This content was published on
July 7, 2026 - 19:00
5 minutes
(Bloomberg) — A selloff in chipmakers dragged down the stock market on concerns over whether massive artificial-intelligence investments will justify lofty valuations after a breakneck surge from war-driven lows.Wall Street’s best-performing corner this year was pummeled, with a gauge of semiconductor firms sinking 4.5%. Not even Samsung Electronics Co.’s record profit was enough to entice investors. The Nasdaq 100 fell 1.5%. SpaceX joined the index. Despite tech volatility, most companies in the S&P 500 rose, signaling rotation into other sectors. Higher oil prices lifted bond yields.Chip stocks just wrapped up their best-ever quarter, extending an extraordinary surge driven by insatiable demand for AI. But after recent jitters sent the shares tumbling, investors are wondering whether the rally is overdone.“While we remain confident in AI’s growth story and continue to see attractive opportunities in semis and hardware, we have also highlighted that the next leg of equity gains is likely to be marked by a broadening of market leadership,” said Ulrike Hoffmann-Burchardi at UBS Chief Investment Office. “Investors should ensure diversified exposure.”Traders are also keeping a close eye on geopolitical developments, with US oil hitting $70 as three ships were attacked in the Strait of Hormuz. Those strikes renewed worries about a slowdown in supplies that could keep energy costs elevated and fuel inflation. Treasury 10-year yields rose to 4.5%.Momentum in chipmakers appears to be fading as investors shift back to this year’s laggards — including hyperscalers, said Morgan Stanley’s Mike Wilson. “You can’t have this divergence continue, it’s not sustainable,” he added.“The issue of rotation between different sectors is a popular one right now, but the rotation within the tech sector could be the most important one to keep an eye on,” said Matt Maley at Miller Tabak. “If it can continue, the bulls will remain in charge.”Maley noted the equity rally has “flattened out” over the past four to six weeks, but that could be seen as merely a “breather” after the extremely strong run the market saw in April and May.While earnings season kicks off next week with big banks, the flare-up in skepticism around the tech outlook will be front and center throughout the reporting period. The big risk is that technology firms, especially the hyperscalers, won’t beat analysts’ overly optimistic estimates for the quarter, according to veteran strategist Ed Yardeni.“That could cause a correction among technology stocks,” he said. “The overall stock market might dodge a correction if investors rotate into sectors that have lagged and report better-than-expected earnings. We are in the rotation camp for the stock market’s outlook up ahead.”Corporate Highlights:SK Hynix Inc.’s $28 billion US listing is multiple times oversubscribed ahead of pricing on Thursday, according to people familiar with the matter. Amazon.com Inc. is looking to raise at least $25 billion from a US dollar bond sale, marking its latest jumbo debt offering as the tech giant ramps up spending on AI infrastructure. Microsoft Corp., looking to reduce artificial-intelligence costs, is starting to replace OpenAI and Anthropic with its own models in software products like Excel and Outlook. China’s DeepSeek is developing its own chip to help power AI systems, Reuters reported, citing unnamed sources. Rivian Automotive Inc. sank as the electric-vehicle maker said it will sell 75 million shares to fund equity contributions related to a US Department of Energy loan. What Bloomberg strategists say…“It’s premature to say whether this is ‘the big one’, i.e. a major structural reversal in the AI trade. It does seem fair, though, to say that the era of the ‘easy’ AI trade — the one with the smooth parabolic rally — is indeed in the rearview mirror.”—Cameron Crise, Macro Strategist, Markets Live. For the full analysis, click here.Some of the main moves in markets:StocksThe S&P 500 fell 0.3% as of 1 p.m. New York time The Nasdaq 100 fell 1.5% The Dow Jones Industrial Average fell 0.3% The MSCI World Index fell 0.4% CurrenciesThe Bloomberg Dollar Spot Index was little changed The euro fell 0.2% to $1.1423 The British pound fell 0.2% to $1.3371 The Japanese yen was little changed at 161.93 per dollar CryptocurrenciesBitcoin rose 0.2% to $63,947.94 Ether rose 0.5% to $1,800.73 BondsThe yield on 10-year Treasuries advanced five basis points to 4.52% Germany’s 10-year yield advanced five basis points to 2.99% Britain’s 10-year yield advanced five basis points to 4.85% CommoditiesWest Texas Intermediate crude rose 2.8% to $70.47 a barrel Spot gold fell 0.5% to $4,144.61 an ounce ©2026 Bloomberg L.P.
