com Weekly Market Update: Post-war normalization continues, but wall of worry grows for Big Tech

Mega-cap tech shares moved lower coming out of the extended holiday weekend, a trend that would underpin trading throughout the week.

There wasn’t one specific headline that traders pointed to, instead investors fretted over a growing list of concerns.

Those included: a lack of free cash flow among hyperscalers/neoclouds/frontier model firms, potentially draconian US government restrictions on frontier models, expenses that seem to be scaling with revenue, rising token market share gains by cheaper open-source Chinese models, hardware OEMs being forced to hike prices because of memory costs, and perceived diminished risk appetite among investors for AI-linked capital markets financing.

Even another blowout Micron earnings report and constructive commentary from Qualcomm did little to sway tech sentiment.

Importantly though, breadth wasn’t nearly as poor as the indices daily performance indicated, illustrating a healthier rotation away from large cap tech into other more neglected segments of the market. - - The other major trend this week was the continued decline in oil prices which in turn put pressure on Treasury yields.

Oil prices dipped to levels not seen since before the start of the Iran war, despite an ongoing back and forth between the White House and Tehran on their own interpretations of the ongoing post-MOU peace talks.

Oil prices briefly moved up on Thursday, after the IRGC fired at a tanker that wasn't sticking to pre-authorized routes in the Strait of Hormuz.

President Trump called the incident a foolish violation of the ceasefire agreement, but took no tangible immediate action.

On Friday, Trump also threatened new 100% tariffs against European trading partners if they move ahead with a Digital Services Tax on US firms.

Separately, June S&P Manufacturing PMI was particularly strong but included the fastest headcount reductions since the Pandemic.

Richmond Fed data missed expectations amid slower new orders growth.

Final Q1 GDP was better than expected, buoyed by strong capital goods orders among businesses.

May PCE wasn’t as hot as feared but several Fed officials were quick to point out the latest inflation read is still running well above the Fed’s 2% target.

The US Dollar Index climbed back to May 2025 highs, headlined by weakness in the Yen which tested fresh 40-year lows.

The benchmark 10-yield fell ~13 basis points to the lowest level in more than a month resulting in continued post-FOMC flattening of the curve.

For the week, the S&P lost 2%, the DJIA gained 0.6%, and the Nasdaq fell 4.6%. - - A closer look at corporate news exposes more cracks in the tech trade, while other sectors also have examples of weakness lingering from inflation effects and geopolitical uncertainty.

Apple and Microsoft both announced price increases on their consumer products, citing skyrocketing costs for memory.

Cerebras, the so called “Nvidia killer”, did not live up to that moniker in its first quarterly report as a public company, projecting anemic growth for the next quarter as it attempts to popularize its rival AI hardware architecture.

FedEx reported solid Q1 results but confused some investors with a change in FY reporting structure as it completed the spinoff of FedEx Freight.

The newly spun entity disappointed investors with its own results, and noted that underlying demand was a little softer than expected.

Carnival touted strong customer deposit metrics and said headwinds from the Middle conflict were already easing, yet still trimmed its Adjusted EBITDA and net yields guidance.

In the banking sector, the largest US financial institutions aced their annual Fed stress tests, unlocking a number of dividend hikes and share buyback announcements.

Perhaps the biggest news in banking though was the report that JP Morgan CEO Dimon finally has eyes on a retirement date, perhaps three years hence, with his likely successors garnering promotions this week. - - - MON 06-22 - (CA) CANADA MAY CPI M/M: 1.0% V 0.8%E; Y/Y: 3.2% V 3.0%E - (EU) EURO ZONE JUN ADVANCE CONSUMER CONFIDENCE: -17.7 V -18.0E - (UK) PM STARMER RESIGNS AS EXPECTED; LABOUR NOMINATIONS WILL OPEN JULY 9TH, WILL REMAIN IN POST UNTIL THE CONTEST COMPLETE; NEW LEADER WILL BE IN PLACE BY SEPTEMBER - (US) VP Vance: We have made a lot of good progress in yesterday's talks with Iran; Set up a mechanism to keep Hormuz open - comments from Switzerland - (US) US President Trump signs the National Quantum Initiative Act executive order; Directs US to build a scientifically useful quantum computer by 2028; Mandates agencies to complete post-quantum cryptography migration for high-value systems by 2031 (update) - NVDA *Chief sustainability officer: The water consumption challenge for data centers is largely solved; Nvidia latest AI system can be fully cooled with liquid warm enough to reduce the need for additional chilling equipment; Its latest AI system can run on 45°C (113°F) warm liquid cooling using a recirculated water-propylene glycol mix - Axios - - TUES 06-23 - (JP) Japan electronics company employees detained in China - Asahi - (JP) BOJ SUMMARY OF OPINIONS (MPM): According to one BoJ board member, appropriate to continue raising interest rate as financial conditions are accommodative; One member said Neutral rate is ~2% - (JP) Japan plans to improve management of $1.3T foreign exchange reserves - Draft Growth Strategy report - (UR) Reportedly Ukraine now believes it has secured White House backing for a campaign aimed at forcing Russia into meaningful negotiations; Trump privately told Zelenskiy to act "more boldly" - Ukrainian press - (UK) JUN PRELIMINARY PMI MANUFACTURING: 53.1 V 53.5E (8th month of expansion) - (US) JUN PRELIMINARY S&P PMI MANUFACTURING: 55.7 V 54.6E (10th month of expansion); Manufacturing output grew at the fastest rate since July; 2021 in response to the largest rise in new orders for just over four years; Manufacturing headcounts were cut at the fastest rate since the COVID-19 lockdowns of early 2020 -