Stocks Find Buyers After Slide as Gold Hits $4,000: Markets Wrap
(Bloomberg) — A respite in the six-month stock rally from the edge of a bear market was quickly followed by the resurgence of dip buyers on speculation equities have more room to run despite elevated valuations.
While the S&P 500 saw a mild gain Wednesday, it remained close to record territory. The insatiable appetite for stocks has propelled a 35% surge from this year’s tariff-fueled meltdown, with occasional calls for consolidation only triggering quick pauses on bets the bull market is nowhere near its end.
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Momentum-chasing traders keep piling into stocks after a series of records fueled by factors such as corporate resilience and the restart of Federal Reserve rate cuts. Renewed enthusiasm around artificial intelligence has trumped recent calls around a bubble forming in the high-profile tech names that have led the rally.
“With price-to-earnings ratios for today’s tech giants still well below those of the tech firms at the peak of the dotcom bubble, we think the bull market remains intact,” said Mark Haefele at UBS Global Wealth Management.
While breadth was nothing to write home about, it was the group of tech shares that led gains. The S&P 500 hovered near 6,740. The yield on 10-year Treasuries fell one basis point to 4.11%. That’s ahead of a $39 billion US sale. The dollar wavered. Gold hit $4,000.
With a slim economic calendar amid the US government shutdown, investors will be waiting to scour the minutes of the latest Fed meeting. To Elias Haddad at Brown Brothers Harriman, the document will offer more context behind the “risk-management cut.”
“We anticipate the Fed to turn more dovish by the time of the December FOMC meeting because restrictive monetary policy can worsen the already fragile employment backdrop and upside risks to inflation are not materializing,” said Haddad.
“Despite headline risks like the government shutdown, markets have been strikingly calm — with no moves greater than 1% in the past six weeks — as investors continue to wait for a catalyst amid a dearth of economic data,” said Mark Hackett at Nationwide.
An equity advance of the magnitude we’ve experienced in the past six months was seen in just five other instances since 1950, data compiled by Bloomberg show.
When US stocks hit a record in September in the past, they proceeded to rally in the fourth quarter, gaining 4.8% on average during that time, according to the Stock Trader’s Almanac’s data going back to 1950.
It’s too early to be worried about a bubble in high-flying US technology stocks, according to Goldman Sachs Group Inc. strategist Peter Oppenheimer, who said their rally has been accompanied by robust earnings growth. In past bubbles, the market was driven higher mainly by speculation.
Still, the strategist reiterated his recommendation that investors seek diversification to avoid risks around a narrow US stock rally and higher competition in the AI space.
“Every little dip has been successfully ‘bought’ with both hands by investors for months now,” said Matt Maley at Miller Tabak. “It does indeed look like we’ll need further evidence that the colossal spending on AI is not going to produce any serious ROI for a long time before the stock market responds in a meaningfully negative way.”
While the market has experienced a significant rally, driven by AI and macro tailwinds, there are emerging signs of momentum divergence that require careful monitoring, according to Craig Johnson at Piper Sandler.
“Investors should stay long, but remain vigilant, particularly regarding overextended stocks and a government shutdown that seems no closer to resolution,” he said. “A brief period of consolidation or a mild pullback would be widely viewed as a buying opportunity.”
Bank of America Corp. clients were net sellers of US equities for the fourth-straight week, with outflows from both stocks and equity exchange-traded funds, according to strategist Jill Carey Hall.
Outflows had remained mainly in large-cap names, while small caps saw inflows, Hall says. Hall notes clients sold stocks in five of the 11 sectors, with financials having its seventh-straight week of outflows.
“Financials flows are the most negative since mid-Nov. amid a weakening job market and investor concerns over credit,” Hall wrote.
Corporate Highlights:
Elon Musk’s artificial intelligence startup xAI is raising more financing than initially planned, tapping backers including Nvidia Corp. to lift its ongoing funding round to $20 billion, according to people with knowledge of the matter. Cisco Systems Inc. is releasing a new chip and networking system meant to connect AI data centers across hundreds of miles, a move that escalates competition with Broadcom Inc. A fund controlled by a unit of Jefferies Financial Group Inc. sank nearly a quarter of its $3 billion trade finance portfolio into receivables tied to auto parts supplier First Brands Group Inc. Canada’s Cenovus Energy Inc. increased its takeover bid for rival MEG Energy Corp. one day before MEG investors were due to vote, signaling that the companies’ original deal didn’t have enough shareholder support. ASML Holding NV shares fell after US lawmakers accused the Dutch chip equipment maker of boosting China’s semiconductor industry, raising the specter of further export controls on the company’s lithography machines. BMW AG lowered its financial guidance on weak sales in China and tariff costs, underscoring the difficulties Germany’s export-reliant auto industry is facing. Security services group Verisure Plc’s shares rallied in its first day of trading, after the initial public offering raised about €3.2 billion ($3.72 billion) in the largest European debut in three years. Teck Resources Ltd. once again cut output guidance for its flagship copper mine in Chile, little more than a month after agreeing one of the biggest ever mining deals with Anglo American Plc. SoftBank Group Corp. agreed to acquire ABB Ltd.’s industrial robots unit at an enterprise value of almost $5.4 billion, reflecting billionaire Masayoshi Son’s growing bets on emerging technology in artificial intelligence and robotics. What Bloomberg Strategists say…
“Some AI-related stocks may still justify lofty valuations as risks are concentrated in smaller companies with weak fundamentals.”
—Tatiana Darie, Macro Strategist, Markets Live. For the full analysis, click here.
Some of the main moves in markets:
Stocks
The S&P 500 rose 0.4% as of 11 a.m. New York time The Nasdaq 100 rose 0.6% The Dow Jones Industrial Average rose 0.2% The Stoxx Europe 600 rose 0.8% The MSCI World Index rose 0.3% Bloomberg Magnificent 7 Total Return Index rose 0.4% The Russell 2000 Index rose 0.5% Currencies
The Bloomberg Dollar Spot Index was little changed The euro fell 0.3% to $1.1626 The British pound was little changed at $1.3425 The Japanese yen fell 0.4% to 152.49 per dollar Cryptocurrencies
Bitcoin rose 0.3% to $122,402.05 Ether fell 1.2% to $4,456.19 Bonds
The yield on 10-year Treasuries declined one basis point to 4.11% Germany’s 10-year yield declined three basis points to 2.68% Britain’s 10-year yield declined one basis point to 4.71% The yield on 2-year Treasuries advanced one basis point to 3.58% The yield on 30-year Treasuries declined two basis points to 4.70% Commodities
West Texas Intermediate crude rose 1.1% to $62.42 a barrel Spot gold rose 1.5% to $4,045.22 an ounce ©2025 Bloomberg L.P.
