(Bloomberg) — Stocks got hit as disappointing earnings from Europe’s most-valuable tech company and concern about tighter US restrictions on chip sales spurred a selloff in the industry that has powered the bull market.
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A closely watched gauge of semiconductor firms saw its worst plunge since early September, dragging down equities from record highs. US-traded shares of Dutch giant ASML Holding NV plunged 17% after a surprise guidance cut. Nvidia Corp. lost 5% on a news report US officials have discussed capping sales of advanced AI chips from the company and other American firms on a country-specific basis.
Investors got so bullish that it might be time to sell global stocks, according to an investor survey by Bank of America Corp. Allocations to equities surged, while bond exposure sank and cash levels in global portfolios fell to 3.9% in October from 4.2% last month, triggering a “sell signal”, strategists led by Michael Hartnett wrote.
“US equity markets, skewed more toward large-cap leadership, are seeing profit-taking today as earnings season ramps up against overbought/extended charts,” said Dan Wantrobski at Janney Montgomery Scott.
The S&P 500 slipped 0.5% to around 5,830. The Nasdaq 100 dropped 1.2%. The Dow Jones Industrial Average slid 0.5%. UnitedHealth Group Inc. sank on a disappointing outlook. Bank of America Corp. climbed 1.2% as earnings beat estimates. Goldman Sachs Group Inc. wavered and Citigroup Inc. fell despite solid results.
Treasury 10-year yields declined six basis points to 4.04%. Oil plunged 5% as a report that Israel may avoid targeting Iran’s crude infrastructure eased concerns about a potential supply disruption, bringing traders’ focus back to expectations of a sizable glut early next year.
Weekly flows for the S&P 500 were near the largest observed this year, according to Citigroup strategists led by Chris Montagu. Positioning is very extended and sits at 98th percentile.
US stocks are set to extend their rally into the final months of the year, pushing the S&P 500 past 6,000, as corporate…
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