US stocks rose as oil prices fell and investor concerns the artificial-intelligence spending spree eased.
The S&P 500 Index rose 0.2% , while the Nasdaq 100 advanced 0.2% as of 9:47 a.m. A report that OpenAI expects · to reach or exceed $70 billion in annualized revenue by year-end helped alleviate anxiety over the durability of the AI boom after an earlier report suggested the company’s sales would fall short of expectations. Others on Wall Street are pushing back on the narrative that the market is witnessing an AI bubble.
“People are worried, and that’s not a sign of a bubble,” Christian Mueller-Glissman, a Goldman Sachs strategist, said in an interview on Bloomberg Television. “Usually, when you’re in the bubble, there’s a lot of exuberance, and people have FOMO.”
He also pointed to the J-curve dynamic of technology investment, in which substantial upfront capital spending can take time to translate into revenue growth and productivity gains.
As the bull market in US stocks approaches its fourth anniversary, it’s showing few signs of stress with corporate profits rock-solid and the S&P 500 near a record. A 117% advance in the equities gauge since 2022 makes it the third-largest bull market of that length in data going back to 1947, according to CFRA.
When the rally extends to a fifth year, the historical average gain is 21%, CFRA data show · . Theoretically, that leaves plenty of room for the rally to broaden out beyond technology megacaps that have driven the lion’s share of gains since October 2022.
Still, signs of strain are emerging across the AI-infrastructure trade. Nvidia Corp.-backed Firmus Grid Ltd. shelved · plans for an Australian initial public offering just days after signaling strong demand for a deal that would have valued the data center company at $30 billion. Credit-default swap spreads on Oracle Corp. reached new highs, as Morgan Stanley warned that project delays could weigh on the company’s debt.
Banks will kick off earnings season in earnest next week. The sector has underperformed the S&P 500 by 11% over the past month and investors will be looking for data and commentary regarding the state of the US consumer.
“The biggest signal we will get will not be from the consumer companies but the banks. It will be interesting to see how bank management characterizes the consumer from spending to credit,” said Joe Gilbert, portfolio manager at Integrity Asset Management. “We will be looking to see if credit has taken a leg down or if the K-shaped economy starts to converge.”
In corporate news, Delta Air Lines Inc. cut its adjusted earnings per share forecast for the full year and shares dropped. Apple Inc. shares fell 2.5% on a report that the company cut component orders for the iPhone 18 Pro and iPhone 18 Pro Max amid weaker-than-expected demand. SpaceX shares are higher after Elon Musk’s rocket and AI company said it acquired low-band spectrum that will enable it to use its Starlink satellites to become a “major mobile carrier” in the US.
Sectors to watch
- Shares in optical-equipment makers rally after Lumentum notes that its components are “completely sold out” through early 2029 on demand from tech companies clamoring for faster AI data centers.
- Travel stocks are in focus today after high fuel costs forced Delta Air Lines to reduce its full-year outlook. The parent company for Vans and The North Face is rising after receiving an upgrade.
- Watch health insurers after Humana Inc. shares surged on the company’s improved performance on crucial Medicare Advantage quality ratings. Shares of CVS Health Corp. underperformed as ratings for some of its largest plans deteriorated.
- Shares in tower companies gained on SpaceX’s plan to acquire a nationwide low-band spectrum license portfolio, a deal analysts said is a positive catalyst for the sector.