The past five trading days rewired how the market thinks about the AI trade. Nasdaq fell 4.6% while two-thirds of S&P 500 stocks closed higher on multiple sessions. That divergence is the story. Tech is rotating, not breaking, but the cleanup inside the AI complex is still running.
What happened to the major indexes in the week of June 23-27?
The S&P 500 fell 2% for the week, closing Friday at 7,354.02. The Nasdaq dropped 4.6%, its fifth consecutive losing session on Friday, ending at 25,297.62. The Dow Jones Industrial Average rose 0.6% on the week, outperforming both. Advancing stocks outnumbered decliners in the S&P 500 on days the index itself fell. Six of 11 sectors ended the week positive, with industrials, utilities, and healthcare leading.
What drove the Nasdaq's losses this week?
Pressure came from multiple directions. Applied Materials fell 6.16%, Lam Research 5.66%. Western Digital, Seagate, and SanDisk gapped down double digits earlier in the week before reversing sharply in after-hours Friday after Micron's blowout report. Apple raised the MacBook Air $200, citing AI data center demand that consumed global memory supply. OpenAI's reported IPO delay to 2027, tied to SpaceX's 34.8% drop from its ATH after listing, added further pressure on AI sentiment across the board.
What did Micron's earnings report show?
Micron reported $41.46B in revenue for the quarter, up from $9.3B a year ago, a 4.5x increase driven by AI data center demand for high-bandwidth memory. The company guided $50B for next quarter. Storage stocks including Western Digital, Seagate, and SanDisk surged in after-hours Friday on the results. The report confirmed HBM supply is still being consumed faster than it can be produced.
What did consumer sentiment and Treasury yields show this week?
The University of Michigan's final June sentiment reading came in at 49.5, below the 50.0 consensus, up from 48.9 in the preliminary. Year-ahead inflation expectations fell to 4.6% from 4.8% in May. Long-run expectations dropped to 3.3% from 3.9% in May. Treasury yields were modestly lower: the 10-year closed at 4.376%, the 2-year at 4.096%. VIX closed Friday at 18.66. The Fear and Greed index sat at 24, still in extreme fear territory.
What is the Fed expected to do at the July 29 meeting?
CME FedWatch prices a 69% probability the Fed holds at 3.5-3.75% at the July 29 meeting, with a 31% chance of a 0.25% hike to 3.75-4.00%. The September 17 meeting has more uncertainty, currently pricing a 46.7% chance of a hike. Both the drop in long-run inflation expectations and the improvement in sentiment give the Fed room to hold, but year-ahead inflation at 4.6% keeps a hike on the table.
Track live market data across equities, crypto, forex, options and macro at opticalpha.net/terminal. 14-day free trial, no credit card required.