| The S&P 500 Index erased early-session losses to close higher on Tuesday as big banks and healthcare companies rallied. The tech-heavy Nasdaq 100 Index ended the day with a slight decline after South Korean neocloud company Elice Inc. tanked in its trading debut, spurring concern about the sustainability of the global AI boom. Investors were also on edge ahead of a spate of tech earnings this week, including SpaceX and Netflix Inc. after the bell. The S&P 500 rose 0.3%, while the Nasdaq 100 fell 0.1%. The benchmark KBW Bank Index gained 1.5%, the most since early September, with top lender JPMorgan Chase & Co. advancing 0.5%. Brent oil prices declined, retracing an earlier increase, while yields on 10-year Treasuries fell. Bank stocks have recently been languishing in correction territory. The index last week logged its worst weekly streak since the 2008 Global Financial Crisis, and "fear is winning the early rounds," Wells Fargo analyst Mike Mayo wrote. He added that the selloff may be overdone, as "continued growth and a 10-times forward price-to-earnings ratio, versus 19 times for the S&P 500, should allow reality to win the fight." ALSO READ | Stock Market Today: All You Need To Know Before Going Into Trade On October 21 Some are turning more bullish on stocks even as market pessimism has surged. Wells Fargo Securities' sentiment indicator has triggered a buy signal, strategist Ohsung Kwon wrote in a note. "Caution is warranted in a decelerating profits/negative liquidity environment, but sentiment may have gotten too bearish around AI financing, midterms, and Iran," he said. Kwon anticipates a "choppy market into year-end." Earnings season is heating up, with investors watching whether Netflix can stop a slide that's erased more than $135 billion in market value this year. Netflix shares closed 1.7% lower ahead of results. SpaceX fell in Tuesday trading as well. The stock had closed 1.3% higher on Monday, after Elon Musk pledged to gift a share to each American child. SpaceX's outlook on AI will "matter more than the quarter," Macquarie analyst Paul Golding wrote in a note, highlighting deals with AI startup Reflection, Anthropic PBC and Alphabet Inc.'s Google. Meantime, South Korean AI services firm Elice's surprising 32% plunge raised doubts about AI valuations and recalled last week's concern over another neocloud company, CoreWeave Inc., whose debt tumbled to levels that typically indicate distress. CoreWeave rose 1.7% on Tuesday. "A prolonged deterioration in investor confidence" may be a bigger risk than CoreWeave's ability to service existing obligations, BNP Paribas analysts Daniel Wang and Stefan Slowinski wrote in a Monday post-market note. ALSO READ | Brent Crude Crosses $110/Barrel After US Secretary Rubio Calls Iran Truce Deal 'Difficult' Apple Inc. slipped after Loop Capital Markets downgraded shares to hold from buy, citing iPhone shipment reductions. |
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