Equities: Investors favour defensives as AI cycle comes under scrutiny – Danske Bank

A 0.3% gain in the S&P 500, an unchanged Nasdaq and outperformance by the Russell 2000 marked a modestly firmer close for US equities, according to the Danske Research Team. Healthcare led a defensive sector rotation as concerns over the AI investment cycle weighed on tech, industrials and communication services. A decline in the VIX towards 17 pointed to easing market anxiety, although subsequent strong AI-related earnings challenged the rotation.

Defensive sectors advance as the AI trade shifts

"US equities ended yesterday modestly higher, although the headline performance masked another rotation beneath the surface. The S&P 500 gained 0.3%, the Nasdaq was flat, while the Russell 2000 outperformed with a 1.7% advance."

"Sector performance again had a defensive tilt, with healthcare leading the gains, while tech, industrials and communication services struggled amid lingering concerns over the AI investment cycle."

"The VIX declined further to 17.3, having approached 20 last week, pointing to a gradual easing in market anxiety."

"After hours, and overnight developments challenge yesterday's rotation story though, as strong earnings have brought the AI trade back into focus."

"SpaceX and Super Micro Computer both delivered results exceeding of expectations, with their shares rising 8% and 16%, respectively, in after-hours trading."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)