US stock futures rose as dip-buyers stepped in after a spell in which concerns over artificial intelligence drove sharp swings in equity markets. Gold climbed back above $4,900 an ounce.
S&P 500 contracts strengthened 0.5%, a move that would mark the biggest advance for the index in more than a week if it holds. Nasdaq 100 futures were up 0.7%, with broad premarket gains across software names and AI heavyweights. Europe's Stoxx 600 hit a record high following a slate of positive earnings. Bitcoin steadied.
After months of gains fueled by optimism over AI, equity markets have turned cautious amid a clash between disruption fears and doubts that heavy spending will yield meaningful returns. The setbacks in US stocks have prompted investors to look elsewhere, with European and Asian benchmarks far outpacing the S&P 500 this year.
“It's hard to know where the floor on valuation is going to be,” Sophie Huynh, portfolio manager at BNP Paribas Asset Management, told Bloomberg TV. “So I think there's going to be some temptation to buy on dips.”
In currency markets, the dollar edged higher against most major peers. The euro held its modest loss after the Financial Times reported that Christine Lagarde is expected to leave the European Central Bank before her term as president expires in October 2027. An ECB spokesperson said Lagarde hasn't yet made a decision regarding the end of her tenure.
Treasuries fell across the curve, with the 10-year yield climbing one basis point to 4.07%.
The Federal Reserve is due to release the minutes of its January meeting later on Wednesday. Bloomberg Economics expects the notes to show a broad consensus to hold interest rates steady after three cuts.
Money markets continue to price in at least two cuts for the rest of the year. Even so, progress on inflation could give the Fed room to ease policy by 100 basis points in 2026, Bloomberg Economics said.
Europe Outperforms
Meanwhile, resurgent optimism about Europe and the benefits of German stimulus is driving investment flows into the region's equity markets and fueling an outperformance that is expected to last.
The positivity is visible in overall positioning, according to the latest Bank of America survey of the region's fund managers. A net 35% are overweight European equities relative to global markets, up from 9% just three months earlier.
“The AI scare trade is creative destruction in the making, and when one doesn't know how it will unfold, one diversifies,” said Nicolas Domont, fund manager at Optigestion in Paris. “Investors are particularly interested in companies which have predictable order books and revenues, such as in defense.”
Corporate News:
- Glencore Plc posted a drop in full-year profit as record copper prices failed to offset declining earnings from the commodity trader-cum-miner's sprawling coal operations.
- Warner Bros. agreed on Tuesday to reopen negotiations with Paramount after receiving a revised proposal last week that sweetened some of its terms.
- Berkshire Hathaway Inc. slashed its stake in Amazon.com Inc. by more than 75% in the fourth quarter, while also building a stake in the New York Times Co.
- Apple Inc. is accelerating development of three new wearable devices as part of a shift toward artificial intelligence-powered hardware.
- Meta Platforms Inc. has agreed to deploy “millions” of Nvidia Corp. processors over the next few years, tightening an already close relationship between two of the biggest companies in the artificial intelligence industry.
- Palo Alto Networks shares fell 8% in extended trading, after the security software company gave a forecast for adjusted earnings that was weaker than expected for both the third quarter and the full year.
Some of the main moves in markets:
Stocks
- S&P 500 futures rose 0.5% as of 7:13 a.m. New York time
- Nasdaq 100 futures rose 0.7%
- Futures on the Dow Jones Industrial Average rose 0.3%
- The Stoxx Europe 600 rose 1%
- The MSCI World Index rose 0.3%
Currencies
- The Bloomberg Dollar Spot Index was little changed
- The euro fell 0.2% to $1.1837
- The British pound was little changed at $1.3576
- The Japanese yen fell 0.3% to 153.73 per dollar
Cryptocurrencies
- Bitcoin fell 0.1% to $67,561.82
- Ether fell 0.8% to $1,983.75
Bonds
- The yield on 10-year Treasuries advanced one basis point to 4.07%
- Germany's 10-year yield advanced one basis point to 2.75%
- Britain's 10-year yield was little changed at 4.37%
Commodities
- West Texas Intermediate crude rose 2.3% to $63.74 a barrel
- Spot gold rose 0.9% to $4,924.18 an ounce
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