Chip Stocks Drag Down US Equities for the Week
BlockBeats News, June 27 – According to Bloomberg, U.S. stocks closed lower for the week, dragged down by persistent weakness in chip stocks. Although the University of Michigan survey showed long-term inflation expectations were lower than forecast, providing some relief to rate hike worries, it failed to offset the chip sell-off pressure. Steve Sosnick, chief strategist at Interactive Brokers, noted that the S&P 500 briefly turned positive intraday but quickly gave up gains, mirroring several failed rebound attempts seen this week.
AI Valuation Concerns Spread from Asia to the US
AI valuation fears spread from Asian markets to U.S. trading sessions. Two well-known Chinese hedge funds publicly stated that AI stocks are in a bubble that could burst. SoftBank Group shares fell after The New York Times reported that OpenAI may delay its IPO until 2027. South Korea's Kospi index triggered a trading halt for the second time this week due to a sharp drop in chip stocks, before partially recovering.
Massive Capital Outflows; Mag 7 and Bitcoin Have Already Topped
In the U.S., Bank of America data shows that investors pulled money out of U.S. stocks for the first time in three months, with outflows reaching $8.5 billion. Cameron Dawson, chief investment officer at Newedge Wealth, raised the question of whether the market has patience for the return on investment from hyperscale cloud vendors. Richard Reyle, CIO of Questar Capital Partners, stated bluntly that he would not buy large-cap tech or AI stocks at current levels, as their dominance is waning. He added that both the Mag 7 and Bitcoin peaked nine months ago and have not yet recovered – a direct link to the crypto market, suggesting the cycle top may be behind us.
Oil Prices Continue to Decline, Inflation Pressures Linger
Meanwhile, crude oil prices continued to fall as tanker traffic through the Strait of Hormuz remained stable. Brian Jacobsen, chief economic strategist at Annex Wealth Management, said the peak in energy prices is past, leaving room for overall inflation to decline, but price pressures have not completely disappeared.