A slide in tech behemoths soured the mood Thursday as disappointing earnings cast doubt on the pillars of a record first-half for the Nasdaq 100 this year.
(Bloomberg) — A slide in tech behemoths soured the mood Thursday as disappointing earnings cast doubt on the pillars of a record first-half for the Nasdaq 100 this year.
Futures on the Nasdaq 100 fell 0.7% with Netflix Inc. set for its biggest intraday decline since December after missing sales estimates and projecting third-quarter revenue that fell short of Wall Street estimates. Tesla Inc. also fell after profitability shrank in the second quarter, a sign the electric-vehicle maker’s margins are being squeezed.
Traders are hitting the pause button on a blistering rally that has taken the tech-heavy Nasdaq 45% higher this year, outpacing the S&P 500’s 19% rise, on excitement about the potential for artificial intelligence.
Such returns on the back of a handful of tech stocks are “overdone” and may be the precursor to a downturn, Aegon Asset Management strategist Cameron McCrimmon warned.
“The breadth of returns on the S&P 500 has become increasingly narrow, driven by a few mega-cap tech stocks on AI optimism, which is a classic sign of an ageing bull,” he wrote in a note.
A US recession is likely this year as central banks persist in tightening policy, and strangling economies, until inflation returns to their 2% targets, according to the strategist.
In Europe, European tech stocks including ASML Holding NV slumped after Taiwan Semiconductor Manufacturing Co. cut its outlook. That was offset by Anglo American Plc’s second-quarter beat which put the main equity gauge back into the green.
US Treasuries fell, pausing a rally sparked by speculation that easing inflation would give the Federal Reserve room to wind down its rate tightening cycle.
Investors also weighed the potential for agricultural commodities to drive inflation higher. Wheat prices extended their biggest daily surge in a decade on Wednesday after Russia warned that any ships to Ukraine would be seen as carrying arms.
Read more: Wheat Extends Surge as Russia Threatens Ships Headed to Ukraine
Meanwhile, the dollar fell against all of its Group-of-10 counterparts as a gauge of the greenback extended its month-to-date weakness.
The offshore yuan advanced 0.7% against the dollar and was the best performing currency in Asia after the People’s Bank of China stepped in Thursday, setting its daily fixing of the yuan with the largest bias since November.
China’s efforts to revive growth, from cutting rates to closing out a regulatory crackdown on tech firms, have so far done little to support growth in the world’s second-largest economy.
Key events this week:
- US initial jobless claims, existing home sales, Conf. Board leading index, Thursday
- Japan CPI, Friday
Some of the main moves in markets:
Stocks
- S&P 500 futures fell 0.2% as of 6:06 a.m. New York time
- Nasdaq 100 futures fell 0.7%
- Futures on the Dow Jones Industrial Average were little changed
- The Stoxx Europe 600 rose 0.2%
- The MSCI World index was little changed
Currencies
- The Bloomberg Dollar Spot Index fell 0.1%
- The euro was little changed at $1.1208
- The British pound fell 0.2% to $1.2911
- The Japanese yen was little changed at 139.53 per dollar
Cryptocurrencies
- Bitcoin rose 1.3% to $30,367.09
- Ether rose 1.1% to $1,920.36
Bonds
- The yield on 10-year Treasuries advanced four basis points to 3.79%
- Germany’s 10-year yield was little changed at 2.44%
- Britain’s 10-year yield was little changed at 4.22%
Commodities
- West Texas Intermediate crude rose 0.1% to $75.46 a barrel
- Gold futures rose 0.2% to $2,022.70 an ounce
This story was produced with the assistance of Bloomberg Automation.
–With assistance from Kurt Schussler, Tassia Sipahutar and Joel Leon.
More stories like this are available on bloomberg.com
©2023 Bloomberg L.P.