Wall Street Buys the Dip in Stocks After AI Rout: Markets Wrap
(Bloomberg) — At a time when every dip in stocks is perceived as an opportunity, buyers emerged after a brief pullback led by some of the biggest winners of the artificial-intelligence boom. Bitcoin rallied. Bonds fell.
About 300 shares in the S&P 500 rose. While Wall Street didn’t see a buying stampede on Wednesday, equities were able to bounce after a slide that underscored worries over how stretched the market has become and how sensitive it is to unfavorable news.
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“For investors with cash on the sidelines, the recent market pullback seems like a good time to buy, especially for investors with a longer time horizon,” said Robert Edwards at Edwards Asset Management. “Earnings are crushing it and growing faster than revenues and that often leads to multiple expansion.”
Traders also kept an eye on the latest economic reports, with US services activity expanding in October at the fastest pace in eight months on a swift upturn in the growth of new orders. Meantime, employment at US companies increased, signaling some stabilization in the job market.
And the US Treasury indicated it’s not looking to boost sales of notes and bonds until well into next year, in a decision that will see the government increasingly rely on bills to fund the budget deficit. Dealers had widely expected the move.
The S&P 500 hovered near 6,790. The yield on 10-year Treasuries rose five basis points to 4.14%. Bitcoin gained 2.5%. The dollar wavered.
Concerns about an ever-narrowing cohort of stocks driving the gains have become louder, while a hawkish pivot in Federal Reserve commentary has put a dent in optimism over rate cuts. Technical indicators are increasingly flagging reasons for caution, adding to the drag on sentiment from warnings by Wall Street chief executives about frothy valuations.
“Some consolidation should not come as a surprise, in our view, especially after a strong run over the past several months,” said Ulrike Hoffmann-Burchardi at UBS Global Wealth Management. “While political uncertainty and shifting investor sentiment could inject further volatility into the market, we continue to believe that the fundamentals supporting the rally remain intact.”
She noted that high valuations do not necessarily signal an imminent correction. Instead, declines are more likely when corporate profit growth disappoints, with forward returns more correlated with changes in earnings expectations over the next 12 months. In addition, the tech sector’s core metrics remain robust.
“The 12-month forward price-to-earnings ratios for today’s tech giants are far lower than those at the peak of the dotcom bubble,” she said. “Leading companies continue to report stronger-than-expected demand for AI compute and services, while maintaining robust cash positions and balance sheets.”
Corporate Highlights:
Advanced Micro Devices Inc., the main contender to Nvidia Corp. in the artificial intelligence chip market, failed to impress investors with its revenue forecast after an eye-popping rally sent expectations soaring. Super Micro Computer Inc. missed reduced estimates for first-quarter sales and profit and gave a disappointing earnings forecast for the current period, reinforcing concerns about its ability to capitalize on demand for AI equipment. Pinterest Inc. issued a weak revenue forecast, a sign that the search platform’s advertising business may not be growing as quickly as expected despite the upcoming holiday shopping season. Alphabet Inc.’s Google and cybersecurity company Wiz Inc. cleared a key hurdle to closing their $32 billion deal, with the US government saying it would wrap up its investigation of the acquisition. McDonald’s Corp. reported faster-than-expected US sales growth last quarter as diners prioritized cheap fast food and pulled back from more premium meals at fast-casual chains. Bank of America Corp., seeking to revive a stock that’s trailing its main US peers this year, laid out a slew of new financial targets — forecasting that earnings per share will rise at least 12% annually over the next several years. After a spate of US regional-bank mergers in recent months, even more are likely as the timeline for regulatory approvals quickens, KeyCorp Chief Executive Officer Chris Gorman said. Humana Inc. kept its full-year guidance unchanged despite reporting better-than-expected adjusted profit for the third quarter. Teva Pharmaceuticals Inc.’s sales of branded medications topped expectations, showing that its strategy to expand into that drug category is working. Bunge Global SA posted third-quarter earnings that beat expectations as it navigates an uncertain export landscape and lingering questions around US biofuels policy. Rivian Automotive Inc. reported a smaller-than-expected loss in a sign of progress as the electric-vehicle maker cuts costs and staff ahead of plans to begin deliveries of a new midsize SUV next year. Sonos Inc.’s new chief executive officer outlined a fresh product strategy after the audio brand reported better-than-expected quarterly revenue, the latest in the company’s effort to turn itself around following a disastrous app release last year. 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. BMW AG said demand for the first model in a new generation of vehicles is exceeding expectations as the luxury-auto maker steps up the fight to meet growing competition in China. Europe’s reliance on imported drug ingredients is as dangerous as its dependence on rare earths, according to Fresenius SE Chief Executive Officer Michael Sen, who urged governments to accelerate plans to rebuild local production. Marks & Spencer Group Plc expects profit in the second half to rebound to at least last year’s level as the British retailer revealed the extent of a costly cyberattack in April that severely interrupted sales. Orsted A/S confirmed its full-year profit guidance, seeking to reassure investors of its financial stability after a weak third quarter. Vestas Wind Systems A/S announced a new share-buyback program supported by a strong orderbook for onshore turbines. Abu Dhabi National Oil Co. is poised to win conditional European Union approval for its €12 billion ($13.8 billion) takeover of Covestro AG after it allayed competition concerns over the deal. What Bloomberg strategists say…
“While some tech companies have valuations that are hard to justify, many of the biggest names in the sector are relatively inexpensive compared to their historical past. Amazon, Meta and even Nvidia trade cheaper than the average of the past decade compared to earnings expectations.”
— Sebastian Boyd, Macro Strategist, Markets Live. For the full analysis, click here.
Some of the main moves in markets:
Stocks
The S&P 500 rose 0.3% as of 10:04 a.m. New York time The Nasdaq 100 rose 0.4% The Dow Jones Industrial Average rose 0.2% The Stoxx Europe 600 rose 0.1% The MSCI World Index rose 0.1% Bloomberg Magnificent 7 Total Return Index rose 0.4% The Russell 2000 Index rose 0.6% Currencies
The Bloomberg Dollar Spot Index was little changed The euro was little changed at $1.1472 The British pound was little changed at $1.3019 The Japanese yen fell 0.4% to 154.29 per dollar Cryptocurrencies
Bitcoin rose 2.6% to $102,897.36 Ether rose 3.9% to $3,339.28 Bonds
The yield on 10-year Treasuries advanced five basis points to 4.14% Germany’s 10-year yield advanced one basis point to 2.67% Britain’s 10-year yield advanced four basis points to 4.46% The yield on 2-year Treasuries advanced five basis points to 3.62% The yield on 30-year Treasuries advanced six basis points to 4.72% Commodities
West Texas Intermediate crude fell 0.7% to $60.15 a barrel Spot gold rose 1% to $3,970.06 an ounce ©2025 Bloomberg L.P.
