Equities: AI-led earnings narrow rally – BNY

FXStreet Insights Team FXStreet

BNY’s Bob Savage argues U.S. equities are being propelled by an unusually strong, AI-led earnings boom that is outpacing the broader economy and sustaining index gains despite macro headwinds. He notes that rising rates, higher Oil prices and weakening consumer dynamics could make the rally more selective, with valuations and market breadth becoming increasingly important.

AI boom drives but narrows equity gains

"U.S. equities are being driven by an unusually strong, AI-led earnings surge that is outpacing the broader economy and supporting index gains despite macro headwinds."

"AI-driven earnings surge is strong but narrow, with growth far outpacing broader economic activity."

"Rising real rates and energy shocks increase risk of tighter financial conditions and valuation pressure."

"Consumer weakness and margin pressures suggest potential demand slowdown despite resilient headline earnings growth."

"However, rising rates, energy shocks, and weakening consumer dynamics suggest the rally may become more selective, with greater sensitivity to valuations and market breadth."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)

Author

FXStreet Insights Team

FXStreet

The FXStreet Insights Team is a group of journalists that handpicks selected market observations published by renowned experts. The content includes notes by commercial as well as additional insights by internal and external analysts.

GBP/USD eases from tops, retests 1.3630

GBP/USD clings to its daily gains, although it gives away some gains and recedes toward the 1.3630 region on Thursday. Cable’s uptick comes despite the bounce in the Greenback, which manages to regain some balance in the wake of Wednesday’s deep pullback.

EUR/USD turns negative near 1.1670

EUR/USD now trades with modest losses around 1.1670, coming all the way down from earlier tops beyond 1.1700 the figure. The pair’s decline follows the acceptable rebound in the US Dollar as market participants continue to closely follow developments from the US money market.

Gold comes under pressure below $4,500

Gold faces some correction and slips back below the key $4,500 mark per troy ounce on Thursday. The precious metal’s daily decline comes amid the slightly improvement in the US Dollar and rising US Treasury yields across the curve.

Crypto Today: Bitcoin, Ethereum, XRP extend gains as ETFs inflows and improved sentiment boost outlook

Cryptocurrency prices are extending gains on Thursday, led by Bitcoin’s (BTC) climb above $70,000. Ethereum (ETH) remains bullish, trading above $2,200, while Ripple (XRP) has recovered above $1.15 as bulls tighten their grip.

US Treasury doubles long-dated bond buybacks: Why are yields rising again?

US Treasury yields stabilize on Thursday after Wednesday’s sharp decline, with the 10-year yield edging back up to 4.672%. The US Treasury doubled the size of some long-dated debt buybacks, a surprise decision that helped ease the recent surge in yields.

$20 billion offered, $2 billion taken: Why Treasury doubled its buyback cap

The US Treasury moved off its own calendar on Wednesday, and that is the part worth sitting with. At 12:32 GMT, the department said it would at least double the size of liquidity support buyback operations in the 10-year to 20-year and 20-year to 30-year sectors, lifting the maximum from $2 billion per operation to at least $4 billion, effective September 9 and running to November 4.