- All three major U.S. stock indices fell on Wednesday, with the Nasdaq leading the decline at 1.98%. The technology sector has retreated over 11% from recent highs, technically entering a correction phase.
- Geopolitical risks and macro inflation concerns resonated, with the worsening U.S.-Iran situation pushing the Cboe Volatility Index up by 11.82%. Meanwhile, the U.S. CPI rose by 4.2% year-on-year in May, marking the largest increase since April 2023.
- The chip sector collectively retreated, with the Philadelphia Semiconductor Index down 3.57%. AMD closed sharply down 28% due to a $7 billion financing plan, and Amazon's expansion into logistics pressured industrial and trucking stocks.
Geopolitical Risks and Inflation Data Trigger Market Pullback
On Wednesday, the U.S. stock market faced multiple macro factors resonating, putting pressure on global risk asset pricing. Geopolitically, statements about the potential escalation of Middle East conflicts significantly dampened market sentiment, causing the Cboe Volatility Index, known as Wall Street's fear gauge, to surge by 11.82%. Meanwhile, macro data showed that the U.S. Consumer Price Index rose by 4.2% year-on-year in May, although this was largely in line with economists' expectations, it marked a new high since April 2023. The rise in gasoline and energy product prices due to the Middle East situation is continuously transmitting to the inflation side. If core inflation data continues to rebound in the future, the market may be forced to reassess the pricing of the Federal Reserve's monetary policy.
Profit-Taking Hits Technology and Chip Sectors
The previously high-valued technology and semiconductor sectors faced significant capital withdrawal during Wednesday's trading. The Philadelphia Semiconductor Index closed down 3.57%, with Nvidia down 3.73% and Broadcom down 5.12%, becoming major drags on the S&P 500 Index. Currently, the S&P 500 technology sector has cumulatively retreated 11% from the historical high set on June 2, officially entering a technical correction zone. Liquidity pressure at the individual stock level also exacerbated the sector's downward volatility, with AMD plummeting 28% during regular trading hours. This followed the company's announcement of plans to raise $7 billion through a series of equity and equity-linked financings to meet its AI server component procurement needs, sparking investor concerns about dilution effects.
Supply Chain Competition Reshapes Traditional Industries
While the technology sector faced adjustments, the cross-industry expansion of tech giants is also dramatically reshaping the supply-demand dynamics and competitive landscape of traditional industries. Amazon's announcement to expand its less-than-truckload freight service nationwide triggered a broad decline in the traditional trucking sector. As a result, trucking giants XPO, J.B. Hunt, and Old Dominion experienced pipeline-like declines, directly dragging the S&P 500 industrial sector down by 3.4%, the largest drop among major core sectors. This phenomenon indicates that if tech giants continue to leverage their massive capital advantages and network effects to penetrate traditional labor-intensive industries, the market share and profit margin expectations of listed companies in related vertical segments may face continuous downward revisions.
Monetary Policy Repricing and Market Capital Diversion
From a broader macro liquidity perspective, the market is readjusting its expectations for the interest rate path in the second half of the year. Although it is widely expected that the Federal Reserve will keep the benchmark interest rate unchanged at its June policy meeting, stronger-than-expected employment reports and high inflation data have prompted investors to start pricing in the possibility of at least a 25 basis point rate hike by the end of the year. Meanwhile, the massive capital absorption effect of the primary market is also diverting funds from the secondary market. The highly anticipated SpaceX is set to go public this Friday, with a financing amount of $75 billion and a valuation of $1.75 trillion, intensifying concerns about excessive optimism in the tech sector. If short-term funds continue to flow into the primary market, the high valuation premium in the secondary market may face further deflation.
