a month of strong growth across global equity markets, I think it’s quite healthy, frankly, to take a breather,” said David Kruk, head of trading at La Financiere de l’Echiquier. “The path of the Fed — with Powell’s surprise hawkish tilt yesterday — is a big question, as is the extent of capex announced by the Mag 7.”
The European Central Bank is due to announce its policy decision later Thursday.
US Treasuries extended losses, with the 10-year yield advancing three basis points to 4.10%. European bonds were broadly weaker, mirroring Wednesday’s moves in US debt after Powell’s hawkish remarks.
In currency markets, the dollar headed for back-to-back gains and remained on track for its best month since July. The euro fluctuated after the euro area grew more than expected in the third quarter, showing resilience to higher US tariffs, while France posted its strongest growth in more than two years.
The yen weakened to around 154 per dollar after the Bank of Japan left its benchmark interest rate unchanged and offered no new hints on when it might hike.
Meanwhile, Nvidia Corp., which surpassed a $5 trillion valuation on Wednesday, nudged lower in premarket trading after Trump said he hadn’t discussed approving sales of Blackwell chips to China with Xi. The comments dampened speculation that Washington will allow exports of the powerful AI accelerators to the world’s largest semiconductor market. Nvidia is scheduled to report results on Nov. 19.
“There has been a lot of good news priced in,” Nancy Curtin, global chief investment officer at Alti Tiedemann Global, told Bloomberg TV. “Having said that, we are still in the midst of the third-quarter earnings. If we end up again with 12-13% earnings growth in this quarter, with expectations on the rise for next quarter – that helps sustain markets.”
What Bloomberg strategists say…
“For almost all global markets, AI is absolutely dominant and renders everything else a noisy — and most likely unprofitable — side show. And while it seems most would accept we have an AI capex bubble, that isn’t a reason to be bearish.”
-Mark Cudmore, MLIV Executive Editor. Click here for the full analysis.
Corporate News:
Meta Platforms Inc. has begun marketing a dollar-bond sale in as many as six parts, raising cash amid surging growth of artificial intelligence spending. Eli Lilly & Co. shares rose in premarket trading after raising its full-year guidance as revenue from its blockbuster weight loss and diabetes drugs beat analysts’ estimates in the third quarter. Novo Nordisk A/S offered to acquire obesity startup Metsera Inc. for at least $6.5 billion, seeking to trump an agreed deal with Pfizer Inc. so it can consolidate its position in weight-loss medications. American International Group Inc. struck a deal to buy a stake in specialty insurer Convex Group and alternative-asset manager Onex Corp. in deals that total more than $2.7 billion. Hershey Co. shares rose in premarket trading after the candymaker raised its full-year outlook. BYD Co. reported another slump in quarterly profit as intensifying domestic competition and industry scrutiny pile pressure on the Chinese carmaker’s sales outlook. Bristol Myers Squibb Co. raised its revenue outlook for the year after newer medicines outperformed expectations, easing pressure on its portfolio of aging blockbusters. Stellantis NV said it expects one-time charges in the second half of the year as political, economic and regulatory pressures force the automaker into making strategic changes. Shares in Shawbrook Group Plc advanced in their London debut after an initial public offering that raised £348 million ($459 million) in the UK’s largest listing by a local firm in four years. Biogen Inc. cut its full-year profit guidance on higher costs from deals the company has been doing to offset the decline of its aging multiple sclerosis drugs. Some of the main moves in markets:
Stocks
S&P 500 futures fell 0.2% as of 8:28 a.m. New York time Nasdaq 100 futures fell 0.3% Futures on the Dow Jones Industrial Average fell 0.4% The Stoxx Europe 600 fell 0.5% The MSCI World Index fell 0.3% Currencies
The Bloomberg Dollar Spot Index rose 0.3% The euro fell 0.2% to $1.1578 The British pound fell 0.3% to $1.3159 The Japanese yen fell 1% to 154.28 per dollar Cryptocurrencies
Bitcoin fell 2.4% to $108,810.17 Ether fell 2.6% to $3,849.66 Bonds
The yield on 10-year Treasuries advanced three basis points to 4.10% Germany’s 10-year yield advanced three basis points to 2.66% Britain’s 10-year yield advanced five basis points to 4.44% Commodities
West Texas Intermediate crude fell 0.9% to $59.92 a barrel Spot gold rose 1.2% to $3,975.51 an ounce This story was produced with the assistance of Bloomberg Automation.
–With assistance from Subrat Patnaik, James Hirai, Margaryta Kirakosian and Neil Campling.
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