U.S. markets held steady as fresh signs of brisk economic activity forced investors to reweight expectations for another Federal Reserve cut. Data showing stronger services activity and private sector hiring pushed long-dated Treasury yields higher, while rising layoffs provided a counterpoint that keeps the odds of a policy easing in play. In the short term, investors will watch Fed speakers and a busy earnings calendar for fresh market drivers. Over the longer term, the AI debate and company valuations recall past tech excesses and point to a period of re-pricing for some high-flying names. Globally, a tight vote at the Bank of England and supply concerns in commodities add regional twists for Europe and Asia.

Market snapshot: What to watch at the open

Stocks steady as yields climb and the dollar cools

U.S. stock futures were largely flat after a modest bounce in the prior session. Service sector surveys beat expectations and private payrolls rose more than forecast. That evidence of continued demand weighed on the case for an immediate Fed cut and pushed Treasury yields up to their highest levels in nearly a month.

The dollar retreated across major pairs while gold ticked higher and Bitcoin pulled back. Market-implied odds still show a meaningful chance of a rate cut next month, but the balance of data now makes outcomes less certain than headline odds suggested earlier in the week.

Economic and policy drivers: Data, yields and central bank timing

Stronger activity weighs on near-term easing bets

Service firms reported rising activity and prices, and quarterly Fed lending data pointed to relatively stable household credit. Those reads helped push long-term yields higher and reduced some market confidence in a prompt Fed easing. Futures still price in just over a 60% chance of a rate cut next month, so markets remain sensitive to any additional upside surprises in activity.

At the same time, labor market indicators showed stress. A Challenger, Gray & Christmas report said U.S. employers cut more than 150,000 jobs in October, the largest monthly reduction for that month in over 20 years. That rise in layoffs gives those hoping for easier policy a concrete argument to cite.

Federal Reserve officials are on the calendar with several speeches ahead of the open. Traders will parse tone and any changes to the outlook for inflation and growth. The interplay between resilient services readings and higher layoffs keeps policy expectations in flux and volatility potential elevated.

Tech and AI valuations: Bubble talk versus long-term utility

High prices test investors while AI investment continues

Tech stocks cooled after a brief wobble even though earnings beats arrived in some names. Qualcomm (NASDAQ:QCOM) reported strong headlines but warned of lost business with a key client and saw shares fall. The debate over whether AI is a bubble or a transformational force has intensified as firms pour capital into chips and data center capacity.

Nvidia (NASDAQ:NVDA) and Palantir (NYSE:PLTR) remain focal points for critics who argue valuations outpace near-term returns. Short-seller commentary has singled out some AI darlings as overpriced, while other investors argue the scale of the AI opportunity justifies heavy investment now. The situation recalls the late 1990s dotcom period when revolutionary technology attracted an urgent flood of capital and left some high flyers stranded after valuations reset.

Analysts note that measured productivity gains and revenue growth over several years will determine winners. For markets, that implies a possible multi-year process of re-pricing where some companies recover quickly and others take much longer to reflect fundamentals in their share prices.

Global scene and market structure: UK policy, flights cuts and commodity flows

BoE decision, court rulings and airport capacity add local risks

Across the Atlantic, the Bank of England faces a knife-edge decision with markets assigning roughly a 40% chance of an immediate rate cut. The BoE will release minutes and a monetary policy report, followed by a press conference with Governor Andrew Bailey. Those events matter for sterling and European fixed income given tight UK fiscal headroom and comments from Finance Minister Rachel Reeves about possible tax measures in the autumn budget.

U.S. domestic disruptions also made news. Transportation Secretary Sean Duffy said he would order a 10% cut in flights at 40 major U.S. airports over air traffic control safety concerns during the record 36th day of a government shutdown. That move raises near-term travel disruption risks and could ripple through service-related sectors.

In commodities, fund flows into the London Metal Exchange aluminium contract suggest market participants are pricing a move away from chronic oversupply. Gold has pulled back from a recent record high, but analysts point out this rally ranks among the stronger percentage gains in the past half century and remains significant for those tracking store-of-value demand.

Corporate calendar: Earnings that could shape the session

Big names report on growth, costs and AI exposure

Investors face a sizable corporate slate that will set the tone for sector positioning. Microchip Technology (NASDAQ:MCHP) and Qualcomm (NASDAQ:QCOM) are among semiconductor suppliers whose reports can move chip-related equities. Big consumer and media names include News Corp (NASDAQ:NWSA) and Warner Bros Discovery (NASDAQ:WBD).

Health and biotech names such as Moderna (NASDAQ:MRNA) and Kenvue (NYSE:KVUE) will draw scrutiny for revenue paths and margin trends. Travel and consumer services have several entries with Expedia (NASDAQ:EXPE), Airbnb (NASDAQ:ABNB) and Wynn Resorts (NASDAQ:WYNN) reporting results that will test demand durability.

Energy and industrial earnings include ConocoPhillips (NYSE:COP) and Rockwell Automation (NYSE:ROK). Financially sensitive utilities such as Consolidated Edison (NYSE:ED) and Alliant Energy (NASDAQ:LNT) will be watched for the impact of higher yields and any demand or regulatory updates. The broader list of reportees includes Ralph Lauren (NYSE:RL), Monster Beverage (NASDAQ:MNST), Parker-Hannifin (NYSE:PH), Mettler-Toledo (NYSE:MTD), Trade Desk (NASDAQ:TTD) and others that will collectively influence sector flows.

Markets start the day balancing resilient activity with signs of labor market strain and a high-stakes calendar of central bank commentary and corporate reports. Traders and investors will parse incoming data and results to refine expectations for policy timing and the pace of corporate investment in AI. The session may not deliver clear answers, but it will provide fresh inputs for price discovery and risk allocation across regions and sectors.