AI Debt Concerns and Rising Yields Weigh on Technology Stocks

Concerns surrounding AI-related debt levels are weighing on technology stocks this morning, with tech-sensitive markets including Korea, Taiwan, Japan, and the NASDAQ all retreating. Media reports suggesting that major technology companies may have up to $3 trillion in AI-related off-balance-sheet obligations appear to have dampened sentiment toward the AI sector. The reports come as interest rates rise, with the 30-year US Treasury yield breaking out to its highest level since 2008.

NASDAQ futures are down 1.2%, while Dow futures are down 0.1%. Overseas, the Nikkei and Taiwan both declined 2.5%, South Korea fell 1.5%, and the Hang Seng gained 0.1%. In Europe, the DAX is down 0.3%, while the FTSE is up 0.2%.

Home Depot kicked off earnings season for US retailers by beating expectations on earnings, sales, and same-store sales. EPS came in at $4.92 versus the Street at $4.73, while same-store sales increased 1.7% compared with expectations of 0.9%. Home Depot shares are up 1.4% in premarket trading. Retail earnings remain in focus this week, with TJX reporting on Wednesday and Walmart on Thursday.

In commodities, crude oil is up 0.8%, trading above $85.00/bbl, while Brent Crude has gained 0.3%, climbing above $90.00/bbl. Gasoline is up 1.1%, trading above $3.30/gallon. Gold has declined 0.5% to trade near $4,450/oz, Copper is down 1.0% near $6.55/lb, and Silver has retreated 1.5%.

The US 10-year Treasury yield has climbed above 4.75%, while the 30-year yield has advanced toward 5.30%. The US Dollar Index is steady, as are the euro and Loonie.

US housing starts, with the Street expecting 1.35M, industrial production, with expectations of 0.3%, and pending home sales, with expectations of 0.2%, are all due later this morning. This week’s economic calendar is dominated by US housing data and international inflation figures.

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