By Stefano Rebaudo
Nov 2 (Reuters) - A global stock rebound petered out on Monday, with selling among popular technology issues picking up in the US afternoon in the latest sign of angst over the underpinnings of the AI market rally.
In New York, US stock indexes rose 1% or more early on Monday before reversing course in the afternoon, led by an 8.6% decline in Oracle after the software firm and major AI player set plans to raise $20 billion by selling shares and bonds. Marvel Technology tumbled 13%
after announcing a $115 billion agreement to buy Lumentum, which fell 18%. Intel dropped 8% on Monday, extending its stunning 29% decline from Friday.
Monday's stock revival gone wrong added to the investor anxiety exposed on Friday, when the Nasdaq posted its largest retreat in four months, and was the latest sign that investors' views on the AI boom at the center of this year's stock advance are becoming more contentious. Adding to the ferment on Monday was an updated S-1 filing from AI lab Anthropic, which disclosed a 47% sequential increase in revenue in its latest quarter.
"The bar for performance is rising and higher volatility in the AI trade is likely to be the new normal in this stage of the cycle," said Mark Haefele, CIO at UBS Global Wealth Management.
Goldman Sachs analysts expect capital spending by hyperscalers to nearly double to $800 billion this year and rise further to $1.2 trillion in 2027. At the same time, they see S&P 500 earnings per share growth slowing to 18% next year from nearly 30% in 2026.
"The next phase will be less about identifying who is exposed to AI and more about distinguishing who is already converting that demand into cash, who is still funding the build-out, and what valuation investors are being asked to pay for each," Kristofer Barrett, head of global equities at Carmignac, said.
A PIVOTAL WEEK
Markets face a pivotal week, with investors digesting the Federal Reserve's and the European Central Bank’s latest policy decisions. Earnings season is in full swing -- US technology stalwart Apple is due to report earnings after the close on Monday -- and the US midterm elections taking place on Tuesday.
In Europe's afternoon, MSCI's main world stocks index <.MIWD00000PUS> was down fractionally lower at 1,115 after earlier trading as high as 1,125, while Europe's STOXX 600 ended up 0.4%.
European gains came after a softer manufacturing report on the continent, as new order growth slowed and rising costs from energy and supply-chain disruptions squeezed margins. The S&P Global Eurozone Manufacturing Purchasing Managers' Index (PMI) dipped to 52.7 last month from 52.9 in September — which was the highest reading since May 2022 — but was above a preliminary estimate of 52.4. Readings above 50.0 indicate growth in activity.
In the US, manufacturing activity picked up in October amid solid domestic demand, with the Institute for Supply Management's manufacturing PMI rising to 55.5 last month from 54.5 in September. Economists polled by Reuters had forecast the PMI would stay at 54.5.
Brent crude futures fell 7% to about $105 as Iranian negotiators left talks with Qatari mediators and a draft proposal is being circulated with a follow-up meeting possible . US President Donald Trump recently threatened new attacks against Iran .
BIG EXPECTATIONS FOR APPLE REPORT
Apple will face scrutiny over three key issues: its crucial holiday-quarter outlook, CEO remarks on AI and the revamped Siri, and rising memory-chip costs that analysts expect to drag quarterly profit growth to its weakest in six quarters.
In foreign exchange markets, major currencies were largely subdued. The euro rose 0.46% to $1.1199, while the dollar was up 0.16% at 157.90 yen.
Among central banks meeting this week, markets are pricing in rate increases from the Reserve Bank of Australia, Bank of England and Riksbank, while the Norges Bank is seen on hold.
Data due this week include the closely watched non-farm payrolls report on Friday.
(Reporting by Stefano Rebaudo; additional reporting by Wayne Cole. Editing by Muralikumar Anantharaman, Mark Potter, Chizu Nomiyama, Colin Barr)
