Stock market zooms toward Thanksgiving as AI plays surge
The main American stock indexes seemed ready to open in the green on Wednesday. S&P 500 futures rose 0.25% in premarket trading, the Nasdaq rose 0.4% and the Dow Jones Industrial Average just moved into positive territory after strong gains Tuesday.
After last week’s volatility, this week’s generally steady positive trading looked set to allow investors to enjoy a long and enjoyable holiday week and weekend. But beneath that serene surface, surprising news has impacted major sectors — from the generally sedate retail headlines to marquee AI stocks, and finally the beleaguered agriculture sector.
News of possible Alphabet-Meta deal shakes up tech’s usual order
Potential Alphabet-Meta chip deal shakes up tech’s usual order. On Tuesday, Alphabet soared toward a historic valuation of $4 trillion, while Nvidia – usually the center of the AI universe – was hovering around $4.3 trillion following its multi-day sell-off following the earnings release.
Alphabet has added nearly $1 trillion in market capitalization over the past six weeks, driven to new highs by an unusually positive reception to its new Gemini AI model, a rapid shift in investor sentiment and the surprise revelation that Warren Buffett’s Berkshire Hathaway acquired the company’s first-ever multibillion-dollar stake during the third quarter.
Now add the possibility that Meta buys or leases Alphabet’s AI chips, and investors suddenly see Alphabet not as a traditional laggard store, but as a legitimate challenger in AI hardware. Even if no deal comes to fruition, the fact that Meta, one of the world’s biggest IT spenders, is reportedly considering pulling its budget from Nvidia indicates how dramatically the landscape could change.
Elsewhere, AI business continues to make headlines
Also on Tuesday, HSBC forecast that the S&P 500 index could reach 7,500 by the end of 2026, mainly due to the AI investment cycle, which the bank expects to continue or even intensify. But HSBC also highlighted the “two-speed economy” that remains firmly in place: big spending at the high end, rougher waters below.
Earnings news echoes split in ‘two-speed economy’
On Wednesday morning, Deere & Co. reported continued challenges in demand for large equipment as individual and industrial buyers pulled back – yet another data point showing tough conditions outside of technology. It was a particularly difficult year for the popular tractor maker, as trade wars disrupted old incentive models and U.S. farmers, wary of macroeconomic uncertainty, delayed major capital spending.
In retail news, Abercrombie & Fitch raised eyebrows Tuesday with a nearly 40% rally in the stock after reporting same-store sales strong enough to prompt a near-total rerating.
