AI is losing its stranglehold on the U.S. stock market. Here's why
The U.S. stock market is shifting away from AI-driven volatility as investors focus more on macroeconomic factors like bond yields and inflation. Volatility metrics suggest that tech-sector dominance is waning in favor of broader market concerns.
Why it matters
This shift indicates a potential change in market leadership and investor sentiment, moving from speculative tech growth to macro-economic stability.
A key tech-stock volatility metric options traders have been watching all year is reversing, sending a sign to investors that the U.S. bond market may now be usurping AI optimism as the primary driver of the stock market. The spread between the volatility of big tech names and the rest of the stock market – measured most frequently by the difference between the Cboe's VIXEQ and VIX indexes – blew out to record highs this summer as tech giants behind the AI boom regularly moved hundreds of billions of dollars of market cap per day while the rest of the market stayed stagnant. Now the trend is reversing, with traders selling broad chunks of index-wide equity exposure as VIX jumps to the highest since April relative to VIXEQ. Paired with an accelerating sell-off in U.S.
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