Seven thousand remains a ceiling, not a launchpad.
US equities ran headfirst into that level again last week, and failed to break through. What initially looked like healthy consolidation quickly morphed into another broad AI-driven de-risking, with Thursday delivering the now-familiar sharp rejection lower. The pattern since January is: approach the round number, stall, then unwind.
The difference this time was the breadth of the “AI scare trade.” This was no longer confined to richly valued software names. Wealth managers, insurance brokers, real estate services and even logistics stocks were pulled into the vortex as investors reassessed how far automation could reach. When transportation, previously considered an AI-resistant corner of the old economy, joined the selloff, its clear that markets define no sector with assumed immunity anymore. Whether justified or exaggerated, the market is repricing disruption risk in real time.
Financials bore the brunt. Insurance brokers slumped. Communication services and tech were dragged lower by their Mag Seven weightings, underscoring how dependent index stability remains on a handful of names. At the same time, utilities surged as policy swung back toward traditional power generation, with coal finding unexpected political tailwinds. In a week defined by disruption fears, regulated cash flows suddenly looked reassuring.
Underneath the surface, flows are starting to matter more. Goldman Sachs estimates CTAs may sell up to $2 billion of US equities in the near term, with a key trigger sitting roughly 110 points below current S&P levels. Stretched at resistance, vulnerable to systematic supply, and increasingly sensitive to narrative shocks. The AI theme that powered 2025 higher is now acting as both engine and brake, and until 7,000 decisively clears, the burden of proof remains on the bulls.
Macro is not offering a clean escape hatch either. January payrolls beat expectations and CPI printed slightly softer, yet neither was able to generate durable upside as rate-cut pricing continued to build into the second half of the year. Good data no longer extends rallies, it simply delays easing bets, while soft data reinforces the view that policy will eventually turn more supportive. With July and December cuts increasingly embedded in OIS and long-end Treasuries well bid on equity weakness, the cross-asset signal is one of late-cycle caution rather than renewed expansion. Until growth re-accelerates convincingly or inflation reasserts itself, macro looks more like a stabilizer for bonds than a catalyst for equities.
Let’s get into the guide to trades moving markets, where things stand and where they may be heading.
“Memory Chip Crunch Ripples”
“Political Clarity”
“Macro Tailwinds Anchor EM Volatility”
Memory Chip Crunch Ripples
For much of the past two years, investors have framed the AI buildout as a story about compute. GPUs were scarce, Nvidia set the tempo, and capital spending followed silicon. That framing is now shifting. The constraint is migrating down the stack, from processors to memory, where a less glamorous but far more pervasive shortage is beginning to bite.