Today, stock markets are rising, and bonds are falling because investor interest in AI has outweighed concerns that a hot inflation report would force the Federal Reserve to raise interest rates further. Nasdaq 100 futures gained 1.5%, recouping Tuesday's drop in the main session; S&P 500 futures and European indices are up about 0.7%, and Asian stocks rose 1.6%.
AI news provided support. CoreWeave shares climbed more than 7% in the US after an earnings beat and an upward revision to its annual outlook. Quarterly revenue at OpenAI hit $10 billion for the first time, a significant figure amid doubts about its revenues. The main driver remains Anthropic's offering. Demand was enough to cover the entire share allocation at launch; some investors are offering parts of their allocations to new buyers, and bankers are discussing a valuation increase to $1.5 trillion and above. As recently as yesterday, the company pulled its pricing terms and promised an updated filing; the placement price is now expected to be set on November 18, with trading to begin on the 19th.
However, the balance between AI enthusiasm and rates remains fragile. Last week, the sector was shaken after the Democrats' wins in Congress raised concerns about stricter AI regulation and slower data?center construction; on November 5, the Nasdaq 100 fell 6.4%. Hedge funds cut risk in the first week of November at the fastest pace in over a decade. Yields are back in the driver's seat. AI valuations remain a loud narrative, but bond yields are the main driver for stocks. Yesterday, the bond market reacted sharply to the inflation report: two?year US Treasury yields jumped 17 basis points — the largest one?day rise in 19 months.
I believe tech stocks will retain support through Anthropic's placement on November 18 as long as demand for what would be the largest IPO in history stays full. Bonds are likely to remain under pressure while the Fed leaves a 50?bp option alive for December, and each new surge in yields will bring renewed selling in tech. Sustained stock gains are only likely after a soft producer?price report on Friday; otherwise yesterday's drop could be repeated.
Regarding the technical picture for the S&P 500, the buyers' main task today is to overcome near resistance at 7,574. Doing so would show strength and open the way to a push toward a new level at 7,607. Another priority for bulls is to hold control above 7,633, which would strengthen buyers' positions. On the downside, amid falling risk appetite, buyers must defend around 7,544. A break there would quickly push the instrument back to 7,518 and open the path to 7,495.
