US Stock Market Today: Broadcom and Oracle Lead Losses in AI Sector
AI stocks were a major drag on the market. Broadcom and Oracle, two companies that led a rotation away from AI last week, fell more than 5% and 2%, respectively, while Microsoft and other tech giants also saw declines, as per a report.
Investors Shift to Consumer Discretionary, Industrials, and Health-Care
Meanwhile, investors turned toward sectors more sensitive to economic trends, including consumer discretionary and industrials, and added health-care shares to their portfolios, as per a CNBC report.
Weekly Performance: S&P 500 and Nasdaq Fall, Dow Gains
Last week had been mixed for the benchmarks. The S&P 500 and Nasdaq ended lower, while the Dow, which is less exposed to tech and AI, gained ground. Over the weekly period, Oracle plunged 12.7%, Broadcom shed more than 7%, and the S&P 500 tech sector fell 2.3%, as per the CNBC report.
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US Stock Market Outlook: AI Trade Pullbacks Are Normal, Magnificent Seven Lead Market
David Wagner, head of equities at Aptus Capital Advisors, told CNBC that “It feels like everyone hates the AI trade right now. There’s no doubt about it,” adding, “But I see the market continuing to be led by the concentration in the market, i.e., the Magnificent Seven names, because of that core tenant that I think the market continues to underestimate, [which] is that operating leverage that these companies have,” as quoted in the report.
He also pointed out that, “As long as you get some type of revenue growth, these guys are going to continue expanding their margin, and they’re going to be beneficiaries of strong returns next year,” as quoted by CNBC.
Key US Economic Reports This Week: Nonfarm Payrolls, Retail Sales, CPI
This week, investors will focus on key economic reports. November nonfarm payrolls and October retail sales figures are due Tuesday, having been delayed by the US government shutdown in the fall. Economists surveyed by FactSet expect November payrolls to show an increase of 40,000 jobs, down from September’s 119,000. Later in the week, the November consumer price index will be released.
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Analyst Warns AI Trade Looks ‘Toppy’
Some analysts are also signaling caution for AI stocks. Jonathan Krinsky, chief market technician at BTIG, said the AI trade is looking “toppy,” noting that it is “Hard to say this is ‘the’ top, but from a medium-term perspective the AI Basket has put in a ‘lower low’ and ‘lower high’ over the last few months,” adding, “That is the precursor for a topping process,” as quoted by CNBC.
Stock Market Movers Today
Despite the volatility, Monday saw 12 S&P 500 stocks reach new all-time highs, including General Motors, Ralph Lauren, Tapestry, Walmart, Assurant, Bank of America, Chubb, JPMorgan, Wells Fargo, Johnson & Johnson, Delta Air Lines, and Raytheon Technologies, as per the CNBC report.
At the same time, six stocks, Trade Desk, Costco, Texas Pacific Land, Motorola Solutions, Tyler Technologies, and CoStar Group, traded at new 52-week lows, as per the report.
FAQs
Why did the stock market struggle on Monday?
AI-focused stocks faced losses, dragging down the S&P 500 and Nasdaq.
What key economic reports are due this week?
November nonfarm payrolls, October retail sales, and the November consumer price index.