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Chip stocks like Nvidia led the market to new highs last earnings season. The opposite could be happening this time.

The Philadelphia Semiconductor Index fell 9.2 percent last week, its biggest drop in almost two years.

The broader S&P 500 dropped 3 percent and the Nasdaq-100 declined the most in 11 months. Taiwan Semiconductor Manufacturing (TSM) lowered guidance and ASML’s (ASML) bookings missed forecasts. While neither company is actively traded in the U.S., both are major players in the global chip industry.

A bigger hit came on Friday after Super Micro Computers (SMCI) failed to raise its outlook. News like that from such an important supplier of AI devices triggered even more selling across the technology sector.

Other major growth companies like (TSLA), Apple (AAPL) and Netflix (NFLX) also fell on their own news.

Outperformance in value stocks like United Airlines (UAL) and financials was potentially reminiscent of 2022. The Federal Reserve additionally pushed expectations away from interest-rate cuts.

Stocks have had their biggest pullback since the current rally began.

Will buyers step in? The S&P 500 fell 1.6 percent last week and touched its 50-day moving average for the first time since November.

Inflation rose more than expected, pressured by shelter, auto insurance, medical care and clothing. That diverse set of categories fueled worries that price increases are more widespread than hoped. Conflict in the Middle East has worried investors, but a calming of the situation could improve sentiment.

Some important AI stocks like Nvidia (NVDA) had help potential support zones. Earnings will also gain importance in the coming weeks as major companies issue quarterly results. At least 42 members of the S&P report this week.

Click the link below for more key details.

Stocks began the second quarter with a pullback as investors worried about

higher interest rates and geopolitical risk.

The S&P 500 fell almost 1 percent last week, their biggest weekly drop since

early January. More than two-thirds of index’s members lost value, along with

nine of the 11 major sectors.

The Institute for Supply Management’s manufacturing index unexpectedly

rose above 50, which means the sector is expanding. ADP’s private-sector

payrolls report and the government’s non-farm payrolls report both exceeded

forecasts. The 10-year Treasury yield rose to its highest level since November

in response.

Federal Reserve Chair Jerome Powell said he needs “greater confidence” of

inflation nearing 2 percent before cutting rates. He’ll get a key piece of data

this Wednesday when the government issues the consumer price index (CPI)

for March. Governor Michelle Bowman also floated the idea of another

rate increase unless prices come down.

Investors additionally worried about tensions in the Middle East as prices for

oil, gold and silver jumped.

While momentum seems to be slowing, the S&P 500 may be showing a

pattern followed by more highs during the current rally.

Stocks hit a new record for the third straight month in March, but there was

significant rotation away from growth names and technology

The S&P 500 rose 3.1 percent, outpacing the Nasdaq-100 by 1.9 percentage

points. It was the biggest underperformance in the tech-heavy index since

December 2022. Cyclical sectors like energy and materials led. The Russell

2000 small cap index also showed signs of a potential breakout.

Most economic reports were consistent with a “soft landing”: slowing inflation

without a recession. Price trends are “more or less in line with what we want

to see,” Federal Reserve Chair Jerome Powell said last week. That was

consistent with earlier comments that he’s “not far” from having the

confidence to cut interest rates.

Central bankers also raised their forecast for economic growth and united

around three potential rate cuts this year.

Aside from ongoing strength in chip stocks, the broader technology sector is

now lagging and Tesla (TSLA) is the S&P 500 worst-performing stock on a

year-to-date-basis.

Energy, on the other hand, became the top top-performing sector this year.

Stocks just had their best week of the year, thanks to a dovish Federal Reserve and strong earnings.

The S&P 500 rose 2.3 percent last week, its biggest gain since mid-December. Almost four-fifths of the index advanced, including 10 of the 11 major sectors. The S&P 500, Nasdaq-100 and Dow Jones Industrial Average all made new record highs.

The Federal Reserve confirmed expectations it will likely cut interest rates by 75 basis points this year. The announcement came despite higher-than-expected inflation in January and February. Policymakers also sharply hiked their estimate for economic growth from 1.4 percent to 2.1 percent.

That maintains potentially favorable conditions for investors, with interest rates moderating despite a strong economy.

Homebuilders and semiconductors, the leading industries in the past year, were the top performers last week. Cannabis stocks also rallied on comments by major politicians.

Will the positive momentum continue, given a quiet calendar and the approach of earnings season in about amonth?

Stocks could be hesitating before a key Federal Reserve announcement on

Wednesday.

The S&P 500 slid 0.1 percent last week. Stocks have now fallen for two consecutive

weeks, which hadn’t happened since the current rally began in November.

Signs of persistent inflation weighed on sentiment. The consumer price index (CPI)

and producer price index (PPI) for February rose more than expected. Energy drove

much of the increase, but other categories like air fares and insurance kept going up.

At the same time, crude-oil jumped to a four-month high and copper hit an 11-month

high. Initial jobless claims were also below forecasts, reflecting a potentially strong job

market.

Borrowing costs jumped in response, with Treasury yields erasing declines over the

previous three weeks. Another report showed disappointing growth in retail sales.

Wall Street strategist warned recent “Goldilocks” conditions could morph into

“stagflation.”

Stocks keep making new highs as investors feel more confident about inflation and

interest rates.

The S&P 500 traded above 5150 for the first time ever, but inched lower to end last

week down 0.3 percent. The Nasdaq-100 traded similarly, with chip stocks like Nvidia

(NVDA) shooting to new records before reversing lower. Small caps and midcaps

advanced. That could suggest a long-awaited rotation away from megacap growth

stocks has begun.

Interest-rate cuts “can and will begin over the course of this year” if inflation continues

to improve, Federal Reserve Chair Jerome Powell told lawmakers in Congressional

testimony last week. He also said “we’re not far” from being confident about

inflationary trends.

The market now expects the first rate cut at its June 12 meeting, according to CME’s

FedWatch tool. The European Central Bank separately indicated it may start easing

policy at its June 6 meeting.

The February jobs report also showed higher unemployment and slower wage

growth. Service data showed milder price increases. Labor productivity was also

better than expected in the fourth quarter, according to updated numbers from the

Bureau of Labor Statistics. Those headlines could support lower interest rates.

The next big catalyst could February’s consumer price index (CPI) tomorrow morning.

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Stocks keep rallying as investors look for the AI boom to drive earnings and the broader economy. The S&P 500 rose 0.9 percent last week and closed above 5,100 for the first time. Technology led the advance.

“We have just started to touch the AI opportunities ahead of us,” said Jeff Clarke, Chief Operating Officer of Dell Technologies (DELL). The computer maker jumped 35 percent to a record high after earnings, revenue and guidance shot past expectation. It also cited accelerating demand for servers specialized in machine learning.

Clarke expects “broader adoption of AI by enterprise customers.” He added that, “PCs will become even more essential as most day-to-day work with AI will be done on the PC” because businesses will prefer keeping their data in house.

DELL isn’t in the S&P 500 because of technicality with its stock structure. But the index’s second-biggest gainer, NetApp (NTAP), beat estimates and raised its outlook after AI investment fueled demand for its data-storage arrays. Axon Enterprise (AXON) and Autodesk (ADSK) also cited AI growth opportunities after announcing strong results.

Barclays raised its target for the S&P 500, in part because AI will boost earnings for big technology stocks. UBS also predicted that machine learning will help the economy by enhancing worker productivity.

Apple (AAPL), however, faced more negativity. Click on the link for more.