📊 Market Overview
The S&P 500 finished last week essentially flat, while the Nasdaq 100 climbed roughly 2%, powered almost entirely by semiconductor and AI stocks. The biggest driver was a sharp rotation back into chip stocks — the SOX semiconductor index surged about 9% for the week, hitting an RSI (a momentum gauge) of 85. The number to watch this week: about 44% of the S&P 500’s market value reports earnings, including Microsoft, Amazon, Alphabet, Meta, and Apple.
📊 Market Snapshot
This week’s mega-cap tech earnings and the Fed’s interest rate decision will determine whether this narrow, chip-driven rally can hold — or crack.
📈 The Big Picture
The market looks strong on the surface, but underneath it’s far less healthy. Hedge funds posted their largest risk reduction in seven months, selling individual stocks across 9 of 11 sectors, while money poured almost exclusively into AI, chips, and mega-cap tech. That means the rally depends on a very small group of stocks — great when they deliver, dangerous when they don’t.
Meanwhile, a largely overlooked risk is building: physical oil prices sit near $112 per barrel even as futures markets price in a drop ahead. The Strait of Hormuz — one of the world’s most critical energy shipping lanes — has seen commercial vessel traffic plunge from 137 ships in late February to just 5. If this disruption lingers, rising energy costs could feed back into inflation (the rate at which prices rise across the economy) and complicate the Fed’s plans. For your portfolio, that means both the earnings reports and the Fed’s tone on Wednesday could swing stocks hard in either direction.
📖 Term of the Day
De-grossing — when hedge funds and large investors reduce the total size of their bets, selling positions to lower their overall market exposure. Why you care today: U.S. stocks just saw the biggest de-grossing in seven months, meaning big professional investors are quietly stepping back even as headlines look calm.
💼 Watchlist: 3 Stocks to Know Today
Microsoft (MSFT) — “The AI Litmus Test”
Microsoft reports Wednesday alongside Alphabet, Amazon, and Meta. Any surprise in AI spending plans or cloud growth could move the entire Nasdaq, not just the stock itself.
Intel (INTC) — “The Comeback Kid”
Intel rallied sharply last week as the AI story expanded beyond GPUs into CPUs and infrastructure chips. Watch whether this momentum holds — Intel is being seen as a proxy for the broadening AI hardware cycle.
Exxon Mobil (XOM) — “The Oil Wild Card”
Exxon reports Friday with physical oil prices near $112 per barrel, well above what futures suggest. Tensions around the Strait of Hormuz make Exxon’s outlook on supply disruptions and capital discipline especially important this week.
💬 Esther’s Take
