Original Article by Edward Moya, OANDA (Published on MarketPulse.com)
Title: Has the Market Turned on the AI Boom? – Market Wrap for the North American Session, November 6
Rewritten and Expanded Article (1,000+ words)
Title: Shifting Sentiment in Markets Amid Earnings Volatility and AI Reassessment
By Edward Moya, OANDA
Adapted and expanded from the original article at MarketPulse.com
The North American trading session on November 6 delivered mixed signals for investors, particularly in tech and AI-heavy equities. Despite a recent upswing in major indices, questions are arising as to whether the robust AI-fueled rally is losing its momentum. Market participants appear to be cautiously rotating out of earlier winners, reassessing valuations in light of earnings data and macroeconomic shifts. Meanwhile, currency and bond markets are also reacting dynamically to central bank cues and economic reports.
Key Takeaways from the Trading Day:
– US equities ended mixed after strong gains in the previous week.
– Tech stocks underperformed as investors weighed future AI growth potential.
– Treasury yields held steady following last week’s Fed commentary and positive jobs data.
– Forex markets showed modest volatility, with the US dollar broadly softer.
– Oil prices retreated further amid concerns over global demand.
Equity Market Snapshot
Stocks have shown signs of vulnerability despite recent strength. The S&P 500 showed minimal change on Monday. However, the Nasdaq Composite, historically the leader during AI and tech hype rallies, experienced notable selling pressure. This realignment reveals that investors are growing increasingly skeptical of tech companies’ ability to sustain AI-driven growth and premium valuations.
– S&P 500: Closed marginally lower after last week’s 5.9% rally.
– Nasdaq Composite: Declined 0.2%, an indicator that leadership from mega-cap tech may be waning.
– Dow Jones Industrial Average: Edged higher by 0.1%, buoyed by industrial and consumer sectors.
The AI enthusiasm that contributed to substantial gains for high-flying companies such as Nvidia, Microsoft, and Alphabet may be cooling, especially after recent earnings reports underwhelmed or failed to solidify bullish expectations.
Key Stocks Under Watch:
– Nvidia: After soaring nearly 240% year-to-date, investors are beginning to question whether this momentum is sustainable. Monday’s modest decline follows a broader five-day gain.
– Palantir: Initially surged after reporting strong quarterly profits and optimistic commentary on AI investments. However, those gains were erased as market participants took profits amid skepticism of forward earnings growth.
– Microsoft: Still in demand due to its diversified AI strategy, yet its lofty valuation is prompting selective profit-taking.
– Apple: Missing the AI hype train thus far, the company has underperformed its tech rivals. With investors less confident in its next growth engine, it may continue to lag the broader tech complex.
Earnings Picture and Market Sentiment
As Q3 earnings season moves toward conclusion, results have largely beat expectations, but the margins have not been wide enough to sustain high valuations, especially in the tech sector. While nearly 81% of companies in the S&P 500 have beaten forecasted earnings, several high-profile misses or conservative guidance updates have taken the shine off the AI boom narrative.
Investor sentiment is now characterized by rotation into value and defensive sectors, a pattern typical when market participants begin to worry about growth slowdowns or elevated interest rates continuing longer than anticipated. The late-summer rate scare and the recent rise in yields over September and October played a large role in the market’s recent choppiness.
Key Sector Moves:
– Information Technology: Weighed down by AI fatigue, down modestly on the day.
– Consumer Discretionary: Showed strength, bolstered by stronger-than-expected services spending data.
– Energy: Dropped as crude oil prices weakened due to demand concerns and technical breakdowns.
Treasury Market Reactions
The bond market stabilized after a volatile week in
Explore this further here: USD/JPY trading.