GLOBAL MARKETS-US stocks rebound with AI earnings test ahead; French markets tumble

By Reuters News

By Caroline Valetkevitch and Danilo Masoni

- The Nasdaq was up more than 1% in early trading on Monday as tech shares rebounded ahead of a big week for AI-related earnings, while French markets and the euro fell as unrest in France added to concerns about the country's fiscal outlook.

French bonds, Paris-listed stocks and the euro also fell as the widespread protests across France underscored the difficulties the government faces in reducing its large deficit.

Wall Street stocks recovered some ground after a bruising week, with an index of semiconductors .SOX up 3.6%. On Friday, the index sank in its eighth straight day of declines, its longest losing streak since 2008.

With results due from Meta META.O on Wednesday, and results from Tesla TSLA.O and chipmakers Lam Research LRCX.O and Texas Instruments TXN.O also due this week, investors will be watching for signs that massive AI spending ultimately pays off.

"Investors are buying the correction dip that we had," said Peter Cardillo, chief market economist at Spartan Capital Securities in New York.

"The market is now going to go through a very critical test over the next two weeks. We have some big name earnings coming out," he said. "In terms of technology, the test of whether or not the spending on AI... will be met with satisfaction is going to be critical."

The Dow Jones Industrial Average .DJI rose 45.31 points, or 0.08%, to 52,045.44, the S&P 500 .SPX rose 56.93 points, or 0.74%, to 7,716.13 and the Nasdaq Composite .IXIC rose 398.49 points, or 1.52%, to 26,538.53. MSCI's gauge of stocks across the globe .MIWD00000PUS rose 2.85 points, or 0.25%, to 1,131.95.

Meta is one of five AI hyperscalers expected to increase combined capital expenditure to about $1.2 trillion next year, according to Goldman Sachs.

Results from SpaceX SPCX.O are also due on Tuesday. Overall, US earnings are still expected to rise about 30%, largely driven by the technology sector.

A recent bond selloff also unsettled technology stocks and intensified scrutiny of the AI sector's massive funding needs.

US Treasury yields edged higher on Monday, with the benchmark 10-year Treasury yield coming off its biggest weekly drop in seven months, as concerns about the impact of higher interest rates on AI stocks eased. Recent comments from Federal Reserve officials, including Chairman Kevin Warsh, suggest policymakers are in no rush to hike rates again. On Friday, Warsh expressed optimism about US economic strength but gave no indication of whether or when more hikes will be needed.

In Europe, the pan-European STOXX 600 .STOXX index fell 1.04%, while France's blue-chip CAC 40 index .FCHI was down 1.4%.

France's 10-year yield was up 13 basis points to 4.9% while the German 10-year yield, the benchmark for the euro zone, was also higher.

Widespread weekend unrest in the euro zone's second-largest economy underscored the challenge facing the French government as it seeks to reduce its large budget deficit ahead of next year's presidential elections.

EURO, OIL EASE

The euro also fell against the dollar amid the turmoil in France.

The euro was last down 0.22% at $1.1214. The dollar index , which measures the greenback against a basket of currencies including the yen and the euro, rose 0.14% to 101.94.

The Australian dollar, meanwhile, was boosted after China's economic growth rebounded from three-year lows, expanding at a 4.5% annual pace in the third quarter. The Australian dollar strengthened 0.52% versus the greenback to $0.698.

Oil prices eased as investors took profits after prices climbed to multi-month highs last week.

Investors continued to keep a close eye on conflicts in the Middle East and Ukraine. They assessed the impact of US waivers on some sanctions and tariffs affecting Russian exports.

US crude fell 0.77% to $100.63 a barrel and Brent fell to $108.20 per barrel, down 1.49% on the day.

Spot gold fell 0.51% to $4,143.79 an ounce.

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