London (AFP) – Stocks recovered slightly Wednesday following heavy losses as investors awaited Nvidia earnings for further clues about whether AI-fueled valuations are justified. Most of the main indexes in New York and Europe were higher, though London was lower. Bitcoin held above $90,000, the dollar strengthened, and oil prices dropped.
“The selling pressure had moderated from Monday (but) investors were unwilling to add to their overall exposure ahead of tonight’s earnings update from chip giant Nvidia,” said David Morrison, senior market analyst at Trade Nation. Investors have endured a tough November as speculation has grown that the tech-led rally this year may have gone too far, and valuations have become frothy enough to warrant a stiff correction.
With the Magnificent Seven — including Amazon, Meta, Alphabet, and Apple — powering recent record highs on Wall Street, there are worries that a change in sentiment could have huge ripple effects on markets. Chip giant Nvidia is the biggest of the bunch, last month becoming the first $5-trillion company, and will report third-quarter results after the market shuts.
“The slightest bit of news to disappoint investors has the potential to whip up a tornado across global markets,” said Russ Mould, investment director at AJ Bell. Nvidia shares were up 2 percent in morning trading in New York. Wall Street’s S&P 500 has dropped four days in a row, with investors nervous that any sign of weakness could be the pin that pops the artificial intelligence bubble, having spent months fearing that the hundreds of billions invested may have been excessive.
A Bank of America survey of fund managers found that more than half thought AI stocks were already in a bubble and 45 percent thought that was the biggest “tail risk” to markets, more so than inflation. That came after the BBC released an interview with the head of Google’s parent company Alphabet — Sundar Pichai — who warned every company would be impacted if the AI bubble were to burst.
Investors will also be looking at the Federal Reserve’s release later Wednesday of its minutes from its late October meeting for clues on the direction of interest rates. In Paris, Air France shares were up 2.4 percent after officially expressing interest in taking a stake in Portuguese carrier TAP. Oil prices were lower as reports of higher US reserves outweighed any concern over Ukrainian attacks on Russian oil installations.
– Key figures at around 1440 GMT –
New York – Dow: UP LESS THAN 0.1 percent at 46,105
New York – S&P 500: UP 0.3 percent at 6,636.64
New York – Nasdaq Composite: UP 0.5 percent at 22,547.87
London – FTSE 100: DOWN 0.2 percent at 9,529.57 points
Paris – CAC 40: UP 0.2 percent at 7,980.77
Frankfurt – DAX: UP 0.4 percent at 23,282.92
Tokyo – Nikkei 225: DOWN 0.3 percent at 48,537.70 (close)
Hong Kong – Hang Seng Index: DOWN 0.4 percent at 25,830.65 (close)
Shanghai – Composite: UP 0.2 percent at 3,946.74 (close)
Euro/dollar: DOWN at $1.1565 from $1.1580
Pound/dollar: DOWN at $1.3114 from $1.3146
Dollar/yen: UP at 156.37 yen from 155.53 yen on Tuesday
Euro/pound: UP at 88.20 from 88.09 pence
Brent North Sea Crude: DOWN 2.6 percent at $63.23 per barrel
West Texas Intermediate: DOWN 2.6 percent at $59.15 per barrel
© 2024 AFP
