The momentum of the selloff in artificial intelligence-related trades has eased somewhat, offering global equity investors a brief respite on the final trading day of a highly volatile week. However, further gains in oil prices continued to keep market sentiment cautious.
As of 7:04 New York time, S&P 500 index futures were down 0.3%, while Nasdaq 100 index futures slipped 0.1%, following the index's largest single-day decline since June. Dow futures fell 0.6%. An ETF tracking US-listed chipmakers edged slightly higher in premarket trading.
Meta Platforms Inc. extended its decline, while SpaceX rose as details of its plan to enter the wireless carrier business emerged.
Oil prices continued to complicate the inflation outlook, with Brent crude briefly touching its highest level since early May. Gold and the dollar showed little change.
Wolf von Rotberg of Bank J Safra Sarasin said: "Equities are only likely to truly calm down once US hyperscalers can demonstrate that the surge in AI revenue is sufficient to support this massive buildout." He added: "The bar has clearly been raised. Credit markets are showing increasing signs of stress, and the willingness to further finance capital expenditure is diminishing."
Bank of America strategist Michael Hartnett said investor risk-aversion could persist until later in November. The market has yet to fully price in the possibility of Democrats winning control of both the House and the Senate; he believes such an outcome would end the current low-tax, low-regulation policy environment, thereby weighing on corporate earnings growth.
"We tactically maintain a risk-off stance through mid-November," Hartnett wrote in a note to clients. "We expect a trading pattern of falling yields, falling stocks, and a falling dollar."
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