The BTI, a sentiment indicator, turned bearish three days after the S&P 500 made a new all-time high. Global markets are reacting heavily to a massive tech-led selloff from Friday and escalating geopolitical tensions over the weekend. Friday saw a severe correction in semiconductor and tech shares, leading to a 4% plunge in the Nasdaq Composite—its worst single session in over a year. Heavyweights like Broadcom, Micron, and Marvell Technology suffered double-digit losses as investors took profits from the extended AI rally.
Friday’s nonfarm payrolls report was strong, fading hopes for near-term Federal Reserve rate cuts. Nonfarm Payrolls report came in at 172,000 jobs (well above the 80,000 expected), pushing the 10-year Treasury yield up to 4.54% on fears that the Fed will keep interest rates higher for longer to tame economic growth. This comes at a time when oil is rallying near $100. A strong economy is associated with high oil prices, plus we have the AI infrastructure build out and the Middle East conflict, all bullish for oil and inflation. Expect bond yields to continue to rally and stocks to correct. In this environment interest rates are likely to go up, that’s why stocks are declining. But this is not a bear market, the correction will be short lived.