Last week saw some sharp losses across the tech sector. Semiconductor stocks were hit hard on what appeared to be a bout of profit-taking, while ‘Magnificent Seven’ constituents also took a pasting. This brought losses for both the S&P 500 and NASDAQ of 2.0% and 4.6%, respectively. But there was no general panic, as investors appeared to reinvest the proceeds from tech sales into other sectors. This helped the Dow to gain 0.6% for the week, while the small cap Russell added 0.9%.
Source: TN Trader
SpaceX, which dropped 16% last week, was a touch firmer this morning. Elon Musk’s conglomerate is being fast-tracked into the NASDAQ and is expected to join the index on 7th July. Despite this morning’s bounce, investors are still expressing some reserves concerning the future direction of tech in general, and semiconductors in particular.
There are worries over the massive spending by hyperscalers on AI infrastructure. Not only are the sums involved huge, but doubts have been raised over whether this spending will generate sufficient returns on investment. On top of this, the Federal Reserve, under its new Chair, Kevin Warsh, is sounding far more hawkish than it was under Jerome Powell.
According to the CME’s FedWatch Tool, there’s an 80% probability of at least one 25-basis point rate hike before year-end, and a 50% chance of the first rate hike coming in September.
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