Written by: Trend Research

In the last two trading days of the first half of the year, after the U.S. stock market continuously set closing records, the market faced a structural shake-up on the first trading day of the second half. The news that Meta plans to sell idle computing power externally directly undermined the narrative of "computing power scarcity," which was originally the underlying support for the valuation of the entire AI hardware sector. Storage chip stocks experienced heavy selling, and funds flowed into the software sector instead.

Market Performance

The S&P 500 fell 0.22% to 7483.23 points, the Dow Jones fell 0.03% to 52305.24 points, basically flat, and the Nasdaq fell 0.66% to 26040.031 points. The Nasdaq 100 dropped 1.5%, with a decline significantly greater than the composite index, indicating that selling pressure was concentrated on a few large-cap stocks.

Micron plummeted 10.57%, Sandisk fell 10.62%, marking a rare sell-off of the two leading storage chip companies. Previously, the combined market value of Micron, Intel, and AMD had increased by approximately $2 trillion in the second quarter, and with such strong gains, this drop is also particularly severe. In contrast, Meta's stock price surged 8.8%, and the software sector strengthened against the trend, showing a clear sign of capital shifting from hardware to software.

The yield on the 10-year U.S. Treasury rose by 0.99 basis points to 4.4752%, while the 2-year remained largely flat at 4.1702%. WTI crude oil fell 1.32% to $68.58 per barrel following announcements of progress in U.S.-Iran talks, while Brent dropped about 2.4% to $71.19 per barrel; spot gold rose 0.57% to $4030.87 per ounce, and spot silver increased 0.90% to $59.0942 per ounce. Bitcoin was around $59,703, Ethereum was near $1,600, and the VIX closed at 16.59.

Macroeconomics and Outlook

Waller spoke at the European Central Bank forum in Sintra, Portugal, clarifying that the Federal Reserve will abandon forward guidance on interest rates and will fully rely on real-time data for decision-making. He assessed that inflation risks have decreased in the past four weeks, but the ultimate impact of AI on the economy and inflation still needs to be observed. He also announced the appointment of former Bank of England Governor Carney to jointly head a newly established communication working group. White House National Economic Council Director Hassett stated that some Federal Reserve officials' votes may have been "against Trump," and Waller himself does not wish to raise interest rates but must contend with a committee that does not share a unified opinion.

The job market also failed to present strong signals, with only 98,000 jobs added in the U.S. private sector in June, more than 20,000 less than market expectations. Although the record of positive growth for 12 consecutive months was maintained, the growth rate clearly slowed. In the manufacturing sector, the ISM index for June recorded 53.3, 0.6 points lower than expected, but it has remained above the expansion line for the sixth consecutive month; the price paid component, which reflects cost pressure changes, plummeted 9.1 points to only 73, marking the largest monthly drop in four years, with the effects of falling oil prices already reflected in the data. The Eurozone's June CPI and core CPI fell to 2.8% and 2.4%, respectively, both down more than expected, significantly weakening the necessity for continued tightening by the ECB.

There are uncertainties regarding the US-Mexico-Canada Agreement, as the U.S. government has abandoned the renewal and shifted to an annual review, increasing uncertainty in the North American supply chain.

Tonight's main event is the U.S. June non-farm employment report, along with last week's initial jobless claims, May factory orders and durable goods orders, and remarks by San Francisco Fed President Daly.

Trend Perspective

Meta's statement this time shatters the underlying logic of "computing power is always scarce," which originally supported the valuation of the entire AI hardware sector. Once the market begins to worry about a peak in capital expenditures, storage chips, which have seen the most significant increases this year, will naturally take the brunt. However, considering this adjustment as a trend reversal is still premature, as the chip sector's gains over the past few quarters have already exhausted many expectations, and a profit-taking sell-off is a typical reaction after such increases.

The non-farm data on Thursday night is the most direct verification window in recent times. If employment continues to slow down, the new framework spearheaded by Waller to "abandon forward guidance and rely entirely on data" will elicit a more pronounced market reaction, representing the largest variable in the short term.