Crypto News: Markets Daily: Charts that scare Wall Street

Stock futures drop as earnings fail to inspire. Microsoft falls 3.5% in early trading after the company forecast slower cloud revenue growth. Meta Platforms slid on heavy spending in AI. EBay lost 10% as sales fell short of estimates.
There's plenty more earnings to come. Uber and Mastercard report this morning. Apple, Amazon and Intel are after the close.
UK bonds extend a selloff on worries that the government's ambitious budget will fan inflation.
China's economy shows signs of stabilizing after Beijing's stimulus package, with factory activity unexpectedly expanding after five months of contraction.
MicroStrategy lays groundwork to raise $42 billion to buy more Bitcoin.

Sky-high stock valuations, super-concentrated markets and the US government's enormous interest bill — here are the charts spooking investors.

Precarious P/E: "We are at the third-highest valuations on the S&P 500 in modern history only behind 1999/2000 and 2021. If this valuation upside continues, it leaves forward-looking returns less compelling," says Emily Roland, co-chief investment strategist for John Hancock Investment Management.

US concentration: "Current pricing prices a likely implausible concentration in earnings and wealth into US companies forever in the future. The last time the US showed a market cap share like this was just ahead of the tech bust, and we all know how that went," says Bob Elliott, co-founder and CEO at Unlimited.

Deficit spending: "The US government pays out more in interest expense than it spends on national defense. Both are not going to be going down anytime soon. It just highlights we're spending way beyond our means, living on debt and at some point the bond vigilantes will emerge with a vengeance. Maybe as soon as next week," says Jack McIntyre, portfolio manager at Brandywine Global Investment Management.

For more market charts, check out the full story.

Apple and Amazon: Those two earnings reports — the last from the Magnificent Seven companies aside from Nvidia — will make a big difference in whether this earnings season is seen as a success or disappointment. There's a preview of what's to come in today's Tech Watch column.

Carvana soars 20% in premarket trading. The online used-car retailer reported higher-than-expected results as cost cutting and growing sales boosted profits.

— Subrat Patnaik

Bond traders are sending a strong message to the UK government. Just this week, 10-year gilt yields have jumped by almost 20 basis points to 4.42%, the highest in a year.

The move comes in the wake of spending plans and tax hikes unveiled by British Chancellor Rachel Reeves yesterday. "Market participants have had time to react and I think they are still worried about how inflationary the budget may be, how loose it is, and how much it can change the BOE's reaction in cutting rates," says Evelyne Gomez-Liechti, strategist at Mizuho International.

It's all a reminder that investors need to be alert to higher yields. In the US, strategists also underscore that mood:

Torsten Slok of Apollo told clients that long rates are rising because of "emerging worries about fiscal sustainability." He cited the fact that yields are climbing despite falling oil prices and expectations that the Federal Reserve will keep cutting.
Anatole Kaletsky of Gavekal Research said rates staying above 4% will eventually seem like "a healthy return to normality" and the near-zero rates era of 2010 to 2020 will look like a "bizarre aberration."

Lastly, some trivia: Twenty-three years ago, the US Treasury delivered a Halloween surprise by announcing that the return of budget surpluses meant it would cease selling 30-year bonds. In hindsight, it seemed a foolhardy decision when deficits returned, and thus in 2006, so did the long-bond. —Simon Kennedy

"Investors have become accustomed to the Mag7 and tech and AI-related names not just beating forecasts but smashing them — and then raising guidance for the next quarter."

Russ Mould

Investment director at AJ Bell

For a deep dive into tech earnings, check out today's story.

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