Equities Steady as AI and Chip Stocks Power Gains
U.S. stocks held steady in mid-morning trading, with the S&P 500 near record levels and the Nasdaq strong, driven by another surge in AI-related plays, mega-cap tech, and semiconductors despite negative market breadth. The Nasdaq 100 has rebounded sharply from its post-FOMC lows, rising from around $700 to above $745. Positive sentiment was also supported by an unspecified morning development.
The market's resilience is notable given negative breadth, meaning gains are concentrated in large-cap tech and AI names. The Nasdaq 100's sharp rebound from $700 to $745 post-FOMC highlights a rapid risk-on shift. Oil's decline, driven by reports of potential Iran-US negotiations over the Strait of Hormuz, added to the positive tone.
A regulatory probe into DeepSeek and Moonshot AI over alleged data routing to Anthropic's Claude introduces a new risk factor for the AI sector. Meanwhile, the Richmond Fed's manufacturing index fell to -2, missing consensus, though services revenues improved. Sector-wise, materials, staples, and discretionary led, while financials and energy lagged.
The steady market performance, driven by AI and tech, could mask underlying fragility given negative breadth. If the AI data-routing investigation escalates, it may trigger regulatory scrutiny affecting global tech supply chains and data privacy norms. Oil price volatility from geopolitical talks could influence inflation expectations and consumer spending. Investors and retirement savers may see continued divergence between index performance and individual stock outcomes, potentially affecting portfolio diversification strategies.