The S&P 500 has lost over $1 trillion in market cap over the past week, down 1.9% π
Y? Here are some weekly insights from our AI agent...
1β£ Healthy Rotation Under the Surface:
- One slightly encouraging feature this week is that advancing shares outnumbered decliners in the S&P 500 even on Tuesday and Wednesday when the overall index fell.
- This has driven improved breadth as investors gravitate out of tech and into other sectors normally a healthy development, suggesting the market may not depend so much on a narrow sliver of stocks. By late Thursday, 63% of S&P 500 stocks traded above their 50-day moving average, up from 50% at the start of June.
2β£ AI Spending Doubts Weigh on Megacaps:
- Chip stocks weakened after a report that OpenAI is considering delaying its IPO to next year because of SpaceX's poor performance following its debut and overall volatility in AI-related shares.
- The report raised concerns about "sustainability of their infrastructure spending given the delay in funding from the capital markets," according to JPMorgan traders. Apple (
$AAPL ) tumbled 6.2% after announcing price increases for MacBook and iPad models citing higher chip and component costs, while Microsoft fell 3.5% after unveiling price hikes for Xbox consoles, adding to concerns that companies are passing rising costs on to consumers.
3β£ Micron (
$MU ) Earnings Steal the Show:
- Micron surged 15.7% after reporting strong earnings and issuing a robust revenue outlook for the August quarter, lifting other chip-related stocks including Sandisk ( 22%), Applied Materials ( 13.4%), and Western Digital ( 4.9%).
- This provided a split signal in the semiconductor space β memory chips are booming while hyperscaler AI spending faces scrutiny.
4β£ SpaceX (
$SPCX ) Index Addition β A Passive Flow Story:
- SpaceX is up more than 1.5% mid-day as the market anticipates its fast-tracked addition to the Russell 1,000 index after markets close today. This move will also result in SpaceX's addition to index funds like the iShares Russell 1000 ETF and Vanguard Russell 1000 ETF, potentially benefiting the stock as passive investors add the company to their portfolios.
- SpaceX completed the largest initial public offering in history and began trading on June 12, raising $75 billion through the sale of 555.5 million shares at $135 each.
5β£ Fed's New Chair Removes Easing Bias:
- In a major policy shift, the Federal Reserve's preferred inflation gauge rose in June, with core readings reaching their highest level since 2023. The PCE price index showed inflation running at a seasonally adjusted 4.1% annual rate, the highest since April 2023.
- Excluding food and energy, core PCE rose at a 3.4% annual rate after gaining 0.3% on the month β both readings were in line with forecasts, and the core figure marked the highest level since October 2023. New Fed Chair Kevin Warsh responded by removing the easing bias from the policy statement, with rate hike probabilities rising sharply.
6β£ Oil Drops on Middle East De-escalation:
- International benchmark Brent crude futures slipped to $73.72 a barrel, while U.S. WTI futures declined to $70.48 per barrel.
- Progress toward reopening the Strait of Hormuz is helping ease concerns about supply disruptions and is beginning to bring relief at the pump. However, analysts remain cautious, noting that "there is so much still that is to be questioned about the actual agreement" and that "nothing really has been resolved."
7β£ Dow Shakeup: Alphabet (
$GOOGL ) Replaces Verizon (
$VZ ):
- Verizon will be removed from the Dow Jones Industrial Average before the market open on June 29 and replaced by Alphabet, S&P Dow Jones Indices said. This is a notable reshuffling that brings a megacap tech name directly into the 30-stock index.
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