US Stocks Stall as Traders Parse Mideast Signals: Markets Wrap

(Bloomberg) — A rally in US stocks is pausing after the artificial-intelligence trade fueled the S&P 500’s longest winning streak in more than a year, with investors gauging prospects for an end to the war in the Middle East.

Futures for the US benchmark slipped 0.1% after an eight-day run of gains. Technology shares gave European and Asian stocks a fresh boost. Hewlett Packard Enterprise Co. soared 28% in US premarket trading on massive AI-fueled demand for its servers and networking equipment.

Brent eased after its biggest gain in about a month, falling 1.9% to trade near $93 a barrel. President Donald Trump is still optimistic the US can reach an interim peace agreement with Iran “over the next week,” after the Islamic Republic threatened to suspend talks because of Israel’s escalating attacks in Lebanon.

Traders are juggling unprecedented euphoria around the economic potential of AI against the war that has brought about a historic disruption in oil markets. Uncertainty about how close a deal may be means traders must consider that crude prices could fall back dramatically or scale to the highest levels in years.

“We may be approaching the point where optimism around the long-term positive impact of the AI buildout is going to crash against a wall of higher yields, higher inflation and lower growth,” said Stephan Kemper, chief investment strategist at BNP Paribas Wealth Management.

Bonds found some relief, with the yield on 10-year Treasuries falling two basis points to 4.43%. The dollar was little changed, while Bitcoin dropped below $70,000.

Treasuries have sold off in recent weeks as investors increasingly bet the Federal Reserve may need to keep rates higher for longer to contain the biggest inflation surge since 2023. The move has also raised questions about whether the mounting US debt burden and AI financing demands are pushing up yields.

“US data, such as the ISM manufacturing print we just had, still keeps the Fed/inflation debate alive and limits the scope for a dovish rates repricing, especially if oil remains volatile,” said Alessandro Gabellone, fixed-income analyst at Bank Degroof Petercam.

Japan’s 10-year yield dropped 10 basis points after an auction drew firm demand. The yen was steady around 159.70 per dollar after Japanese Finance Minister Satsuki Katayama said authorities were ready to take steps as needed in the foreign exchange market.

Corporate News:

SK Hynix Inc. plans to double its memory chip wafer capacity over the coming half-decade, a major expansion that should help ease a global shortage of an essential component of AI. Abivax SA shares plunged after cancer cases in a crucial clinical trial for an experimental bowel disease drug threw the French biotech’s future into question. UniCredit SpA has secured commitments that will take its stake in Commerzbank AG well above 30%, according to people familiar with the matter, adding momentum to its €38.6 billion ($45 billion) acquisition offer for the German rival. Alphabet Inc. unveiled plans to raise $80 billion through equity offerings, including an investment deal with Berkshire Hathaway Inc., highlighting the scale of spending tied to the race to build AI infrastructure. Anthropic PBC pulled ahead of OpenAI with its confidential IPO filing Monday, as the free-spending AI startups battle for a fundraising edge that’s set to determine who will win the ultimate battle for computing power. Hewlett Packard Enterprise Co. shares soared 28% in late trading after the company gave an outlook for annual sales that topped estimates, citing massive growth in AI-fueled demand for its servers and networking. Some of the main moves in markets:

Stocks

The Stoxx Europe 600 rose 0.7% as of 10:15 a.m. London time S&P 500 futures fell 0.1% Nasdaq 100 futures were little changed Futures on the Dow Jones Industrial Average fell 0.3% The MSCI Asia Pacific Index rose 0.5% The MSCI Emerging Markets Index rose 0.9% Currencies

The Bloomberg Dollar Spot Index was little changed The euro was little changed at $1.1641 The Japanese yen was little changed at 159.74 per dollar The offshore yuan was little changed at 6.7626 per dollar The British pound was little changed at $1.3467 Cryptocurrencies

Bitcoin fell 2.7% to $69,450.95 Ether fell 1.7% to $1,968.35 Bonds

The yield on 10-year Treasuries declined two basis points to 4.43% Germany’s 10-year yield declined five basis points to 2.96% Britain’s 10-year yield declined six basis points to 4.84% Commodities

Brent crude fell 1.9% to $93.19 a barrel Spot gold rose 1.1% to $4,534.03 an ounce This story was produced with the assistance of Bloomberg Automation.

–With assistance from Neil Campling.

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