The S&P 500 had a high-to-low drop of approximately 3.25% last week, and marking a new all-time high last week.
WE ARE AT ALL TIME HIGHS:
FIND POST IN SPANISH HERE: https://mariorandholm.substack.com/p/la-fed-mas-ai-y-alguna-incertidumbre
Today, before the open, it is recovering a bit.
Broadcom released solid numbers on Wednesday night, but the flat forward guidance was not enough for a market with valuations that were already pricing in perfection.
The downside gap on Thursday morning was bought, but weakly. AVGO failed to reclaim the highs of the daily bullish flag.That was just the beginning — the real blow came on Friday.-22% in 3 days.
The stronger-than-expected jobs report.
From there, rates rose, the US dollar rose, and foreign markets suffered. AS USUALLY HAPPENS
The most affected market was, of course, the KOSPI. South Korea’s meteoric rise has been largely driven by Samsung and SK Hynix, which have been acting as high-beta memory names for the AI trade. The KOSPI fell approximately 10% from high to low — about three times worse than the S&P 500. They are up 80% YTD in USD.
Another striking example that valuations really do matter is Marvell. Jensen called it “the next trillion-dollar company,” and the stock shot up roughly 30% in a single day. The point is not to say that the AI trade is dead. Far from it.
The Fed Scares the MarketThe drop was not due to a weakening economy. It sold off because the economy may still be stronger than the market thought, and therefore the Fed may not need to cut interest rates.
A hot data point like last week’s makes the conversation about rate hikes real and puts pressure on everything that is already priced to perfection. Probabilities from the FedWatch tool suggest that a rate hike has been pulled forward from January 2027 to December 2026.
In addition, probabilities have already priced in a second hike for June 2027.
SpaceX IPOIf semiconductors and the Fed weren’t enough to deal with, now comes SpaceX, the largest IPO in history.
It was expected to go public with a valuation of $1.75 trillion. It was originally assumed that the ticker SPCX would bypass the S&P 500’s maturity and profitability rules and receive immediate inclusion
… And here’s the important part……
However, toward the end of last week it was announced that the usual requirements had been confirmed. This could imply that Friday’s selling was actually less about raising cash to finance SPCX purchases and more about the other two mechanisms mentioned above.
E’LL KNOW MORE SOON…
I found this article from Morningstar a good read: https://www.morningstar.com/news/marketwatch/20260603137/looking-to-buy-into-the-spacex-ipo-this-scary-chart-might-make-you-think-twice
Best regards, and until next time…
Mario Randholm
