Week ended June 5, 2026: sell-off in tech shares drive indices lower

Stocks faltered this week, not surprising given the recent two month+ run in anything / everything even remotely related to A.I.  Friday was particularly ugly for U.S. stocks and Treasuries, but more on that in a minute.

The table below fromSeaport Research Partners shows the 12 biggest contributors in the S&P 500 that drove the amazing 16.1% gain in the benchmark U.S. index in April and May. 

See anything in common amongst these 12 stocks?  These tech giants – all in one way or another tethered to the A.I. aurora – collectively accounted for three-quarters of the increase in the S&P 500 index in April and May.  This means the other 488 stocks in the S&P 500 only accounted for one-quarter of the indices increase.  My observation is that the incredible two-month increase in the S&P 500 has been slightly narrow to say the least.

Nothing lasts forever though, as investors’ concerns about the recent run in A.I. stocks ran into a brick wall last week.  These concerns dragged global stock indices lower, especially those concentrated in tech.  International indices heavily skewed towards A.I. stocks and more specifically towards semi-conductor fabricators, like the KOPSI (Korea) and the TWSE (Taiwan), took a beating. The KOPSI was down 3.7% WoW (and 7.3% the last two days), and the TWSE was down 7.6% WoW.  In the States, the NASDAQ of course bore the brunt of the selloff in tech names, down 4.7% WoW even as the large cap DJIA (concentrated, non-tech dominated) fell only 0.3% WoW.

This raises the question: is the “straight to the moon” march of tech A.I.-associated names too much, too fast?  Well, as John Authers wrote this week in Bloomberg Opinion (@Opinion), it depends on the trajectory of future earnings growth.  Should companies continue to deliver the amazing growth that they did in the most recent quarter, there is a case that A.I.-related stocks have moved higher because of a justified upward revision in earnings growth, not just an expansion of (valuation) multiples. Mr Authers included the table below in his Opinion article, which I think provides very good historical context. 

I am bothered by these graphs, because I see both the direction of travel and the absolute valuation levels now as slightly unnerving, leaving no room for future sales growth or earnings to disappoint.  This is why I have been trimming around the edges of my own portfolio recently, arguably a bit too early perhaps but perfectly logical at these levels to me. Why not lock in some gains? 

Markets last week

Friday’s session was difficult with a stronger-than-expected May payrolls released before the open (here), causing a resurgence in inflationary expectations even though it was good news for the U.S. economy.  This strong report certainly reduced further any chance that the Fed might ease its policy rate this year.  The bond market responded accordingly, with yields inching higher across the curve, most pronounced at the policy-sensitive short end.   Investors, already under pressure much of the week with the A.I. trade faltering, responded by selling tech shares into the downturn on Friday, with losses worsening as the day progressed.  Non-tech stocks generally fared better, perhaps because they benefitted from rotation and are more likely to be beneficiaries of a strong economy over the negative effects of ongoing inflation and higher interest rates.  The DJIA lost a mere 0.3% on the week, even with the NASDAQ (down 4.7% WoW) and the S&P 500 (down 2.6% WoW) losing significantly more ground, much of it coming during Friday’s difficult session.  It all begs the question – has the A.I. rally finally run out of steam, or is it just another short period of consolidation while investors celebrate their recent gains and take some money off the table?  Or are there perhaps making room for the trifecta of mega-A.I. IPOs being teed up – SpaceX, Anthropic and OpenAI? 

Weak sentiment wasn’t helped by the ongoing conflict between the U.S. and Iran, in which increasingly it seems the U.S. is more or less negotiating with itself.  Mr Trump has had the same message for weeks now, along the lines of “the Strait of Hormuz is about to re-open”.   But it hasn’t, and probably won’t for a while longer.  Investors by now have certainly figured out the hollow rhetoric and motored on, although there is the risk that the global energy situation could worsen further.  Oil moved higher again last week (WTI +3.6% WoW), as the conflict dragged on. 

Bitcoin is taking a beating at the moment, which some pundits attribute to a rotation out of speculative cryptocurrencies and into the “more certain” hot A.I. trade.  Others blame Strategy (MSTR) for unloading a few #BTC – their first sale since 2022 – to service their preferred stock.  The question for me is: is the Strategy Ponzi scheme under pressure and at risk of breaking at some point soon, which would send the benchmark cryptocurrency down sharply?  Clearly Strategy is highly leveraged, but it will also depend on unwinds away from Strategy since leverage in Bitcoin everywhere is likely high albeit opaque.  (You can read my rather dated article on MicroStrategy as it was then called on my blog here.)

The tables at the end of this update contain market data for the week ending June 5, 2026.

SpaceX IPO

The SpaceX IPO is on the launchpad and nearing take-off.  As I wrote in an article earlier this week here, I suspect the IPO will fly.  However, will investors that don’t flip the shares into the post-IPO euphoria be able to hang onto gains in the months ahead?  Or will investors become more critical of and less enthusiastic about the valuation?  Will the small amount of traded shares feel pressure from existing investors as the lock-up periods begin to expire?  I am of two minds about this, ignoring Elon Musk for a moment (since I’m not a big fan).  On one hand, the business segments of SpaceX are really innovative and cool, even though the company has strangely positioned its future around A.I. rather than space travel and Starlinks, two sectors it dominates.  On the other hand, I do think the post-IPO pop might fade.  So if you want to own SpaceX and can’t get the shares given the small float, hang out for a while and you will likely get another bite at the apple at a lower (than IPO) price.  I don’t consider myself an expert on this company or its sectors, but rather am reflecting my instinct alone.  Let’s see.  In any event, check out my two cents in the article about SpaceX on my blog.

MARKET DATA AND TABLES

Below are tables of key indices and asset prices that have been updated for the past week.

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