Dow rises, Nasdaq slides as Fed rate-cut bets jump; bitcoin sinks

Yahoo Finance’s David Hollerith reports:

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Japanese multinational holding company SoftBank Group (SFTBY) saw shares fall more than 5% Friday after issuing ¥46 billion ($292 million) in bonds, bringing its bond issuance for the year to a record ¥400 billion ($2.6 billion), Bloomberg reported.

The move came after The Information reported Thursday that the company plans to invest up to $3 billion to remodel an EV plant in Ohio that would manufacture equipment for OpenAI’s (OPAI.PVT) data centers as part of the Stargate project.

SoftBank has committed to investing $30 billion in OpenAI and recently sold its $5.8 billion stake in Nvidia (NVDA) in a sign of desperation to meet that promise.

SoftBank stock’s drop Friday underscores concerns by investors over the entrance of debt in the AI boom. Though SoftBank was already leveraging debt to fund its AI deal spree before the latest selloff in tech equities, investor fears of an AI bubble have mounted as firms like Meta (META), Oracle (ORCL), and xAI (XAAI.PVT) have also started turning to debt.

US consumer sentiment dropped less than expected in November, according to the final results of the University of Michigan’s survey of consumers.

The consumer sentiment index fell to 51 in November from 53.6 in the previous month.

An initial reading on Nov. 7 showed sentiment dropping to a reading of 50.3 for the month, as Americans feared the government shutdown’s effects on the economy and their personal finances. That marked the lowest reading in three years.

Economists had expected the index to pare that loss slightly and record a final reading of 50.6, according to Bloomberg data.

“After the federal shutdown ended, sentiment lifted slightly from its mid-month reading,” wrote Joanne Hsu, director of the university’s consumer surveys.

Inflation expectations also eased. Year-ahead inflation expectations ticked down to 4.5% in November from 4.6% in September, while long-term inflation expectations dropped to 3.4% from the previous 3.9%.

“However, consumers remain frustrated about the persistence of high prices and weakening incomes.”

New York Fed president John Williams boosted hopes for a December rate cut from the central bank in a speech on Friday in Santiago, Chile.

“I view monetary policy as being modestly restrictive, although somewhat less so than before our recent actions,” he said. (Bloomberg reported on the commentary.)

“Therefore, I still see room for a further adjustment in the near term to the target range for the federal funds rate to move the stance of policy closer to the range of neutral, thereby maintaining the balance between the achievement of our two goals.”

The comments caused bets on a rate cut to surge. Shortly after the market open, options traders were pricing in roughly 73% odds of an easing in December, up from about 40% yesterday.

Rate cut bets had already jumped Thursday to 40% from around 30% Wednesday as the September jobs report showed unemployment ticking up slightly.

The trillion-dollar market cap club is no longer just for tech giants and Warren Buffett.

On Friday, Eli Lilly (LLY) joined the party as its shares rose over 1.3%, sending its stock to a record high above $1,050 and giving the healthcare giant a market capitalization north of $1 trillion. This makes Lilly the first healthcare company to top the market cap milestone.

The company’s stock has soared in recent years as it rode the GLP-1 boom with its Zepbound and Mounjaro drugs.

Lilly now joins a group of companies that include the “Magnificent Seven” tech giants, along with Berkshire Hathaway (BRK-B, BRK-A), TSMC (TSM), and Broadcom (AVGO).

After Eli Lilly, Walmart (WMT) is the next-biggest company in the world with a market cap of around $850 billion. The company reported strong third quarter earnings earlier this week and announced an executive transition earlier in the month.

Following a sharp sell-off this week, US stocks rose Friday at the market open as comments from New York Fed president John Williams boosted market odds of a December rate cut to 75%, from 39% a day ago.

The tech-heavy Nasdaq Composite (^IXIC) led the gains at the start of the trading session, rising 0.6%. Meanwhile, the S&P 500 (^GSPC) and the Dow Jones Industrial Average (^DJI) both added about 0.5%.

Stocks closed sharply lower on Thursday after a turbulent session that saw tech names reverse big gains on the heels of Nvidia’s (NVDA) stellar earnings report.

The major gauges were set for weekly losses. The Nasdaq was on track to shed more than 3%, while the Dow and S&P were facing declines of more than 2%.

BJ’s (BJ) stock rose 4% before the bell on Friday after reporting third quarter fiscal 2025 earnings that beat analysts’ expectations. The wholesale club operator raised its full-year profit outlook on the strength of its membership income and posted adjusted earnings per share of $1.16, beating the analyst consensus of $1.10.

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Intuit (INTU) stock rose 3% before the bell on Friday. The software company posted better-than-expected results, reporting $3.89 billion in revenue for the quarter, representing a year-over-year increase of 18.3%.

Ross Stores (ROST) stock jumped 3% in premarket trading after raising its full-year earnings guidance as same-store sales jumped in the third quarter.

Strategy (MSTR) stock fell 4% before the bell on Friday. Bitcoin (BTC-USD) continued to fall this week and dropped around 10% on Friday. It’s also on track for its worst monthly performance since 2022. Strategy is one of the largest corporate holders of bitcoin.

Gap (GAP) stock rose 4% before the bell on Friday after the apparel company topped earnings expectations and delivered an upbeat outlook.

The retailer reported earnings per share of $0.62, which surpassed estimates, and $3.9 billion in revenue as same-store sales grew 5% year over year. Wall Street was expecting $3.9 billion in revenue and $0.59 per share in earnings, according to S&P Global Market Intelligence.

Gap’s three core brands — the namesake Gap brand, Old Navy, and Banana Republic — showed strength during the quarter, while athleisure brand Athleta was the clear laggard. Same-store sales at Gap rose 7% year over year, sales at Old Navy rose 6%, and sales at Banana Republic rose 4%. Athleta’s same-store sales, meanwhile, dropped 11%, as Gap said it’s applying a “reinvigoration playbook” to the brand.

Gap also raised the lower end of its full-year revenue forecast. It now sees 1.7% to 2% top-line growth, up from its previous guidance of 1% to 2%.

“The strength of our third quarter and quarter-to-date performance positions us well for the holiday selling season and gives us the confidence to increase our full year net sales outlook to the high end of our prior guidance range and raise our full year operating margin outlook,” CEO Richard Dickson said in a statement.