The ninth week was where momentum finally met its first proper stress test.
US equities began the week with another record on Tuesday, as another burst of AI enthusiasm carried the market higher. Nvidia (NVDA US) pushed deeper into the PC market, Alphabet (GOOGL US) raised $80 billion for AI-related capex, and Marvell (MRVL US) surged after Jensen Huang declared it could be the next trillion-dollar company.
By Friday, the same mega-cap and semiconductor names that had dragged the market higher since March became the source of the drawdown. Broadcom’s (AVGO US) disappointing forecast was the first real warning that AI expectations are now running ahead of even strong fundamentals. In a market priced for perfection, “good” no longer clears the bar.
The jobs report then turned a valuation wobble into a rates shock. May payrolls came in far stronger than expected, with positive revisions reinforcing the idea that the US economy is not slowing enough to justify easier policy. Fed pricing moved further toward hikes, while the dollar squeezed higher.
Geopolitics remained in the background rather than the driver. The US-Iran ceasefire looked increasingly fragile, with little progress toward reopening the Strait of Hormuz and fresh clashes testing the truce. Oil and the dollar still carried some war premium, but the dominant move was domestically in the US.
The CTA setup adds another layer of fragility. Goldman Sachs estimates that systematic flows now look asymmetric, with downside scenarios carrying far more potential selling than upside scenarios offer buying. The rally has leaned heavily on momentum, positioning, and forced participation. Once those flows turn, the same mechanics that supported the market can amplify the reversal.
The burden of proof has shifted. AI still has the structural story, earnings are not collapsing, and the S&P 500 remains close to highs after an extraordinary run. But the combination of stretched expectations, narrow leadership, and a Fed path moving toward hikes leaves the market much less forgiving.
Let’s get into the guide to trades moving markets, where things stand and where they may be heading.
“Equity Risk-Off”
“US Rates View”