U.S. stocks and bond yields rose on strong job growth and service sector data, raising doubts on the need for further interest rate cuts by the Federal Reserve. Private payrolls rebounded in October, and service sector activity strengthened, leading to a decrease in market expectations for a Fed rate cut next month.

Tech giants’ AI investments are under scrutiny, with doubts emerging on the returns amid soaring valuations. While most firms reported strong earnings, concerns persist on the sustainability of AI capex. Big Tech companies are expected to spend billions on AI, but questions linger on whether these investments will yield significant returns.

Dollar/yen hits a high, prompting speculation of Japanese intervention. Tokyo may step in to stabilize the currency, given its upward momentum and potential fiscal easing by the Japanese government. Market watchers are monitoring the situation closely ahead of the BOJ’s December 19 meeting for signals of intervention.

Big Tech’s AI investments are impacting cash flows, with record capex-to-operating cash flow ratios. Companies like Amazon are seeing sharp declines in free cash flow due to hefty AI spending. The sector faces challenges in generating adequate returns on AI investments, raising concerns about financial vulnerability in case of economic downturns.

The fate of tech giants heavily impacts the broader economy, with high valuations driving market growth. Investors are cautious about reducing exposure to these companies as they continue to invest heavily in AI. The sustainability of their cash flow generation in line with spending remains a key concern for investors and fund managers.

Read more at Yahoo Finance: US economic resilience lifts spirits