Oil rally drags stocks and bonds lower before Fed decision
A renewed rally in oil prices pulled stocks and government bonds lower, reviving inflation concerns days before the US Federal Reserve's interest rate decision. Brent crude settled near US$117 as a flare-up in Middle East violence threatened supplies, according to the source material. The Dow Jones Industrial Average slipped 1.2%, the S&P 500 fell 0.5% and the Nasdaq 100 was little changed. The yield on 10-year Treasuries advanced five basis points to 5.00%.
Bank of America strategist Michael Hartnett said he expects the risk-off mood to persist into November, citing jitters over the artificial-intelligence trade and the midterm elections. "We stay tactically risk-off until mid-November," he wrote in a note to clients. Brian Jacobsen of Annex Wealth Management said the recent sell-off in AI-linked stocks showed how crowded trades can hurt when sentiment turns, and suggested rebalancing rather than abandoning growth stocks.
Views among asset managers diverged. Florian Ielpo of Lombard Odier Asset Management said the problem is not that equities are expensive but that bonds are no longer cheap. Ulrike Hoffmann-Burchardi of UBS Chief Investment Office said robust earnings should continue to support equities, with AI demand strong and bond yields offering attractive income. Tiffany Wilding of Pacific Investment Management Co said inflation is elevated but not accelerating, which likely gives the Fed room for a measured approach.
In digital assets, bitcoin was little changed at US$81,178.51 and ether rose 0.5% to US$2,390.75, according to the source. Spot gold fell 0.6% to US$3,999.56 an ounce. The Bloomberg Dollar Spot Index was little changed, with the euro down 0.2% at US$1.1194 and the pound 0.2% lower at US$1.3372.
Separately, SpaceX is seeking at least 80,000 cell sites across the US and is in talks with at least one major cellular infrastructure company, according to people familiar with the matter. American Express is cutting 5% of its global headcount, while Bristol Myers Squibb reported a death in clinical trials of an experimental cell therapy.
