The yield on 10-year Treasuries declined three basis points to 4.05%
by Andre Janse van Vuuren and Sagarika Jaisinghani
US stocks were headed for their worst week since April as worries over lofty valuations deepened a pullback from the market’s most speculative corners, including technology shares and Bitcoin.
Futures on the S&P 500 fell 0.4% after erasing gains, underscoring the market’s fragility. Nasdaq 100 contracts slipped 0.7%. Bitcoin headed toward $82,000, extending its slump from an all-time high to more than 30%.
With global stocks on track for their steepest drop in seven months, investors are debating how much further the pullback that’s erased $5 trillion from this year’s tech-fueled rally has to run. Traders remain unsettled by lofty valuations, doubts over whether artificial-intelligence spending will pay off and fading prospects for a US interest rate cut next month.
“This is a rational selloff after the rally in tech stocks this year,” said Rory McPherson, chief investment officer at Magnus Financial Discretionary Management. “It could go even further as the market’s not oversold yet. The Fed’s rates policy outlook at the next meeting will absolutely be key.”
On Thursday, the S&P 500 benchmark logged its biggest intraday reversal — at 3.6% — since the height of the tariff turmoil in April, according to data compiled by Bloomberg. The gauge has now fallen 5% from its most recent peak.
In a technical warning that sellers have seized control, charts show Thursday’s losses fully erased the previous session’s advance. The signal — called a bearish engulfing pattern — was unusually large and swift and echoing a similar setup in early March that preceded a 5% drop in the index.
This time, the signal landed with extra weight. The S&P 500 broke below both its 50- and 100-day moving averages, levels that many traders view as key lines of support. Momentum gauges have rolled over, and breadth continues to narrow, clear signs that the bears were tightening their grip.
“All asset classes have been fragile for a while,” said Neil Birrell, chief investment officer at Premier Miton Investors. “In equities a buy the dip mentality has prevailed, but when valuations are high and there is a lot of leverage in the system, at some point the momentum players and retail investors will step away. That looks to be the case this week.”
Goldman Sachs Group Inc. partner John Flood said that since 1957, there have been eight instances, including Thursday’s, in which the S&P 500 opened more than 1% higher only to reverse and close in the red. Still, average performance after those episodes was positive, with a gain of at least 2.3% in the following day and week and a 4.7% advance in the next month.
In Asia, Japan’s Prime Minister Sanae Takaichi’s cabinet approved the largest round of extra spending since the pandemic. The plan includes ¥17.7 trillion ($112 billion) in general account spending.
That came after Japan issued its strongest warning yet over recent movements in the yen, with the nation’s finance minister specifically mentioning intervention as an option as she tried with only limited impact to stem falls in the currency. The yen gained the most in a week.
In commodities, oil was on track for a weekly loss of more than 2%, with Brent trading below $63 a barrel. Crude’s leg lower came as Ukrainian President Volodymyr Zelenskiy agreed to work on a peace plan, just as US sanctions on two Russian oil giants are scheduled to take effect on Friday.
Corporate Highlights:
- Ubisoft Entertainment SA, the video-game publisher behind Assassin’s Creed, said an auditor’s review forced it to restate its 2025 fiscal year accounts and to not recognize revenue from a partnership signed in its most recent quarter, putting it in violation of the terms of a loan agreement.
- Netflix Inc., Comcast Corp. and Paramount Skydance Corp. all submitted bids for Warner Bros. Discovery Inc., according to people with knowledge of the matter.
- The frenzy for the company behind the viral children’s hit “Baby Shark” has quickly cooled, with shares dropping below the initial public offering price just days after their trading debut.
Some of the main moves in markets:
Stocks
- The Stoxx Europe 600 fell 1% as of 10:15 a.m. London time
- S&P 500 futures fell 0.4%
- Nasdaq 100 futures fell 0.7%
- Futures on the Dow Jones Industrial Average rose 0.1%
- The MSCI Asia Pacific Index fell 1.9%
- The MSCI Emerging Markets Index fell 2.8%
Currencies
- The Bloomberg Dollar Spot Index was little changed
- The euro was little changed at $1.1517
- The Japanese yen rose 0.5% to 156.64 per dollar
- The offshore yuan was little changed at 7.1138 per dollar
- The British pound fell 0.1% to $1.3055
Cryptocurrencies
- Bitcoin fell 6.1% to $81,852.57
- Ether fell 6.7% to $2,684.73
Bonds
- The yield on 10-year Treasuries declined three basis points to 4.05%
- Germany’s 10-year yield declined four basis points to 2.68%
- Britain’s 10-year yield declined six basis points to 4.53%
Commodities
- Brent crude fell 2% to $62.13 a barrel
- Spot gold fell 1% to $4,038.19 an ounce
This story was produced with the assistance of Bloomberg Automation.
Copyright Bloomberg News
