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Dow, S&P 500 edge higher, Nasdaq flat
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Energy leads S&P sector gains, cons discretionary lags
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Euro STOXX 600 index up 0.3%
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Dollar rises, crude little changed; gold, bitcoin dip
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U.S. 10-Year Treasury yield slides to ~3.46%
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CAN AI HELP SOLVE THE ONSHORING INFLATION PROBLEM? (1000
EDT/1400 GMT)
The Federal Reserve's inflation fight could run into an
additional hurdle - a push for onshoring, or moving production
of goods back or close to the U.S.
This trend, which will require more investment at a time when interest rate hikes are raising the cost of capital and could result in increased inflationary pressures but the adoption of AI technology could potentially offset this, said Stefan Rust, founder and CEO at data aggregator Truflation.
"Technology has the potential to be the saving grace with artificial intelligence providing significant productivity gains that could counter the rising cost of capital," Rust told the Reuters Global Markets Forum.
He pointed to how growth in computing power, the internet, and mobile data access has increased productivity at a reduced cost in the past as a potential blueprint for AI's impact on costs.
AI remains a buzzy topic for both investors and corporations.
A Brown Brother Harriman survey of investors found 56% intended to add AI and robotics-themed strategies to their portfolios this year.
Meanwhile, a Reuters analysis showed the term "AI" has been used nearly twice as frequently in this quarter's conference calls of S&P 500 companies as it was in the previous quarter.
Additionally, Rust said the push for onshoring is helping to shift inflationary pressures from the supply to the demand side. "We've seen a significant shift over the last six months from a supply side issue to actual demand-side inflation... the supply issue is largely due to the onshoring of manufacturing and the desire for independence in parallel to deglobalization," he added.
(Lisa Mattackal)
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NASDAQ COMPOSITE: PRESSURE IN THE PIPE (0900 EDT/1300 GMT) Although the S&P 500 index ended Thursday virtually flat for the week, shorter-term volatility has certainly picked up.
The benchmark index gave up as much as 2% through Wednesday, only to surge back as much as 2.2% on Thursday. That said, the SPX remains trapped in a range, and just shy of some major resistance. Meanwhile, the Nasdaq Composite , which also experienced some sharp swings this week, has seen one historical volatility measure on a daily basis collapse to a 20-month low, suggesting it is especially ripe for even greater swings, or indeed its next trend. On Thursday, the Composite's daily Bollinger Band (BB) width ended at its tightest reading since August 25, 2021. Compressed band width does not in itself predict direction, but traders are on alert for what could end up being a surprisingly strong IXIC range breakout. An IXIC thrust above this year's high at 12,270, as well as the upper daily BB, now around 12,285, will have potential to spark upside momentum. Conversely, taking out the lower daily BB, which ended Thursday at 11,855, as well as Tuesday's low at 11,798, and the 50-day moving average, which closed Thursday at 11,788, will have the potential to trigger a sharp downside spill. Perhaps not surprisingly, the S&P 500 tech sector is exhibiting similarly tight daily BB width as the Nasdaq Composite. Given that tech accounts for nearly 30% of S&P 500 market cap, it would appear that market fireworks are not far off.
(Terence Gabriel)
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(Terence Gabriel is a Reuters market analyst. The views
expressed are his own)
