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(Bloomberg) — A rotation that has seen investors bail from richly priced technology names in favor of more economically sensitive industries resumed, dragging down the S&P 500 while lifting the majority of its companies.
The group of chipmakers that had powered the run from war-driven lows came under renewed volatility, erasing a rally to sink 4%. The Nasdaq 100 fell 2%. Despite the weakness in tech, over 300 shares in the US equity benchmark rose. Oil fell below $90 amid hopes the US and Iran are getting closer to a deal to end their conflict. That helped eased concerns about inflation, driving bond yields lower.
Heightened swings in giant semiconductor firms came on the heels of an advance that put the industry’s stocks on track for their best year since 1999. While those companies continue to benefit from the flood of cash being spent on artificial intelligence, calls for consolidation have emerged after such a powerful surge.
“As much as we love to see tech’s leadership, it would be constructive to see this rally broaden out to other sectors,” said Bret Kenwell at eToro. “When leadership is concentrated in one corner of tech, the market’s foundation gets a little wobblier.”
