U.S. stocks are pulling back from their highs—but is this a pause in the bull market or a signal that it’s peaked?
All three major indexes closed lower. At first glance, the latest Fed meeting minutes seemed hawkish, while rising Treasury yields and stronger oil prices tightened market liquidity. But a closer look at the trading shows a deep divide beneath the surface.
Among tech stocks, Micron Technology $MU bucked the trend, surging more than 4% as orders for its AI high-bandwidth memory (HBM) are already booked through 2027. Investors haven’t abandoned AI; they’re rotating away from megacaps selling a vision and toward upstream chip suppliers with more predictable earnings. Amazon $AMZN also rose more than 1%, backed by solid fundamentals.
Among the decliners, Meta $META and SpaceX $SPCX fell more than 2%. SpaceX is volatile, and reports have emerged of massive fundraising to buy chips. Meta, meanwhile, had risen sharply beforehand, leaving its valuation under pressure as interest rates climb.
The market is starting to show signs of megacaps turning defensive and hardware becoming utility-like. Investors are beginning to treat Nvidia $NVDA and Amazon as defensive holdings, and memory chips as hard currency. But there’s a risk: Treasury yields remain high. If monetization of downstream AI applications can’t keep pace with the spending on upstream hardware, bubble risks could spill over and hit the hardware sector.
In the near term, the broader market is likely to remain choppy, with greater divergence once third-quarter earnings season begins. Only hardware stocks that can deliver profits and megacaps with strong cash flow are likely to hold up as investors crowd into them. Small caps without profits will continue to bleed.
Which stocks are you holding? Let’s talk.
DYOR
All three major indexes closed lower. At first glance, the latest Fed meeting minutes seemed hawkish, while rising Treasury yields and stronger oil prices tightened market liquidity. But a closer look at the trading shows a deep divide beneath the surface.
Among tech stocks, Micron Technology $MU bucked the trend, surging more than 4% as orders for its AI high-bandwidth memory (HBM) are already booked through 2027. Investors haven’t abandoned AI; they’re rotating away from megacaps selling a vision and toward upstream chip suppliers with more predictable earnings. Amazon $AMZN also rose more than 1%, backed by solid fundamentals.
Among the decliners, Meta $META and SpaceX $SPCX fell more than 2%. SpaceX is volatile, and reports have emerged of massive fundraising to buy chips. Meta, meanwhile, had risen sharply beforehand, leaving its valuation under pressure as interest rates climb.
The market is starting to show signs of megacaps turning defensive and hardware becoming utility-like. Investors are beginning to treat Nvidia $NVDA and Amazon as defensive holdings, and memory chips as hard currency. But there’s a risk: Treasury yields remain high. If monetization of downstream AI applications can’t keep pace with the spending on upstream hardware, bubble risks could spill over and hit the hardware sector.
In the near term, the broader market is likely to remain choppy, with greater divergence once third-quarter earnings season begins. Only hardware stocks that can deliver profits and megacaps with strong cash flow are likely to hold up as investors crowd into them. Small caps without profits will continue to bleed.
Which stocks are you holding? Let’s talk.
DYOR