Markets today: Stocks slide on concern AI still a ‘show me’ story

BNN Bloomberg's Jon Erlichman looks at how North American markets are shaping up for the trading day.

While high-flying megacaps have been responsible for the bulk of this year’s equity market gains, traders are looking for more evidence of the return on investment for the billions and billions of dollars spent in AI. Treasury yields fell, with the move led by shorter maturities on speculation the U.S. Federal Reserve will cut rates soon. Former New York Fed President William Dudley’s called for lower U.S. borrowing costs — preferably at next week’s gathering. For many analysts though, such a move would be worrisome as it would indicate officials would be rushing to avoid a recession.

“The market is not impressed with the start of earnings season for the mega tech stocks,” said Kathleen Brooks, research director at XTB. “There was a lot resting on these results and we don’t think that they give clear answers to questions about the effectiveness and profit potential for AI right now.”

Known as the “the 200-DMA” — an abbreviation of 200-day moving average — the gauge measures how the S&P 500 Index is performing against that longer-term measure. At one point last week, the benchmark was trading as much as 15 per cent above it, according to data compiled by Bloomberg. Although that does not necessarily mean the market is about to tank, it is a warning sign for investors concerned about lofty tech valuations and concentration risk, Thrasher said.• Texas Instruments Inc.

• Pfizer Inc.’s gene therapy for a severe bleeding disorder met its goal in a pivotal late-stage trial, paving the way for the company to enter what’s proven to be a challenging market for drug companies.

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