After the market’s concentrated sell-off last week, the U.S. stock market is now in a tug-of-war period where high valuations in AI concept stocks are being digested and geopolitical disturbances in the Middle East are adding uncertainty.

Last week, the Nasdaq Composite Index fell 2.9% week-over-week, the S&P 500 Index dropped 1.6%, and the semiconductor and AI hardware supply chain became the main concentrated target of selling pressure.

As the second-quarter earnings season fully enters a dense reporting period this week, market funds are closely watching whether tech giants’ capital expenditures are being realized, as well as shifts in capital flows toward defensive sectors for risk-avoidance.

With the 10-year U.S. Treasury yield staying in high-range consolidation around 4.53% ~ 4.55%, high P/E growth stocks remain vulnerable under pressure from discount rates.

U.S. retail sales and core inflation show signs of easing, but rising oil prices driven by geopolitical risk have intensified concerns about supply-chain costs. Safe-haven funds are continuing to flow into traditional defensive sectors such as healthcare (XLV) and consumer staples (XLP).

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