Wall Street has grown uneasy about stretched valuations and the vast sums being spent on AI infrastructure
by Andre Janse van Vuuren and Levin Stamm
Global stocks advanced after a robust revenue forecast from Nvidia Corp. helped dispel fears of a potential bubble in the artificial intelligence industry that had shaken markets in recent weeks.
Nvidia surged 5% in premarket trading, spurring gains in other AI shares including Advanced Micro Devices Inc. and Broadcom Inc. Futures on the Nasdaq 100 climbed 1.6%. The main benchmarks for European and Asian equities rose as well. Bitcoin traded near $92,000.
Strong results from the AI bellwether helped restore a sense of calm after weeks of heavy selling in technology stocks. Wall Street had grown uneasy about stretched valuations and the vast sums being spent on AI infrastructure after the sector powered a nearly 40% rally in the S&P 500 since its April low.
“Nothing stands in the way of a Christmas rally now, really” said Amundi SA Chief Investment Officer Vincent Mortier. “Everything is lining up for the cycle to continue in the short term.”
With one of the week’s key events spurring a comeback for equities, attention is now turning to the path for interest rates as markets await the release of the September jobs report later on Thursday. The figures will be the only major labor market data published before the Federal Reserve’s next policy meeting.
Traders have steadily dialed back bets on a December rate cut amid hawkish remarks from policymakers and a lack of government data, with money markets now pricing in about a 30% chance of easing.
The Bureau of Labor Statistics said Wednesday it won’t publish an October jobs report, but will incorporate those payroll figures into the November data due after the Fed’s final meeting of the year. Meanwhile, minutes from the Fed’s October meeting showed many officials considered it appropriate to keep rates steady for the remainder of 2025.
“The September jobs data is clearly dated,” said Wolf von Rotberg, equity strategist at Bank J Safra Sarasin. “They would thus need to show a substantial surprise to the upside or the downside. With the majority of FOMC members seemingly in favor of holding rates at current levels in December, a significant downside surprise would likely have more of an impact on markets.”
The dollar was little changed and Treasuries held steady.
Elsewhere, yields on Japan’s 5- and 10-year government bonds rose to their highest levels since 2008, as markets brace for Prime Minister Sanae Takaichi’s stimulus package, which is set to be unveiled on Friday. The yen is experiencing sudden, one-way movements that are concerning and which require close monitoring, Japan’s chief cabinet secretary said.
Corporate News:
- UBS Group AG Chief Executive Officer Sergio Ermotti pushed back hard on speculation that the bank is looking to leave Switzerland, saying that the leadership is seeking a compromise on contentious capital rules.
- BNP Paribas SA announced a new buyback and plans to reach a target for capital strength early as Chief Executive Officer Jean-Laurent Bonnafe seeks to reverse a recent slide in the stock price.
- A Chinese investment firm bought a block of ByteDance Ltd. shares at a valuation of $480 billion, far above recent levels, a sign of strong investor interest in the parent company of video sensation TikTok.
- Bayer AG won US approval for its new medicine Hyrnuo to treat a common form of lung cancer as the German company works to bolster its drug pipeline.
Some of the main moves in markets:
Stocks
- The Stoxx Europe 600 rose 0.8% as of 9:25 a.m. London time
- S&P 500 futures rose 1.1%
- Nasdaq 100 futures rose 1.6%
- Futures on the Dow Jones Industrial Average rose 0.6%
- The MSCI Asia Pacific Index rose 1.2%
- The MSCI Emerging Markets Index rose 0.9%
Currencies
- The Bloomberg Dollar Spot Index was little changed
- The euro fell 0.1% to $1.1524
- The Japanese yen was little changed at 157.23 per dollar
- The offshore yuan was little changed at 7.1183 per dollar
- The British pound was little changed at $1.3067
Cryptocurrencies
- Bitcoin rose 1.5% to $91,835.57
- Ether rose 0.9% to $3,016.49
Bonds
- The yield on 10-year Treasuries was little changed at 4.13%
- Germany’s 10-year yield advanced one basis point to 2.72%
- Britain’s 10-year yield declined one basis point to 4.59%
Commodities
- Brent crude rose 0.7% to $63.94 a barrel
- Spot gold fell 0.3% to $4,064.19 an ounce
This story was produced with the assistance of Bloomberg Automation.
Copyright Bloomberg News
