Stocks in the US closed mixed on Tuesday, propelled by gains in tech shares ahead of important earnings and economic data releases.
The Nasdaq 100 climbed 1%, approaching a record high, while the S&P 500 increased by 0.2%, and the Dow Jones fell 0.3%.
Investors are closely watching results from Apple (+0.1%) and AMD (+3.9%), as well as inflation and employment updates for clues on market direction.
Among other stocks, McDonald’ fell 0.6% due to weaker international sales, Ford plunged by 8.5% after lowering its earnings forecast due to of high warranty costs, and Pfizer dropped 1.4% despite reporting a strong Q3 with a 31% revenue increase.
SoFi's stock declined 6.4%, even after achieving its fourth consecutive profitable quarter.
There is an abundance of economic, domestic political and geopolitical information for markets to digest over the next nine days.
What signals are markets giving?
Bitcoin is back on record highs.
Gold posted the highest closing price on record.
Global bond yields have sharply returned to levels of this past summer.
The optics here are "de-risking." Global capital seeking store-of-value. Devaluation of fiat currencies. Signs of an overdue rebuke of overindebtedness and egregious fiscal behaviour.
With that, the same media and fiscal watchdogs that were unworried about multi-trillion dollar agenda spending over the past four years and record deficits that accompanied an already growing economy are now pontificating about draconian debt and deficit outcomes from the next administration.
It's a story that's fitting the price. But is it the right story?
If we look at bond yields, the yield curve returned to a positive slope last month, after two years of inversion. It has since steepened and then shifted higher. This can be interpreted as a bond market signalling increasing confidence in economic growth expectations.
And we happen to have a significant economic growth catalyst at work. It's not the Fed. It's not the election outcome. It's the ongoing industrial revolution, driven by generative AI.
With that, we heard from one of the tech giants working on the frontier of generative AI.
Remember, in its earnings call over the summer, Alphabet (Google) said:
The price to build generative AI computing capacity continues to go up.
The handful of companies that can afford to build it will spend whatever it takes on the infrastructure.
The AI model intelligence continues to rapidly advance.
The stage of the technology revolution is still "early."
They reported on Q3 earnings, and all of it still applies. They had record revenues with near record operating margins. They will be investing even bigger in AI infrastructure in 2025 - the spend, in the words of the CFO, is "based on the demand of customers."
GRYNING | Trader - it’s like having an investment strategist in your corner, helping you stay on top of markets & macro — pointing out critical risks and opportunities so you can save time and get ahead in your investment goals.
