Nasdaq 100 losing momentum as AI trade divides
Wall Street enters the week on the back foot, with the technology leadership that drove the autumn rally now in question. The...
As Wall Street begins the week on a negative note, the once-mighty technology sector's momentum appears to be waning. The Federal Reserve maintained its policy rate within the 3.75 to 4 percent range on October 28th, though dissenters divided on the decision. Chair Kevin Warsh painted a balanced but cautious picture, hinting at a potential December hike while playing down the impact of the upcoming midterm elections.
Recent economic data, including robust third-quarter GDP growth and accelerating inflation, have pushed the 10-year Treasury yield closer to the 5 percent mark. In the technology realm, the Nasdaq's performance hinges on a stark contrast between AI spenders and AI earners. Companies like Alphabet experienced a record post-results decline of around 10 percent due to disappointing search growth and mounting cash burn, dragging the index down roughly 1.6 percent on Thursday.
In contrast, Microsoft's AI investments have translated into cash flow, earning the company a positive reception from investors. As the earnings landscape becomes increasingly focused on the AI trade, the divide between spenders and earners is becoming a critical factor in market sentiment. With elevated yields and no clear resolution on the AI earnings conundrum, the Nasdaq 100 has lost its short-term footing, leaving the stage set for potential wider swings ahead of the US midterm elections and the upcoming US-China meeting.
Written by urgent.news from The Business Times - Companies & Markets's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
