Equities: Is AI cycle scepticism driving the defensive tilt? – Danske Bank

A defensive tilt marked the modest rise in US equities, according to the Danske Research Team, as the S&P 500 advanced 0.3%, the Nasdaq finished unchanged and the Russell 2000 outperformed. Healthcare led sector gains, whereas tech, industrials and communication services trailed amid concerns over the AI investment cycle. With the VIX retreating towards 17, market anxiety appeared to be easing. However, strong AI-related earnings subsequently challenged the rotation into defensive sectors.

Can defensive sectors retain the lead as the AI trade swings?

"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.)