US Stocks Increase as AI Earnings and Fed Call Approach – Europe Market Wrap
US stocks drifted higher ahead of earnings from two of the world’s biggest spenders on artificial intelligence and a US interest-rate decision where markets still see room for a hike.
S&P 500 futures rose 0.2%. Those for the Nasdaq 100 were flat after the latest selloff in chipmakers left the index on the brink of a technical correction. Treasuries halted a three-day run of gains, with markets assigning about a 35% chance of a Federal Reserve rate increase. The Dollar barely budged.
Earnings from Meta and Microsoft arrive as the AI trade is faltering, with traders questioning whether the costly buildout of the technology can deliver adequate returns. While both companies are expected to deliver rapid growth, Wall Street will look for evidence that their outlays are justified.
Chipmakers are also getting punished amid doubts over whether lofty margins can be sustained. SK Hynix plunged nearly 10% in South Korea even after reporting a more than fivefold rise in operating profit, extending a rout that has wiped more than $700 billion off its market value in little more than a month. An exchange-traded fund tracking US-listed chip stocks fell 0.7%.
In Europe, the Stoxx 600 swung from gains to a 0.2% loss on a busy day for earnings. The region’s luxury sector saw diverging fortunes for two of its biggest names, with Kering rallying after Gucci sales topped estimates and Hermès getting hit by a lack of growth in China.
The latest flare-up in the Middle East had little knock-on effect on stocks. A days-long lull in hostilities came to an abrupt end after Iran fired on American forces overnight and the US and Saudi Arabia struck Tehran-backed militias in Iraq. Brent rose 5.3% to $88.55, while Treasury yields climbed across the curve.
