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Stocks Take a Breather After Record-Breaking Run: Markets Wrap

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Stocks Take a Breather After Record-Breaking Run: Markets Wrap

(Bloomberg) — A rally that drove stocks to a series of all-time highs showed signs of fatigue, with traders awaiting this week’s readings on the labor market and a slew of Federal Reserve speakers.

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Equities struggled to make headway, following a relentless advance that sent S&P 500 to its 54th record this year. Salesforce Inc. is due to report results after the close, with investors particularly focused on any comments on artificial intelligence-related trends going forward. Treasury trading was muted while the dollar slipped as traders ramped up bets on a Fed rate cut this month.

The only notable economic report on Tuesday is the so-called JOLTS record of job openings. Hurricanes and labor disputes have added noise around October’s data, but labor-market cooling was evident in payrolls and other key data, according to Stuart Paul at Bloomberg Economics.

“Investors will want to see more ‘Goldilocks’ data to support post-election growth optimism,” said Tom Essaye at The Sevens Report.

The S&P 500 was little changed. The Nasdaq 100 fell 0.3%. The Dow Jones Industrial Average rose 0.2%. Germany’s main equity benchmark touched 20,000 for the first time.

Treasury 10-year yields slid one basis point to 4.18%. The Bloomberg Dollar Spot Index fell 0.2%. The South Korean won sank as President Yoon Suk Yeol declared martial law.

Oil rose ahead of an OPEC+ supply meeting, buoyed by hopes the group will refrain from hiking output and that China will approve more stimulus.

Short-sellers are capitulating as the S&P 500 keeps hitting record highs, according to Citigroup Inc. strategists led by Chris Montagu. Investor positioning in S&P 500 futures is “completely one-sided,” they wrote.

Equities will likely be exposed to risks such as tariff- and geopolitics-driven inflation, growth fears and a fizzling AI trade in 2025, according to HSBC strategists, who retained their expectations of a first-half rally.

The team led by Max Kettner says a more hawkish-than-expected Fed would also be a downside risk. On the other hand, deregulation, a strong rebound in China and synchronized pick up in global goods could support further gains in risk assets, they added.

The “Magnificent Seven” stocks are a buy during corrections as most of them will keep generating money, according to a New York University professor known for his expertise on valuations.

“As a value investor, I have never seen cash machines as lucrative as these companies are,” Aswath Damodaran, a finance professor at NYU’s Stern School of Business, said in a Bloomberg Television interview. “And I don’t see the cash machine slowing down.”

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