Stocks Fall as Burst of Dip-Buying Fades Quickly: Markets Wrap

(Bloomberg) — Stocks resumed their slide after a brief burst of dip-buying, with caution prevailing at the end of a volatile week that brought this year’s artificial-intelligence-led rally to a halt.

Futures for the Nasdaq 100 fell 0.6% after erasing gains of as much as 0.4%. Contracts on the S&P 500 slipped 0.4% after a heavy bout of selling on Thursday. US Treasuries held onto yesterday’s gains. The dollar was steady, while Bitcoin headed for its worst week since March.

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The Magnificent Seven cohort of tech megacaps extended losses in premarket trading. Tesla Inc. slipped after shareholders approved Elon Musk’s potential $1 trillion pay package. Nvidia Corp. fell more than 1%. Microsoft Corp. was poised for its longest losing streak since 2011.

Investors are heading into the end of a dizzying week that has delivered one of the toughest tests yet for the post-April AI-fueled rally amid growing doubts that the surge has gone too far.

Markets are also flying partly blind amid limited economic data during the longest US government shutdown in history, causing uncertainty on the path for interest rates.

“Sentiment is probably modestly cautious,” said Karen Georges, a fund manager at Ecofi. “Any reassuring news on employment data in the US, a potential end to the shutdown, or tariff news-flow could give markets a new boost.”

With the US benchmark down 1.8% for the week, a notable feature has been the lack of clear catalysts behind the swings. Traders say the choppiness may linger for a while but expect it to remain relatively shallow, with solid earnings and the prospect of eventual Fed easing continuing to underpin sentiment.

Caution is emerging in credit markets as well. Robert Cohen at DoubleLine Capital warned that fixed-income investors should be careful about financing the AI boom.

“You have to be not only cautious about the tech sector, but the tangential, related sectors that are providing support for these new projects,” Cohen said on the Bloomberg Intelligence Credit Edge podcast. “Who knows what the spillover will be if the music stops?”

What Bloomberg Strategists Say…

“While there is near-universal awareness that we are in bubble territory, there hasn’t been enough concern to drive a sustained selloff. That nonchalance stems perhaps from conviction that a backdrop of easy financial conditions will persist. Recent events in the credit market, however, should make traders sit up and take notice.”

— Ven Ram, Macro strategist. For full analysis, click here.

Still, flows remain supportive of stocks despite the volatility, with US equity funds attracting $19.6 billion for the week ending Nov. 5, an eighth consecutive week of inflows, according to Bank of America Corp., citing EPFR data.

“We’re very far away from a a bubble popping, this is not even a correction yet,” said Delphine Arnaud, portfolio manager at Edmond de Rothschild. “There are however some concerns about how fast the massive capex spending can translate into earnings. In this sense, there is bound to be profit taking along the way”

Corporate Highlights:

Airlines across the US began canceling flights scheduled for the coming days, as the longest government shutdown in history snarls up air travel and forces thousands of passengers to change their travel plans. Nvidia Corp. Chief Executive Officer Jensen Huang said his company isn’t in active discussions to sell its Blackwell AI chips to Chinese firms, waving off speculation it’s trying to engineer a return to the world’s largest semiconductor market. TPG has made a binding offer of about €1 billion ($1.15 billion) for the digital banking solutions unit of Italy’s Nexi SpA, people familiar with the matter said. British Airways parent IAG SA said its all-important North Atlantic route experienced some weakness in the third quarter, weighing on earnings that missed estimates and causing the stock to drop the most since April. Novo Nordisk A/S has again increased its offer for Metsera Inc. as its takeover battle with Pfizer Inc. for the obesity startup escalates. Some of the main moves in markets:

Stocks

S&P 500 futures fell 0.4% as of 8:29 a.m. New York time Nasdaq 100 futures fell 0.6% Futures on the Dow Jones Industrial Average fell 0.3% The Stoxx Europe 600 fell 0.7% The MSCI World Index was little changed Currencies

The Bloomberg Dollar Spot Index was little changed The euro rose 0.2% to $1.1568 The British pound was little changed at $1.3136 The Japanese yen was little changed at 153.12 per dollar Cryptocurrencies

Bitcoin fell 1% to $100,030.01 Ether fell 2.8% to $3,231.62 Bonds

The yield on 10-year Treasuries was little changed at 4.09% Germany’s 10-year yield was little changed at 2.66% Britain’s 10-year yield advanced three basis points to 4.46% Commodities

West Texas Intermediate crude rose 0.8% to $59.89 a barrel Spot gold rose 0.5% to $3,996.48 an ounce This story was produced with the assistance of Bloomberg Automation.

–With assistance from Michael Msika, Neil Campling and Julien Ponthus.

(An earlier version corrected the date of Microsoft. Corp’s previous longest losing streak.)

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