U.S. stocks saw heightened volatility this week amid investor concerns about financing massive artificial intelligence (AI) projects and shortages of critical components such as memory chips.
Lower oil prices and a solid gross domestic product (GDP) report helped contain the losses, mostly in the tech sector, as investors directed funds into other sectors rather than pulling them out of equities altogether.
For the week, the Dow Jones Industrial Average gained 0.60 percent to close at 51,876. The S&P 500 closed 1.95 percent lower to 7,354, near the low for the week. The Nasdaq Composite was down 4.60 percent, while the Russell 2000 gained 1.02 percent.
The Chicago Board Options Exchange Volatility Index closed the week at 18.41, up 6.54 percent.
Stocks opened the week higher on June 22, extending the June 19 rally amid another drop in oil prices, following progress in U.S.–Iran peace talks on June 21 in Switzerland.
West Texas Intermediate crude hovered around the $73 mark, down from around $80 a week before, easing inflationary expectations and helping push the benchmark 10-year U.S. Treasury bond yields to stabilize around the 4.5 percent level.
By late morning, the market ran into turbulence amid profit-taking in the big tech sector, with Nasdaq selling off for the rest of the trading session to close 1.3 percent lower. The S&P 500 fared slightly better, down 0.39 percent, while the Dow and the Russell 2000 managed to hold on to most of the early gains, closing 0.29 percent and 0.79 percent higher, respectively.
Among the tech sector’s big losers were Alphabet, down close to 5 percent following the loss of a couple of key employees, and SpaceX, as the hype surrounding the biggest initial public offering (IPO) in history began to fade.
The sell-off in tech stocks accelerated on the morning of June 23, following a 10 percent sell-off on the Korean exchange overnight, home to many hot chip stock names such as SK Hynix, which was down 12.47 percent.
Shares of memory chip makers, including Micron Technology, Sandisk Corporation, and Storage Technology, were hit hard—down 13.18 percent, 13.64 percent, and 5.07 percent, respectively—helping push Nasdaq and the S&P 500 down 2.21 percent and 1.44 percent, respectively. The Dow and the Russell 2000 fared slightly better, down 0.09 percent and 1.03 percent.
“The downside move in tech stocks is a healthy pullback, since many tech stocks have become overstretched. When stocks rise too much and too fast, a pullback almost always ensues,” Rick Gardner, chief investment officer at Raleigh, North Carolina-based RGA Investments, told The Epoch Times.
“The tech pullback suggests that investors are coming to the realization that earnings expectations for tech stocks are high, creating a more difficult bar to clear when earnings season restarts in July, and we would characterize this pullback as a recalibration of expectations,” he said.
Stocks rebounded in early morning trade on June 24 as the “buy-the-dip” crowd returned to the market, helping the tech sector recoup some of the previous day’s losses.
Aiding the rebound were another drop in oil prices and a drop in bond yields. Crude oil traded below $70 a barrel, touching its lowest level since late February, amid rising tanker traffic through the Strait of Hormuz, with United Arab Emirates oil exports reaching 85 percent of pre-war levels.
The yield on the benchmark U.S. 10-year Treasury note dropped for a second consecutive session to 4.45 percent.
By late afternoon, selling in tech resumed, led by semiconductors amid lingering investor concerns over financing for massive AI spending, with Nasdaq and the S&P 500 closing 0.43 percent and 0.10 percent lower, respectively. The Dow and the Russell 2000 managed to retain most of their early gains, closing 0.35 percent and 0.37 percent higher, respectively.
The tech bulls raced out of the gate on the morning of June 25 following solid earnings from Micron Technology, reigniting interest in AI-related stocks.
The memory chip maker’s data center revenue exceeded $25 billion in the third fiscal quarter, or an annualized run rate of more than $100 billion, with data center solid-state drive revenue exceeding $5 billion, more than doubling sequentially.
Management expects shortages of computer memory chips—DRAM, which powers short-term processing in devices, and NAND flash, used for longer-term storage—to continue beyond 2027, driven by strong AI-related demand and tight supply across the industry.
Both stocks jumped at the open, helping the tech-heavy Nasdaq gain nearly 2 percent. But the rally lost steam in the early afternoon amid lingering concerns that the tight supply of memory chips could hurt computer manufacturers.
Micron Technology and Qualcomm managed to keep most of their early gains, but the broader sector sputtered, led by Apple, which lost 6.15 percent, pulling Nasdaq and the S&P 500 down 0.46 percent and 0.30 percent, respectively. The Dow and the Russell 2000 closed with modest gains, up 0.14 percent and 0.35 percent, respectively.
Another factor contributing to the day’s mixed market close was economic headlines from the United States.
GDP, a broad measure of a country’s output, rose at an annual rate of 2.1 percent in the first quarter, up from a revised 1.6 percent early estimate, and above 0.5 percent in the fourth quarter of 2025.
Meanwhile, the Federal Reserve’s favored inflation gauge, the personal consumption expenditures (PCE)—a measure of the total amount of money consumers spend on goods and services—rose at a year-over-year rate of 4.1 percent in May, the highest since April 2023, in line with market expectations.
The figure follows a 3.8 percent increase in the previous month, pointing to an acceleration in inflation, a red flag for the nation’s central bank, which may be forced to raise rather than cut interest rates, which is a headwind for equities.
“Thursday’s PCE is set to take on greater importance for markets, especially since Federal Reserve Chair Warsh was emphatic in last week’s meeting about the central bank’s desire to achieve price stability, and this PCE reading could affect the market’s rate hike expectations,” Gardner said.
Selling in tech resumed on June 26 amid another overnight sell-off in Korean AI infrastructure stocks, but they managed to trim their losses by late morning trading as the buy-the-dip crowd returned to the market.
By the middle of the trading session, all major equity indexes turned positive before dipping back into the red toward the close, led by the Nasdaq, which was down 0.24 percent. The S&P 500, Dow, and the Russell 2000 posted marginal losses.
Adding to investor anxiety over the fate of the AI trade were reports that OpenAI would postpone its IPO until next year.
Gardner sees the recent selloffs in tech stocks as a good market entry point for investors with low exposure to the sector.
“We would much rather be buying tech stocks on days when they are down, and the pullback can present an opportunity for investors who do not have adequate exposure to this space, which is still fundamentally strong,” he said.
“If the tech selloff continues, this may pause the pipeline of IPOs that are on the horizon, which could very well extend the duration of the bull market, since a parade of IPOs is typically a sign of late-cycle activity.”
Richard Reyle, chief investment officer at Paramus, New Jersey-based Questar Capital Partners, is cautious on big tech stocks and AI stocks at current levels.
“Their dominance is starting to erode, as the Mag 7 and bitcoin peaked 9 months ago and have not recovered. The market is telling us something and investors ought to listen,” he told The Epoch Times.
