Public Markets 8-Hour Briefing
×Market Turmoil
The S&P 500 sank as Nvidia's earnings failed to lift the broader chip sector, with AMD and Broadcom down sharply. Treasuries rose, sending longer-maturity yields toward their lowest levels of the year, amid a fresh slump in US technology shares. Nvidia stock struggled despite reporting record sales, as investors shifted focus to AI's destabilizing impact on software companies. The market's plumbing held up fine in the selloff, encouraging bulls, but the $1.6 trillion meltdown that swept through software stocks highlighted growing concerns about AI's threat to traditional business models.
Private Credit Concerns
Private credit faces a great divide as even skeptics and true believers disagree on the severity of recent blowups. Marathon Asset Management's Bruce Richards fears 15% direct loan software defaults, warning private credit is too exposed to the software industry. A publicly-traded private credit fund managed by Blackstone is marketing a new bond with its biggest premium in five years, a day after disclosing continued signs of stress. The sector's vulnerability became apparent as complex hedging strategies gained traction among investment banks seeking to dodge AI-driven stock selloffs.
Energy Sector Moves
BP is aggressively expanding shale drilling, bucking the conservative approach of many rivals as the UK oil giant seeks to reverse years of anemic output. Meanwhile, Stellantis warned of higher US tariff costs as it reported a €22 billion loss, facing criticism for reviving combustion-engine models amid increased competition. The energy sector saw continued strength as Houston savored a "nice turnaround" with energy company relocations underscoring its role as the industry's linchpin in the Americas.
Corporate Restructuring
EBay announced plans to cut 800 jobs in a strategic restructuring, though the company didn't specify when the layoffs would occur or whether restructuring charges would result. Papa John's is closing hundreds of pizza shops as the broader sector struggles, working to turn around its business. Ocado plans to cut 1,000 jobs and restructure its technology unit, warning earnings from its licensing business will fall below expectations after clients scale back online grocery plans.
AI Investment Boom
Morgan Stanley says hyperscaler AI spending is set to exceed dot-com peak levels, creating winners beyond the "Mag 7" as one sector could see big gains. The AI spending boom is creating opportunities across the technology landscape, with Nvidia CEO Huang dismissing the "Saa Spocalypse" narrative as a "deep misunderstanding." However, analysts remain perplexed as Nvidia fails to rally after its "largest, cleanest beat ever," suggesting the market may be demanding even more from the AI leader.
International Markets
China's auto and EV industry faces sales headwinds and margin pressure in 2026, while Baidu reported sharply lower profit with revenue declining for a third straight quarter as it struggles to transform its businesses in the AI era. Colombia's dollar bonds fell across the curve and the peso led emerging-market losses after a new poll showed leftist Senator Iván Cepeda with a wide lead in the presidential race. Argentina's stocks are missing out on a surge in Latin American equities this year as market euphoria over President Milei's election victories fizzles out on concern over weak corporate earnings.
Central Bank & Policy
Fed Governor Stephen Miran said he thinks the Fed needs to cut interest rates by about a percentage point this year, while the European Central Bank reported a third straight annual loss, its worst run on record, as the effects of crisis-era policies continue to weigh. The ECB will closely monitor for any signs that AI adoption throughout the economy is sparking job losses, President Christine Lagarde said. Meanwhile, the US is becoming ever more dependent on its closest allies to fund its swollen debt burden, exposing a vulnerability in the $30 trillion Treasuries market.