After the Federal Reserve released the possibility of interest rate cuts in September, the real estate, banking and manufacturing sectors generally strengthened, but the prospects for Wall Street's "Big Seven" technology stocks (Amazon, Google, Apple, Meta, Microsoft, Nvidia and Tesla) became unclear. These leading companies have recently been impacted by doubts about the future of artificial intelligence, pressure from high valuations, and the rise of other sectors.
The market's focus is on the upcoming financial report of Nvidia, the world's most valuable listed company, and the results may determine whether the technology sector can continue to rise. Although investors generally benefited from the strong rebound in the early stage, some individuals and institutions have begun to reduce their positions, believing that the stock price is high compared to the profitability level. Last week, even though Powell's speech promoted the overall rebound of the market, the technology sector still fell during the week, lagging behind the energy, materials and real estate sectors. Data from JPMorgan Chase shows that retail investors have also turned to net selling during the recent sharp decline in technology stocks, with reduction targets including Google, Palantir and Broadcom.
Since the beginning of this year, the valuation of technology stocks has risen rapidly, and the Nasdaq index has rebounded by more than 40% since its low in April. However, high inflation and a weak job market have exacerbated market caution, with some investors still taking a wait-and-see approach to the pace of interest rate cuts. At the same time, the artificial intelligence craze has also encountered setbacks: OpenAI's newly released GPT-5 caused controversy due to its performance not being as good as expected, and some companies did not realize considerable profits after applying artificial intelligence. Industry insiders believe that investors’ enthusiasm for artificial intelligence is turning.
Under the influence of trade and immigration policies, the market expects future interest rate cuts to support the economy, and previously lagging sectors such as real estate may benefit. Some investors have turned to defensive industries such as energy, healthcare and retail to avoid potential risks.