Stock Selloff Deepens Ahead of Nvidia, Jobs Data: Markets Wrap

A global selloff in stocks extended into a fourth day as investors, concerned about lofty tech valuations, shifted away from riskier assets in the run-up to Nvidia Corp.’s earnings and a key US jobs report later this week.

The MSCI All Country World Index hovered around a one-month low, while Asian shares were on track for a third straight day of losses. That’s after the S&P 500 index dropped 0.9% and the Nasdaq 100 shed 0.8%. In a further sign of weak sentiment, Bitcoin traded around levels last seen in April.

In other corners of the market, a gauge of the dollar held its gains from the prior session, while gold posted a fourth day of losses, underpinned by fading expectations of a Federal Reserve interest-rate cut next month.

The moves highlighted lingering uncertainty over interest rates and tech earnings, with Nvidia’s Wednesday report set to test investor nerves over lofty valuations surrounding the artificial intelligence sector. Attention will then shift to the delayed September jobs report due Thursday, which will provide investors with clues on the Fed’s policy outlook.

“The monthly jobs report would normally dominate this week’s economic calendar, but with the AI trade struggling the past couple of weeks, Nvidia’s earnings are once again looking like a key piece of the market’s momentum puzzle,” said Chris Larkin at E*Trade from Morgan Stanley.

Alarm bells are ringing for analysts who study chart patterns in the US stock market, fueling concern that the latest dip could swell into a full-blown correction of at least 10%.

A sharp selloff in the S&P 500 on Monday extended the decline from its last record on Oct. 28 to 3.2%. The benchmark index closed below its 50-day moving average for the first time in 139 sessions, breaking the second-longest stretch of this century above the closely watched trend line.

The Nasdaq Composite Index is also flashing some “ugly” signals, according to John Roque, head of technical analysis at 22V Research. More of the index’s some 3,300 members trade at 52-week lows than highs, he said, a sign of internal market weakness that makes a further rally unlikely. 

What Bloomberg Strategists say...

The artificial intelligence narrative is starting to look less convincing for investors who are questioning the big-spending industry’s ambition. Nvidia’s quarterly earnings Wednesday offer the next chance to scrutinize AI and, if recent history is any guide, traders will treat it as an excuse to take profit.

Nvidia’s shares also fell in US trading after a filing showed Peter Thiel’s hedge fund sold its stake in the chipmaker during the third quarter.

“While we should expect an eventual reckoning for blindly throwing trillions of dollars at AI capital expenditures with no clear path to profitability, markets are unlikely to tip over while the Fed is still in easing mode and the economy is still strong,” said Dennis Follmer at Montis Financial.

The path for rate cuts is the other major theme investors are concerned about amid conflicting views from central bank officials.

Fed Vice Chair Philip Jefferson said he sees risks to the labor market as skewed to the downside, but warned policymakers need to proceed slowly. Fed Governor Christopher Waller is backing a cut in December, citing weak jobs. Traders are pricing in about a 40% chance of a rate cut next month.

“Fed officials continue to voice concerns over sticky inflation, emphasizing that the current information vacuum makes it difficult to assess the economy’s true momentum,” Dilin Wu, a strategist at Pepperstone Group Ltd., wrote in a note.

Corporate News:

• Xpeng Inc.’s fourth-quarter revenue forecasts trailed expectations, raising concerns about its plan to break even next year.

• Akzo Nobel NV is in advanced talks to combine with rival paintmaker Axalta Coating Systems Ltd., according to people familiar with the matter.

• Shares of Baby Shark creator Pinkfong Co., jumped as much as 62% on their trading debut as investors snapped up the studio behind YouTube’s most-viewed jingle, following strong demand for the small initial public offering.

• Amazon.com Inc. raised $15 billion in its first US dollar bond offering in three years, adding to a spree of jumbo debt sales by technology firms.

• Gina Rinehart, Australia’s richest person, has become the biggest shareholder in US rare-earths producer MP Materials Corp., boosting her global bet on strategic minerals.

• Rio Tinto Group will almost halve production at its Yarwun Alumina refinery in Australia as a waste stockpile reaches capacity and the company seeks to cut costs.

Some of the main moves in markets:

Stocks

• S&P 500 futures were little changed as of 9:58 a.m. Tokyo time

• Hang Seng futures fell 0.7%

• Nikkei 225 futures (OSE) fell 1.8%

• Japan’s Topix fell 1.4%

• Australia’s S&P/ASX 200 fell 1.3%

• Euro Stoxx 50 futures fell 0.7%

Currencies

• The Bloomberg Dollar Spot Index was little changed

• The euro was little changed at $1.1586

• The Japanese yen was little changed at 155.29 per dollar

• The offshore yuan was little changed at 7.1098 per dollar

• The Australian dollar fell 0.2% to $0.6484

Cryptocurrencies

• Bitcoin rose 0.2% to $92,014.57

• Ether rose 0.9% to $3,034

Bonds

• The yield on 10-year Treasuries was little changed at 4.13%

• Japan’s 10-year yield advanced two basis points to 1.745%

• Australia’s 10-year yield declined one basis point to 4.47%

Commodities

• West Texas Intermediate crude fell 0.4% to $59.68 a barrel

• Spot gold fell 0.2% to $4,036.30 an ounce