Contracts for the S&P 500 rose 0.5% and those for Nasdaq 100 gained 1% after the underlying indexes dipped Thursday. Apple shares rose in late trading after the company beat revenue estimates and offered a bullish holiday forecast. Amazon surged 13% in extended trading after reporting its fastest cloud unit growth in nearly three years. Asian shares rose at the open with a 1% gain in the Nikkei index.
After-market gains in Apple and Amazon offered investors a brief reprieve from a bruising session for megacap techs, as doubts mounted over whether massive AI spending will deliver returns. Meta Platforms Inc.’s 11% drop following a $30 billion bond sale weighed on US benchmarks, halting a rally that has added $17 trillion in market value since April.
“None of this means that the AI bubble is going to burst and that we’re on the cusp of a major reversal in the stock market,” said Matt Maley at Miller Tabak. “However, it does raise the odds that we could see a short-term pullback.”
Elsewhere, Treasury yields steadied after rising across the curve. A gauge of the dollar edged lower after two consecutive days of advances.
Gold held its gains to trade once again above the $4,000-an-ounce level. The yen rose after inflation in Tokyo advanced at a faster pace.The moves came after a selloff in several megacaps dragged down US stocks Thursday. Microsoft Corp. slid on underwhelming results, while Nvidia Corp. dropped as President Donald Trump said he didn’t discuss approving sales of Blackwell chips to China with Xi Jinping.The largest technology companies are betting on an AI future powered by gigantic data centers filled with humming servers. Now that the staggering cost of this push is coming into sharper focus, it’s testing nerves on Wall Street.
“The only takeaway that investors care about from big tech earnings is evidence of which company can stay in the AI race the longest,” said David Trainer at New Constructs. “None of these companies can keep up this huge spending on AI forever, and so those that find a way to profit first and the most from AI will be the winners.”
Selling in US government debt reflected Fed Chair Jerome Powell’s warning that investors need to rein in expectations for a December rate cut as US policymakers grapple over the outlook for jobs and inflation.
Fed officials voted 10-2 to lower the target range for the federal funds rate by a quarter percentage point on Wednesday. It was the second straight rate cut, but for the first time in six years, there were dissents in both directions — with one official advocating a larger reduction and another preferring to stay on hold.
The decision was hawkish “because the moderates are pushing back,” said Andrew Brenner at NatAlliance Securities. If the Fed fails to cut again in December, investors should “expect fewer cuts next year,” as “the bar of employment gets raised,” he said.
On the trade front, Treasury Secretary Scott Bessent said he sees the US back at the negotiating table with China in a year. That came after Trump and Xi agreed to extend a tariff truce, roll back export controls and reduce other trade barriers in a landmark summit on Thursday.
“The much anticipated US-China trade agreement showed both sides willing to step away from recent escalations, but not willing to stand down from a longer-term competition,” said Paul Christopher at Wells Fargo Investment Institute.
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