(Bloomberg) — Disappointing financial results for Europe’s most valuable tech company and concerns about tighter U.S. regulation of semiconductor sales hurt its stock prices, prompting a selloff in an industry that has been a driving force behind the bull market. .
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The stock index of semiconductor companies, which had been a focus of attention, fell significantly for the first time since early September, pushing stock prices down from their all-time highs. The U.S.-listed shares of Dutch giant ASML Holding NV plunged 17% after the company unexpectedly cut its forecasts. Nvidia Corp. fell 5% on reports that U.S. officials discussed limiting sales of advanced AI chips from the company and other U.S. companies by country.
Investors have become so bullish that it may be time to sell global stocks, according to Bank of America’s Investor Survey. Allocations to equities soared while fixed income exposure fell, with global portfolio cash levels falling to 3.9% in October from 4.2% last year. Strategists led by Michael Hartnett wrote that it triggered a “sell signal.”
Dan Wantrowski of Janney Montgomery Scott said, “Contrary to the overbought/expanded charts and with earnings season in full swing, the U.S. stock market was tilted towards large-cap stocks today with some profit-taking. “There is,” he said.
The S&P 500 fell 0.5% to around 5,830. The Nasdaq 100 fell 1.2%. The Dow Jones Industrial Average fell 0.5%. UnitedHealth Group fell after a disappointing outlook. Bank of America, whose profit beat expectations, rose 1.2%. Goldman Sachs Group Inc. faltered and Citigroup Inc. fell despite strong results.
The yield on the 10-year US Treasury note fell 6 basis points to 4.04%. Reports that Israel may avoid targeting Iran’s oil infrastructure ease fears of potential supply disruptions, with traders’ focus returning to hopes of a significant supply glut early next year. , crude oil prices fell by 5%.
Weekly flows in the S&P 500 were near the highest seen this year, according to Citigroup strategists led by Chris Montague. The positioning is highly extended and sits in the 98th percentile.
Scott Rabner of Goldman Sachs Group Inc. said U.S. stocks will continue to climb higher through the end of the year as corporate buyers re-enter the market and institutional investors unhedge, with the S&P 500 index rising by 6,000. It is expected to exceed.
“The year-end bull market is starting to resonate with clients who are shifting their hedges from the left tail to the right tail, as the stock market decline has subsided and institutional investors are now forced into the market.” Rabner wrote. In a note to clients on Tuesday, it added that professional investors are becoming increasingly concerned about performance that is significantly below benchmarks.
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Meanwhile, UBS Group AG has again raised its outlook for U.S. stocks for this year and next, citing strength in corporate earnings and risks tilted to the upside from easing inflation to lower interest rates by the Federal Reserve.
A team led by Jonathan Golub and Patrick Palfrey raised their year-end targets for the S&P 500 index from 5,600 and 6,000, respectively, to 5,850 in 2024 and 6,400 in 2025.
“Returns in 2025 are far from certain due to fiscal and monetary policy uncertainty and the potential election outcome,” the strategists said.
Company highlights:
Boeing Co. has taken a step toward raising up to $25 billion in financing to give the troubled plane maker the financial resources to withstand a paralyzing attack and weather a series of operational setbacks.
Johnson & Johnson reported better-than-expected third-quarter profits as sales of its cancer drug Darzalex soared.
Charles Schwab reported earnings per share that beat analysts’ expectations and pared down some of its expensive debt, a sign the company has weathered last year’s turmoil.
PNC Financial Services Group delivered net interest income that beat analysts’ expectations in the third quarter, marking another period of growth for the bank’s largest revenue stream as the company continues to project record earnings next year. Ta.
Walgreens Boots Alliance plans to close 14% of its U.S. stores to cut costs as consumers cut back on spending.
LVMH’s fashion and leather goods sales fell for the first time since the pandemic, as the industry giant was hit by weak demand from Chinese consumers, who once appeared to have an insatiable appetite for luxury goods.
Adidas AG raised its annual profit target for the third consecutive quarter as the boom in retro sneakers such as the Samba continues and sales of Yeezy shoes increase, with inventories shrinking.
This week’s main events:
Morgan Stanley earnings results Wednesday
ECB interest rate decision, Thursday
U.S. retail sales, unemployment claims, industrial production, Thursday
Fed’s Austan Goolsby speaks on Thursday
China GDP, Friday
U.S. housing starts Friday
Fed’s Christopher Waller and Neel Kashkari speak on Friday
The main movements in the market are:
stock
As of 2 p.m. New York time, the S&P 500 was down 0.5%.
Nasdaq 100 fell 1.2%
The Dow Jones Industrial Average fell 0.5%.
MSCI World Index falls 0.5%
currency
Bloomberg Dollar Spot Index rose 0.2%
The euro fell 0.2% to $1.0883.
The British pound was almost unchanged at $1.3062.
The Japanese yen rose 0.2% to 149.48 yen to the dollar.
cryptocurrency
Bitcoin rises 1.3% to $66,784.73
Ether fell 1.5% to $2,581.64.
bond
The 10-year Treasury yield fell 6 basis points to 4.04%.
Germany’s 10-year bond yield fell 5 basis points to 2.22%.
UK 10-year bond yields fell 8 basis points to 4.16%.
merchandise
West Texas Intermediate crude oil fell 4.7% to $70.39 a barrel.
Spot gold rose 0.6% to $2,663.23 an ounce.
This article was produced in partnership with Bloomberg Automation.
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