Wall Street Shaken by AI Leaders: Why the Caution Ahead of Jackson Hole?

Korean time as of the morning of the 25th, the New York market closed mixed on the 24th. The S&P 500 fell 0.3% to 7,652.86, the Nasdaq slipped 0.8% to 25,980.19, while the Dow held up with a 0.3% gain to 53,417.16. With no major economic data released, investors were gradually adjusting their risk‐asset allocations ahead of the midweek PCE price report and related consumer/inflation indicators.

Leading the market downturn once again were AI semiconductors. Nvidia dropped 2.9%, Micron fell 5.8% and Broadcom slid 2.6%, triggering a wave of profit-taking in growth stocks. With Nvidia’s earnings report due Wednesday, AI-related names that have surged recently appeared stretched on a valuation basis.

In the bond and commodity markets, government and policy factors overlapped. After the U.S. Treasury unveiled plans last week to expand its long-term Treasury buyback program, the 10-year Treasury yield eased slightly from 4.74% to 4.70%, relieving some selling pressure in equities. However, amid heightened oil-price volatility driven by the conflict with Iran and additional sanctions, Brent crude fell 2.3% to $90.54 a barrel but remained at elevated levels, keeping inflation concerns alive.

Later in the week, the Fed will reemerge as the key variable. New Fed Chair Kevin Warsh is set to deliver his first keynote address at the Jackson Hole Symposium on August 28 (local time), and the market is sizing up the strength of his messaging on whether to hold rates steady or tighten further in September.

In summary, today’s New York session can be characterized as a ‘cautious, wait-and-see trading session’ driven by a breather in AI bellwethers, easing long-term yields, and anticipation ahead of Jackson Hole and upcoming inflation data.