S&P 500 futures were deep in the red this morning after Wall Street’s latest slide spilled into the next session, even as European stocks managed a modest bounce. The move left investors facing a quieter open in Europe but a harsher tone in US premarket trading, with the S&P 500 and Nasdaq still carrying the weight of Tuesday’s losses.
Neil Wilson said the key test now is today’s US inflation print, and that is what is driving the next move in risk. Tuesday’s session showed how uneven the market has become: the S&P 500 fell by a quarter of a per cent, the Nasdaq lost nearly 1 per cent, and the Dow still managed to rise 0.2 per cent, while the Vix jumped 23 points and the S&P 500 and Nasdaq 100 sank to five-week lows. That split matters because it shows money did not leave stocks in one clean wave; it rotated hard out of tech and into consumer staples, materials, healthcare, industrials, real estate, financials and utilities instead.
That is also why the pressure has landed so heavily on AI hardware and hyperscalers. Investors are reassessing how much of the recent rally rested on AI returns on investment, whether the AI capex story can keep supporting prices, and how long the IPO boom can run before it runs out of momentum. Semiconductor stocks were down almost 9 per cent at one point, Qualcomm finished around 6 per cent lower even after Jensen Huang backed the shares, and Oracle is due to report today for the latest reading on AI spending. Apple, Microsoft and Tesla also lost ground yesterday, deepening the sense that the sell-off is concentrated rather than broad-based.
There was one more reason the mood stayed fragile. Selling came alongside falling US Treasury yields and oil sliding to a two-month low, even as US energy secretary Chris Wright said traffic through the Strait of Hormuz was increasing “very meaningfully”. At the same time, calls on the Street were turning more bearish, with the market also reassessing where the Federal Reserve goes with rates after the June meeting. Everyone expects a hold then, but after that rate moves are fair game, which leaves today’s inflation print as the number most likely to decide whether this pullback deepens or steadies.
For now, the message is blunt: the market is no longer treating AI-led leadership as a one-way trade, and it is waiting for inflation to decide whether the Federal Reserve can keep that wobble contained.
