Wall Street's AI Hype Fades: Why Funds Are Flowing into 'Boring' Stocks

On July 28 in New York, the stock market closed mixed. The S&P 500 rose 0.2%, the Dow Jones Industrial Average jumped 1.0%, while the Nasdaq Composite fell 0.2%. On the surface, index moves were modest, but a clear rotation emerged as funds shifted from AI and semiconductor stocks toward traditional defensive sectors like consumer staples and industrials.

Over the course of a single day, the October Brent crude contract plunged over 4% to around $82 per barrel, easing inflation concerns. As a result, the 10-year U.S. Treasury yield dipped slightly to 4.60%, and markets increasingly priced in a rate hold at the Federal Reserve’s July 28–29 meeting. However, the Conference Board Consumer Confidence Index came in weaker than expected, highlighting renewed fears of an economic slowdown.

Corporate earnings broadly supported the indices. Coca-Cola reported a 7% rise in sales and saw its share price surge 5%, while Sherwin-Williams and Illinois Tool Works beat expectations, gaining over 8% and about 3%, respectively. In contrast, Micron, AMD, and Applied Materials plunged 7–9%, extending the AI and semiconductor pullback. The spread of low-cost AI models in China and advances in its domestic equipment technologies have intensified global competition, contributing to sharp declines in SK Hynix and Samsung Electronics; South Korea’s Kospi fell by more than 10%, triggering an intraday trading halt. For investors, tomorrow’s Fed decision and the investment plans of AI “big tech” firms such as Meta, Microsoft, and Amazon have emerged as key variables in guiding future market direction.