Indices: Tech-Led Pullback as Investors Fail to Shake Off Valuation Worries
– US equity index futures are mixed after a session of losses for the S&P 500 (-1.2% to 6,721), Dow 30 (-0.5% to 47,885), and more so the tech-heavy Nasdaq 100 (-1.9% to 24,647) due to ongoing rotation out of mega-cap AI beneficiaries amid increasing concerns around capex intensity, funding structures and monetization timelines (see Stocks below regarding Oracle (NYSE:ORCL) but also Micron (NASDAQ:MU) helping the tech sphere in extended trading); market pricing (CME’s FedWatch) continues to reflect expectations for Fed policy easing ahead but with reduced conviction on the timing of near-term cuts, increasingly pushing expected easing into early 2026 rather than the immediate next meeting
– Shares of Oracle (-5.4%) plummet following FT report that primary investor in its $10bn Michigan data center, Blue Owl, won’t proceed with support even as Oracle says equity deal still on schedule; sends the broader AI complex to a lower close including Nvidia (NASDAQ:NVDA) (-3.8%), AMD (NASDAQ:AMD) (-5.3%), and Broadcom (NASDAQ:AVGO) (-4.5%) but Micron’s (NASDAQ:MU) earnings (see below) partially rescues in extended trading; Reuters report regarding China’s EUV prototype to build its own chips in 2028 sees ASML (-3.8%) shares take a dip
– Tesla (NASDAQ:TSLA) shares (-4.6%) fall back from their recent record high in line with the general tech pullback; California DMV gives it 60 days to fix misleading marketing else face 30-day suspension of its dealer license
– Shares of Amazon (NASDAQ:AMZN) (-0.6%) finish lower but avoids the rougher finish of its peers as The Information reports OpenAI is in talks to raise at least $10bn and use its AI chips
– Warner Bros Discovery (NASDAQ:WBD) (-2.4%) board unanimously recommended its shareholders to ditch Paramount Skydance’s (-5.4%) offer for the “superior” proposal from Netflix (NASDAQ:NFLX) (+0.2%) as they “look forward to delivering on the compelling benefits of our combination”
– Rough slide for shares of Instacart plummeting 8.2% in extended trading as report says FTC is looking into its pricing practices
– European defense stocks partially recover off Tuesday’s lows, German budget committee approves over €50bn in military purchases: Renk (+1.4%), Saab (+1.5%), Hensoldt (+3%), Rheinmetall (+2.6%)
– Meme stock movers: Beyond Meat (-4.6%), Kohl’s (-2.2%), GoPro (-1.9%), Opendoor (-9.1%), AMC (-5.7%), BlackBerry (-3%), Nokia (-1.1%), GameStop (+3.4%)
– Crypto stocks track cryptocurrencies lower: Coinbase (-3.3%), MicroStrategy (-4.3%), Mara Holdings (-7.1%), Gemini Space Station (-8.8%), Bullish (-1.9%)
– Earnings:
o Micron Technology: beats on both earnings and revenue and provides a strong forecast for the current quarter; shares jump 8% in extended trading
o General Mills (NYSE:GIS): earnings and revenue beat; shares close 3.4% higher
– Gold prices hover more clearly above the $4.3K level with traders bracing for CPI data; silver outperforms sharply, at one point not far off $67 as it enjoys a record high, and taking the gold/silver ratio into the 65s
– Oil prices (WTI) rebound from multi-year lows to get back above $56s but much of those gains fail to stick, with traders bracing for an uptick in geopolitical uncertainty following U.S. actions against Venezuela, and noting weekend peace plan talks between the U.S. and Russia else potential tougher sanctions on the latter’s energy sector; EIA’s weekly energy inventory estimates show a drawdown for oil (-1.3m barrels) but builds for both gasoline (+4.8m) and distillate (+1.7m)
– Crypto sphere continues to struggle with Bitcoin around $86K and even worse for altcoins including Ethereum briefly breaking beneath $2.8K with one more day to go before the expected rate hike out of the Bank of Japan
– US Dollar Index manages to get back above 98 but only just, and ahead of impacting economic data; USD/JPY climbs to the upper 155s as markets brace for the Bank of Japan’s policy announcement tomorrow, while GBP falls to $1.3360 after softer UK inflation data boosted BoE rate-cut expectations (see Data below)
– Federal Reserve’s Waller that he would “absolutely” emphasize central bank independence when interviewed by President Trump and that the labor market is “very soft” with room for them to cut rates, and Bostic sees GDP growth remaining solid next year but less clear on employment with increased upside risks to inflation; President Trump says next Fed Chair will be someone who believes in lower rates, “by a lot”
– Japan’s Finance Minister Aso closely watching FX moves; Nagahama says Bank of Japan’s monetary policy appears to be heavily influenced by FX moves
– Indices: Pullback takes long bias higher in all key U.S. equity indices with the S&P back in extreme buy territory (79%), both Nasdaq (76% from 71% yesterday) and Russell (75%) not far off it, and the Dow pushing further heavy long (71% from 68%); elsewhere jump in the FTSE following softer CPI data sees fresh longs close out and the bias fall out of heavy buy (to 64% from 72% before the inflation release)
– Commodities: Still heavy buy in gold but dropping notably (to 66% from 73%) with a reduction in silver long bias as well (70% from 75%) as the latter makes a fresh record high; WTI’s lift off the lows reduces extreme buy bias by a few notches (89% from 92%) but in all still a struggle for long positions
– UK Inflation data weaker than expected, with CPI y/y at 3.2% (vs 3.5% forecast, prior 3.6%), core CPI soft at 3.2% (vs 3.4% forecast), RPI at 3.8% (vs 4.2% forecast), and HPI y/y also softer at 1.7% (vs 2.4% forecast)
– German Ifo business climate slightly weaker at 87.6 (vs 88.2 forecast, prior 88.0), with a miss for both expectations and current assessment; EZ HICP for November mostly in line with forecasts but headline a notch lower at 2.1%; Q3 labor cost index drops to 3.3% from 3.9%
– Australian consumer inflation expectations (MI) rise a couple notches to 4.7% from a previous three-month low
– U.S. CPI (5:30 pm Dubai time), weekly claims, Philly Fed’s manufacturing index, Kansas Fed manufacturing (8pm)
o Earnings from Nike, FedEx, Cintas and more
– Bank of England’s policy announcement (4pm; 25bp rate cut expected, not unanimous)
– European Central Bank’s policy announcement (5:15pm, press conference at 5:45pm; hold on rates expected); Norway’s Norges Bank and Sweden’s Riksbank (also expected to hold on rates)
Tomorrow morning: Bank of Japan expected to raise rates to 0.75%, a 30-year high
