Stocks Halt Rally as Nvidia and ASML Get Crushed – Markets Close

(Bloomberg) — Stocks took a hit as disappointing earnings from Europe’s most valuable tech company and concerns about tighter U.S. restrictions on chip sales sparked a selloff in the industry that has fueled the bull market. .

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A closely watched gauge of semiconductor companies saw its worst decline since early September, dragging stocks down from record highs. The US-listed shares of Dutch giant ASML Holding NV plummeted 17% after a surprise cut to its forecasts. Nvidia Corp. lost 5% on a news report that U.S. officials have discussed limiting sales of advanced artificial intelligence chips from the company and other U.S. firms on a country-by-country basis.

Investors have become so optimistic that it could be time to sell global stocks, according to an investor survey by Bank of America Corp. Allocations to stocks rose, while exposure to bonds sank and cash levels in stocks Global portfolios fell to 3.9% in October from 4.2% previously. month, triggering a “sell signal,” strategists led by Michael Hartnett wrote.

“U.S. equity markets, more tilted toward large-cap leadership, are seeing profit-taking today as earnings season progresses against overbought/extension charts,” said Dan Wantrobski of Janney Montgomery Scott.

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 Inc. sank amid disappointing prospects. Bank of America Corp. rose 1.2% as earnings beat estimates. Goldman Sachs Group Inc. faltered and Citigroup Inc. fell despite strong results.

10-year Treasury yields fell six basis points to 4.04%. Oil plunged 5% as a report that Israel might avoid targeting Iran’s crude infrastructure eased concerns about a possible supply disruption, prompting traders to refocus on expectations of a sizeable glut early in the year. next year.

Weekly flows for the S&P 500 were near the highest seen this year, according to Citigroup strategists led by Chris Montagu. The positioning is very widespread and is located in the 98th percentile.

U.S. stocks are expected to extend their rally into the final months of the year, pushing the S&P 500 above 6,000 points, as corporate buyers re-enter the market and institutional investors abandon their hedges, according to Goldman’s Scott Rubner. Sachs Group Inc.

“The stock market sell-off is called off and a year-end rally is beginning to resonate with clients moving from left-tail to right-tail coverage as institutional investors are forced into the market in this time,” Rubner wrote in a note to clients on Tuesday, adding that professional investors are increasingly concerned about materially underperforming their benchmarks.

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Meanwhile, UBS Group AG is raising its outlook for U.S. stocks once again for this year and next, citing strength in corporate earnings and risks that are skewed to the upside, from slowing inflation to tax cuts. interest rates by the Federal Reserve.

The team led by Jonathan Golub and Patrick Palfrey raised the S&P 500’s year-end targets 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 outcomes make the 2025 results far from certain,” the strategists wrote.

Corporate Highlights:

• Boeing Co. moved to raise up to $25 billion, funds that would give the troubled plane maker the financial resources to withstand a crippling strike and overcome a series of operational setbacks.

• Johnson & Johnson reported better-than-expected third-quarter earnings, boosted by rising sales of the cancer drug Darzalex.

• Charles Schwab Corp. reported earnings per share that beat analyst estimates and reined in some of its costly debt, a sign that the company has overcome a bout of turbulence last year.

• PNC Financial Services Group Inc. earned more net interest income than analysts expected in the third quarter, another period of sequential growth for the bank’s biggest earner, as the company continues to predict record collections next year.

• Walgreens Boots Alliance Inc. 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’s biggest player was hit by a drop in demand from Chinese consumers whose appetite for high-end purchases once seemed insatiable. .

• Adidas AG raised its annual profit target for the third straight quarter amid a sustained boom in retro sneakers like the Samba and higher sales of its dwindling stock of Yeezy footwear.

This week’s key events:

• Morgan Stanley results, Wednesday

• ECB rate decision, Thursday

• US retail sales, jobless claims and industrial production, Thursday

• Federal Reserve’s Austan Goolsbee speaks Thursday

• China GDP, Friday

• US Housing Starts, Friday

• Federal Reserve’s Christopher Waller and Neel Kashkari speak Friday

Some of the main movements in the markets:

Stocks

• The S&P 500 fell 0.5% at 2:00 p.m. New York time

• The Nasdaq 100 fell 1.2%

• The Dow Jones Industrial Average fell 0.5%

• The MSCI World index fell 0.5%

Coins

• The Bloomberg Dollar Spot Index rose 0.2%

• The euro fell 0.2% to $1.0883

• The pound sterling barely changed and stood at $1.3062.

• The Japanese yen rose 0.2% to 149.48 per dollar

Cryptocurrencies

• Bitcoin rose 1.3% to $66,784.73

• Ether fell 1.5% to $2,581.64.

Captivity

• The 10-year Treasury yield fell six basis points to 4.04%

• The 10-year German bond yield fell five basis points to 2.22%

• The UK 10-year yield fell eight basis points to 4.16%

Raw materials

• West Texas Intermediate crude fell 4.7% to $70.39 a barrel

• Spot gold rose 0.6% to $2,663.23 an ounce.

This story was produced with the help of Bloomberg Automation.

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