AI capex revival, vaccine headlines and firmer crude stir risk appetite as traders eye Fed path
A rebound in AI-linked tech and a pop in energy prices pushed risk sentiment higher, even as pockets of the market remained under pressure. Vaccine news lifted select healthcare names, while Apple’s underperformance and a sharp target cut for a crypto-exposed software name kept investors cautious on valuations and policy risks.
Tech bid returns on buyback buzz and rate-cut hopes
Adobe rallied about 5.5% after highlighting share repurchases, with investors also leaning into expectations for Federal Reserve easing. Barclays maintained an Overweight rating despite Adobe still being down roughly 21% year-to-date and 37% below its peak—underscoring how far large-cap software must climb to reclaim prior multiples. More broadly, the AI infrastructure cycle is gathering momentum: U.S. data center investment is projected to top $100 billion by 2026, while global spend could jump about 67% in 2025. Wage growth is part of the story—average pay in the segment has surged about 32% to $81.8K—adding a labor-cost wrinkle that could keep inflation sticky even as growth remains resilient.
Healthcare and small caps ride stock-specific catalysts
Moderna gained about 6.4% after updates around vaccine safety, though the stock remains down roughly 34.5% year-to-date, keeping valuation a key debate. In small caps, Smart Sand surged about 65% to a three-year high on robust demand signals. Technical screens flagged broad buy readings, with its Relative Strength Index near 85.7 and market capitalization around $168.5 million—momentum that could draw short-term traders but also invites overbought risks.
Crypto-tied exposure divides analysts
One broker slashed its price target on a Bitcoin-exposed enterprise software company by 59% to $229, while Cantor Fitzgerald reiterated an Overweight rating, citing the value of BTC holdings even as questions over dividends and capital returns persist. The split underscores how equity proxies for crypto can trade as quasi-ETFs, amplifying volatility around digital asset cycles and Fed policy expectations.
Energy: rigs tick higher as WTI and Brent extend gains
U.S. oil rigs rose by five to 549, trimming some of the year-on-year deficit, though counts are still down by about 40 units versus a year ago. West Texas Intermediate and Brent futures advanced, signaling firmer risk appetite despite mixed production data. Tighter supply signaling and resilient demand are helping crude stabilize, with implications for inflation-sensitive assets and rate expectations into year-end.
Apple’s lag weighs on megacap leadership
Apple’s 12% year-to-date return trails the S&P 500 as retail investors pulled an estimated $96 million, according to flow trackers, amid concerns about the company’s positioning in the AI race. The stock’s relative performance matters for passive-heavy benchmarks and broader risk sentiment given its outsized index weight.
Macro and FX takeaways
Investors are toggling between growth optimism and inflation vigilance. An AI-driven capex boom is supportive for cyclicals and semis, while higher oil prices can complicate the disinflation narrative. In currencies, firmer crude typically supports petro-linked FX such as CAD and NOK, while a tech-led equity rally can bolster pro-cyclical FX and weigh on haven demand. Much hinges on incoming data and how quickly the Fed signals comfort with rate cuts.
Key Points
- Adobe jumps ~5.5% on buyback support and Fed cut hopes; still down ~21% YTD and 37% off its high.
- Moderna climbs ~6.4% on vaccine safety headlines but remains ~34.5% lower YTD, keeping valuation in focus.
- AI data center cycle accelerates: U.S. spend seen topping $100B by 2026; global capex could rise ~67% in 2025; average pay up ~32% to $81.8K.
- Small-cap Smart Sand surges ~65%, RSI near 85.7; market cap around $168.5M amid strong demand signals.
- Brokerage cuts price target by 59% to $229 on a Bitcoin-exposed software name; Cantor Fitzgerald stays Overweight despite payout questions.
- U.S. oil rigs increase by five to 549, still ~40 units below last year; WTI and Brent futures extend gains.
- Apple lags the S&P 500 with ~12% YTD gain; retail outflows of about $96M highlight AI competition concerns.
- FX lens: stronger oil tends to aid CAD/NOK; risk-on tone favors pro-cyclical currencies, but the Fed path remains the key swing factor.
FAQ
How does rising oil affect currencies?
Higher crude prices generally support petro-currencies like the Canadian dollar (CAD) and Norwegian krone (NOK) by improving terms of trade and boosting energy-sector revenues. However, if oil’s rise stokes inflation worries, it can also lift global yields and complicate the outlook for risk assets and rate-sensitive FX.
Why did Adobe rally despite being well below its peak?
Investors responded to buyback support and renewed hopes for Fed easing, while the broader AI infrastructure theme is reviving confidence in software demand. Even so, the stock remains far off its highs, reflecting valuation reset and execution risks.
What’s behind Moderna’s move?
Fresh vaccine safety updates bolstered sentiment. Yet the stock’s substantial year-to-date decline keeps focus on long-term demand visibility, pipeline diversification, and pricing power.
What does a higher U.S. rig count signal for oil?
A modest uptick in rigs signals potential supply response, but the count remains below year-ago levels. With WTI and Brent rising, traders see a tighter balance; the interplay between supply growth, OPEC+ policy, and demand resilience will determine the trend.
Why is Apple underperforming the S&P 500?
Concerns about the company’s pace in the AI race and recent retail outflows have pressured sentiment. Given Apple’s index weight, its lag can temper broader megacap leadership even when risk appetite improves elsewhere.
How does the AI data center boom feed into macro and markets?
Surging capex supports semiconductors, power infrastructure, and cloud software, lifting cyclicals and growth stocks. Rising wages and high build-out costs may keep some inflation pressures elevated, influencing the timing and depth of Fed rate cuts, which in turn shapes FX and equity valuations.
What should traders watch next?
Upcoming inflation prints, Fed communications, oil inventory data, and AI capex updates from megacaps. Cross-asset moves—equities, crude, and rates—will steer FX, with liquidity pockets and positioning likely to amplify swings, BPayNews notes.
