(Bloomberg) — A rally that drove stocks to a series of all-time highs showed signs of exhaustion, with investors awaiting this week’s key jobs data and Jerome Powell’s remarks for clues on whether the Federal Reserve will cut rates in December.
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Equities struggled to make headway, following an $11 trillion surge that sent S&P 500 to its 54th record this year. Some traders noted that the relentless advance drove sentiment gauges toward extremes, with the stock benchmark hovering near technically overbought levels. Positioning in S&P 500 futures is “completely one-sided,” according to Citigroup Inc. strategists led by Chris Montagu.
“Things are getting extremely crowded on one side of the boat — the bullish side,” said Matt Maley at Miller Tabak + Co. “Valuation levels are a lousy timing tool. However, sentiment and positioning are better tools. So it’s not out of the question that today’s extreme readings on these issues could create a surprising pick up in volatility before year-end.”
Just a few days ahead of the all-important US payrolls report, data showed US job openings picked up in October, suggesting demand for workers is stabilizing after steep declines in recent months.
“From here, the market will be awaiting this afternoon’s Fedspeak with expectations for the comments to outline a willingness to cut on Dec. 18 in the event the data doesn’t surprise on the upside,” said Ian Lyngen at BMO Capital Markets.
The S&P 500 was little changed. The Nasdaq 100 fluctuated. The Dow Jones Industrial Average fell 0.2%. Salesforce Inc. is due to report results after the close. Germany’s DAX hit 20,000 for the first time.
Treasury 10-year yields rose two basis points to 4.21%. The South Korean won pared losses as South Korea said it will mobilize all possible measures to stabilize the financial market — including providing “unlimited liquidity” — after President Yoon Suk Yeol declared martial law. Oil climbed ahead of an OPEC+ supply meeting.
Equities will likely be exposed to risks such as tariff- and geopolitics-driven inflation, growth fears and a fizzling AI trade in 2025, according to HSBC strategists, who retained their expectations of a first-half rally.
The team led by Max Kettner says a more hawkish-than-expected Fed would also be a downside risk. On the other hand, deregulation, a strong rebound in China and synchronized pick up in global goods could support further gains in risk assets, they added.
The “Magnificent Seven” stocks are a buy during corrections as most of them will keep generating money, according to a New York University professor known for his expertise on valuations.
“As a value investor, I have never seen cash machines as lucrative as these companies are,” Aswath Damodaran, a finance professor at NYU’s Stern School of Business, said in a Bloomberg Television interview. “And I don’t see the cash machine slowing down.”
There will be corrections and “I’d suggest that when that happens you find a way to add at least one, maybe two or three of these companies, because these are so much part of what drives the economy and the market,” he added.
Corporate Highlights:
AT&T Inc. predicted sustained profit growth over the next three years, including double-digit gains in 2027, a payoff from its investments in mobile-phone and fiber-optic networks.
BlackRock Inc. agreed to buy HPS Investment Partners in an all-stock deal valued at roughly $12 billion, a purchase that will propel the world’s largest asset manager into the highest ranks of private credit.
Bank of Nova Scotia missed estimates as expenses came in higher than analysts expected and the company grappled with higher taxes as well as lower profits in its capital-markets business.
Honeywell International Inc. and aircraft maker Bombardier Inc. reached a deal on the development of aviation technology and settled a long-running legal dispute.
MARA Holdings Inc. bought the North Texas wind farm in Hansford County from a joint venture between National Grid Plc and the Washington State Investment Board,
Zscaler Inc., a security software company, gave a forecast for adjusted second-quarter earnings that missed expectations.
Children’s Place Inc. posted profit that missed the average analyst estimate.
Key events this week:
S&P Global Eurozone Services PMI, PPI, Wednesday
US factory orders, US durable goods, Wednesday
Fed’s Jerome Powell and Alberto Musalem speak, Wednesday
Fed’s Beige Book, Wednesday
Eurozone retail sales, Thursday
US initial jobless claims, Thursday
Eurozone GDP, Friday
US jobs report, consumer sentiment, Friday
Some of the main moves in markets:
Stocks
The S&P 500 was little changed as of 11:01 a.m. New York time
The Nasdaq 100 was little changed
The Dow Jones Industrial Average fell 0.2%
The Stoxx Europe 600 rose 0.3%
The MSCI World Index rose 0.2%
Currencies
The Bloomberg Dollar Spot Index was little changed
The euro rose 0.2% to $1.0514
The British pound was little changed at $1.2659
The Japanese yen rose 0.2% to 149.37 per dollar
Cryptocurrencies
Bitcoin rose 0.4% to $95,773
Ether fell 1% to $3,579.61
Bonds
The yield on 10-year Treasuries advanced two basis points to 4.21%
Germany’s 10-year yield advanced three basis points to 2.06%
Britain’s 10-year yield advanced three basis points to 4.25%
Commodities
This story was produced with the assistance of Bloomberg Automation.
