U.S. technology equities slumped on Tuesday, hit by concerns that elevated growth forecasts for the sector are stretched as the market approaches a busy earnings period. The moves came alongside another leg up in oil, which added to worries about whether central banks can successfully navigate an increasingly cloudy growth-inflation landscape.
A recent column examined the legacy of outgoing Federal Reserve Chair Jerome Powell. From a macroeconomic standpoint, that assessment finds his tenure can be judged a success, though with qualifications. The column also highlights Powell's vigorous defense of the central bank's independence and his refusal to yield to political pressure from President Donald Trump.
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Today’s key market moves
- STOCKS: Most Asian and European markets were lower, with exceptions including KOSPI, the FTSE 100 and Japan's Topix. U.S. stocks declined, with the Nasdaq down 0.9%.
- SECTORS/SHARES: U.S. technology -1.3%, chips index -3.6%, software +0.3%. Energy +1.7%. Individual moves included Oracle -4% and CoreWeave -6%.
- Selected tickers and moves cited during the day included MSFT +1.04%, ORCL -4.02%, TTEF +1.9%, SAN +0.88%, GOOGL -0.16%, AMZN -0.53%, AZN -0.52%, GC -1.8%, SI -2.59%, CL +3.37%, IXIC -0.9%, US7YT=X +0.56%, JP10YT=XX 0.00%, META -1.08%, KS11 +0.39%, SOX -3.58%, TOPX +0.99%, UBSG +0.42%, XBR/USD +2.11%, GBGV10YEUAC=R +0.44%, MWCLc1 +3.37%, LCOmdc10.00%.
FX, bonds and commodities snapshot
- FX: The U.S. dollar inched higher, making its largest gains against the Swedish krona, Swiss franc and New Zealand dollar. The Japanese yen slipped after a Bank of Japan meeting, and the Thai baht softened ahead of a domestic rate decision.
- BONDS: Global sovereign yields moved up. The 10-year gilt yield rose above 5% for the first time in a month. A U.S. seven-year auction registered decent results, with strong demand from direct bidders but weak demand from indirect bidders.
- COMMODITIES/METALS: Oil strengthened, with WTI up about 4% and back above $100 per barrel and Brent up around 3% and trading above $110. Gold fell roughly 2% and silver about 3%.
Market themes and talking points
Exiting OPEC
The United Arab Emirates announced on Tuesday that it is leaving OPEC. That makes the UAE the fourth country to quit the producers' group in recent years, following Angola in 2024, Ecuador in 2020 and Qatar in 2019. Observers regard the UAE's withdrawal as materially more consequential than the earlier exits, posing sharp questions about the long-term coherence and influence of the 65-year-old bloc. The announcement introduces an added source of volatility for oil markets and could, according to the perspectives cited, open the door to a price war once the Iran war concludes. While UAE departure had been contemplated for some time, the timing of the decision introduced a further element of surprise for oil traders.
Bonds on the run
Selling pressure across sovereign bond markets has picked up. With Brent crude remaining well above $100 a barrel, energy and fuel costs continue to exert upward pressure on prices more broadly. Both consumer inflation measures and market-based inflation expectations are cited as drifting higher. In fixed income, Britain’s 10-year gilt yield closed above 5.00% on Tuesday for the first time since 2008, and Japan’s 10-year yield matched its highest close since 1997. At the same time, average U.S. gasoline prices are reported as the highest in four years. Those dynamics add complexity for central banks meeting this week.
Red (hot) Sox - semiconductors cool
U.S. semiconductor stocks plunged on Tuesday after an extraordinary run earlier in the month. By some measures the rally this April was historic: until Friday the 'SOX' index had climbed nearly 40% in the month and was up more than 160% from a year earlier - both gains characterized as the largest since 2000. Bank of America data noted the chip index had become the most overbought relative to its 200-day moving average since 2000. Those statistics underline how stretched sentiment had become. Market participants are mindful of the long recovery that followed the 2000 peak - for the Nasdaq and the SOX index alike - and the comparison has heightened caution around the lofty rally.
What could move markets next
- Developments in the Middle East
- Energy market moves
- Australia inflation (March, Q1)
- Thailand interest rate decision
- ECB lending (March)
- Euro zone inflation expectations, consumer sentiment (April)
- Germany inflation (April)
- European earnings, including AstraZeneca, UBS, TotalEnergies, Santander
- Brazil interest rate decision
- Canada interest rate decision
- U.S. interest rate decision
- U.S. durable goods (March)
- U.S. trade balance (March, advance)
- U.S. earnings including Alphabet, Microsoft, Meta, Amazon
Investors monitoring the intersection of policy, energy and stretched equity valuations will find a dense schedule of central bank decisions, inflation reads and corporate reports that could re-test current market assumptions.