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(Bloomberg) — A selloff in high-flying chipmakers weighed on stocks, with Broadcom Inc.’s underwhelming outlook testing the artificial-intelligence trade that has powered the market from war-driven lows.
The record-breaking run in equities took another breather amid signs of overheating, particularly in tech companies that have largely outperformed since the end of March. Investors hoping for a stronger forecast from Broadcom were disappointed by guidance that was not enough to buoy Wall Street sentiment, driving the shares down 15%. The Nasdaq 100 dropped 1%.
“The rally off the March lows has been an extremely strong one. In fact, it has been parabolic, especially for the chip stocks,” said Matt Maley at Miller Tabak. “Therefore, if the earnings report from Broadcom is the catalyst for a pullback that lasts more than a day or two, it would actually be healthy for the stock market.”
Weakness in tech shares overshadowed a decline in oil prices after a conditional ceasefire between Israel and Lebanon offered to ease the way toward a US-Iran peace deal. That’s even as the truce was marred by ongoing clashes. Brent crude slid to $95.
