Bloomberg: Chip Stock Selloff Drags Down US Equities This Week, AI Valuation Concerns Weigh on Market Performance

BlockBeats News, June 27th, according to Bloomberg, the U.S. stock market closed lower this week due to the continued weakness in chip stocks. Despite the University of Michigan survey showing that long-term inflation expectations were lower than expected, easing some interest rate hike concerns, it was not enough to offset the selling pressure on chip stocks. Steve Sosnick, Chief Strategist at Interactive Brokers, said that the S&P 500 index briefly turned positive during the day but the gains quickly faded, similar to the multiple failed rebound attempts investors saw this week.

AI valuation concerns spread from the Asian markets to U.S. trading. Two prominent hedge funds in China stated that AI stocks are in a potential bubble that could burst. The stock price of Japan's SoftBank Group fell after reports from The New York Times suggested that OpenAI might delay its IPO until 2027. The South Korean Kospi index triggered a trading halt for the second time this week due to a sharp decline in chip stocks, followed by a partial recovery.

In the U.S., according to data from Bank of America, investors withdrew funds from U.S. stocks for the first time in three months, with outflows totaling $8.5 billion. Cameron Dawson, Chief Investment Officer at Newedge Wealth, said that whether the market has the patience to wait for the return on investment from mega-scale cloud companies is a significant question. Richard Reyle, Chief Investment Officer at Questar Capital Partners, said he would not buy large-cap tech stocks or AI stocks at the current levels because their dominance is waning, and Mag 7 and Bitcoin peaked 9 months ago and have yet to recover.

Furthermore, as the passage of oil tankers through the Strait of Hormuz continues unimpeded, crude oil prices remain on a downward trend. Brian Jacobsen, Chief Economic Strategist at Annex Wealth Management, stated that the peak in energy prices is behind us, and there is downward pressure on overall inflation, but price pressures have not completely disappeared.