Market developments
Equities: U.S. equities retreated after recent record highs as a sharp selloff in AI-related stocks, triggered by Broadcom’s weak sales outlook and Oracle’s spending-heavy forecast, sparked profit-taking. Concerns about stretched valuations and delays in AI infrastructure projects added pressure, while investors weighed mixed signals from Fed officials following a third consecutive rate cut. Strategists emphasized diversification beyond tech, highlighting opportunities in Asia and emerging markets.
Fixed Income: U.S. 10-year treasury yields trended higher and climbed to ~4.2%. This reluctance is attributed to a divide within the Federal Reserve committee, with some signaling for multiple rate cuts in 2026 while others prefer holding the Fed Funds rate steady. Investors are reducing duration risk as the year-end approaches.
Commodities: A divergence occurred, with metals surging while energy slumped. Energy markets were weak due to concerns about a developing surplus, while silver and copper reached fresh highs and gold showed renewed strength.