It wasn't a good day for tech shares as we saw more of a rotation play in Wall Street to start the week. The S&P 500 closed down by 0.4%, despite seeing 7 of its 11 major sectors close higher. The main culprit for the drop? It was always going to be big tech when you weigh the ending close with that kind of a sectoral performance.
The thing about megacap tech stocks at the moment is that they tend to move in tandem. And yesterday was another example of that. Google/Alphabet struggled and with SpaceX also tumbling as the IPO hype fizzles, the mood is tiding over to the other big names as well.
If anything, it shows that investors are also starting to reserve some caution in this space. That especially when compared to how the market mood was last year. One year ago, everything and anything AI-related was a gold mine and every firm that mentioned it had that Midas touch to work with.
Fast forward to today, there is a gradual shift towards the show me the money phase as investors are demanding results to back up the insane hyperscaling from AI infrastructure spending. And even more so when you factor in something like SpaceX with negative cash flow to boast and yet raked in $75 billion from its IPO.
That's keeping the market mood on edge with S&P 500 futures now down by 1% again and Nasdaq futures down by 1.9% on the day.
For this week, all eyes will now turn towards Micron's earnings call tomorrow after the close. The chipmaker saw its shares rebound massively since the early June drop but this week will prove to be a big test to deliver on the recent lofty expectations built in again.
