(Bloomberg) — Shares got disappointing results from Europe’s most valuable technology company and concerns about tighter U.S. restrictions on chip sales led to a selloff in the industry that led the bull market.
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A closely-watched semiconductor gauge saw its worst plunge since early September, dragging equities off record highs. US-traded shares of ASML Holding NV fell 16% after issuing a bearish outlook as orders missed estimates. Nvidia Corp. lost 5% on news reports US officials have discussed limiting sales of advanced AI chips from the company and other American companies on a country-specific basis.
Investors are so bullish that it may be time to sell global stocks, according to an investor survey by Bank of America Corp. The allocation to equities increased, while bond exposure decreased and the level of cash in the global portfolio fell to 3.9% in October from 4.2% last month, triggering a “sell signal”, strategists led by Michael Hartnett wrote.
“Equity markets have rallied strongly in the past week amid a combination of earnings optimism and softening expectations,” said Tom Essaye at The Sevens Report. “If any economic data, Fed talk, or earnings results undermine either of these narratives, expect some mild gains in equities today.”
The S&P 500 fell 0.4%. The Nasdaq 100 fell 1.2%. The Dow Jones Industrial Average fell 0.4%. UnitedHealth Group Inc. plunging into a disappointing outlook. Shares of Apple Inc. reach a record high. Bank of America Corp rose 2% on top earnings. Goldman Sachs Group Inc and Citigroup Inc fell despite solid results.
The 10-year Treasury yield declined six basis points to 4.04%. Oil fell 5% as reports that Israel could avoid targeting Iran’s crude infrastructure eased concerns about potential supply disruptions. Later, Israeli Prime Minister Benjamin Netanyahu insisted the country was free to act as it chose in the counterattack.
US stocks are set to extend their rally into the final months of the year, pushing the S&P 500 past 6,000, as corporate buyers re-enter the market and institutional investors ease their hedges, according to Scott Rubner at Goldman Sachs Group Inc.
“The equity market selloff is reversed, and the year-end rally is beginning to resonate with clients moving from hedging from the left tail to the right tail as institutional investors have been forced into the market today,” Rubner wrote in a note to clients on Tuesday, adding that professional investors are increasingly worried about performance which is less good.
Meanwhile, UBS Group AG raised its outlook for US equities for this year and next, citing strength in corporate earnings and risks tilted to the upside, from lower inflation to interest rate cuts by the Federal Reserve.
The team led by Jonathan Golub and Patrick Palfrey raised their year-end targets on the S&P 500 to 5,850 in 2024 and 6,400 in 2025 from 5,600 and 6,000, respectively.
“Fiscal and monetary policy uncertainty, and potential election results, make 2025 returns far from certain,” the strategist wrote.
Company Highlights:
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Boeing Co. took a step towards raising $ 25 billion, a fund that will give the planemaker the financial resources to withstand the attack of paralysis and work through some operational setbacks.
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Johnson & Johnson reported stronger-than-expected third-quarter earnings, boosted by rising sales of its cancer drug Darzalex.
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Charles Schwab Corp. reported earnings per share that topped analyst estimates and curbed some of its expensive debt — a sign the firm has moved through a bout of turmoil last year.
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PNC Financial Services Group Inc. pulled in net interest income more than analysts expected in the third quarter, another period of sequential growth for the largest source of bank revenue as the firm continues to predict a record haul next year.
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Walgreens Boots Alliance Inc. plans to close 14% of US stores to reduce costs as consumers pull back spending.
This week’s highlights:
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Morgan Stanley earnings, Wednesday
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ECB rate decision on Thursday
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US retail sales, jobless claims, industrial production, Thursday
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Fed’s Austan Goolsbee said, Thursday
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China’s GDP, Friday
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home US since, there
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The Fed’s Christopher Waller, Neel Kashkari said, there
Some of the main movements in the market:
Savings
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The S&P 500 fell 0.4% at 12 pm New York time
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Nasdaq 100 down 1.2%
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Dow Jones Industrial Average down 0.4%
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Stoxx Europe 600 down 0.8%
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MSCI World Index down 0.4%
currency
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Bloomberg Dollar Spot Index rose 0.1%
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The euro was little changed at $1.0900
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The British pound rose 0.2% to $1.3083
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The Japanese yen rose 0.3% to 149.30 per dollar
Cryptocurrencies
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Bitcoin rose 0.2% to $66,039.07
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Ether fell 1.8% to $2,573.89
Bond
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The yield on 10-year Treasuries declined six basis points to 4.04%
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Germany’s 10-year yield fell five basis points to 2.22%
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UK 10-year yield down seven basis points to 4.16%
Commodity
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West Texas Intermediate crude fell 5% to $70.13 a barrel
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Spot gold rose 0.6% to $2,664.40 an ounce
This story was produced with the help of Bloomberg Automation.
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