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Treasury yield-suppression plan boosts S&P 500 worries for AI firms

Bank of America warned that if efforts to rein in borrowing costs fail, hyperscalers’ AI investment financing costs could rise and weigh on IT-sector results.

Reported · Written up by our desk · Major Pairs

U.S. stocks ended the week mixed, as a rise into the close gave way to a weekly decline, despite an upbeat tone from economic data and expectations around NVIDIA’s upcoming results. Action Forex points to S&P Global’s Composite Output Index reaching its highest level in more than four years, along with analysts raising their forecast for third-quarter U.S. GDP to 2.5%, which supported the S&P 500.

At the same time, attention stayed on the Treasury’s plan to suppress Treasury yields and the potential spillover into equity markets. Bank of America characterized the approach as a potential “Bessent put” and said investors may react if borrowing costs do not fall as intended, warning that hyperscalers could see higher financing costs for artificial intelligence investments.

The outlet also said hedge funds are diversifying within the S&P 500, with Goldman Sachs citing active portfolio shifts into other issuers. Separately, concerns center on early signals of stress in NVIDIA’s second-quarter results, as the company is positioned among leading firms seeking capital to develop AI systems.

On the international front, Action Forex noted that European equities remain a relative laggard, with the STOXX Europe 600 up 10% year-to-date versus the S&P 500’s 12% rally, though the earnings gap is narrowing. It added that European companies posted an 18% rise in second-quarter earnings per share, and referenced bullish forecasts for the STOXX Europe 600 from major banks targeting a move to 670 to 680, roughly 3% above current levels.

Latest closeS&P 500 7,785.76 ▼0.2%

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