AI stocks plunged last week against the backdrop of the CoreWeave shock, but with Meta Platforms' earnings due this week, Walmart's solid rebound may spread to the broader market. Attention is also focused on US stock-market trends and movements in 10-year Treasury yields.
AI stocks plunged last week amid concerns over CoreWeave's creditworthiness, and the Nasdaq Composite fell sharply from the previous weekend. The SOX Index declined for 8 consecutive trading days, with losses in AI-related stocks affecting the broader market. CoreWeave's share price fell approximately 25% in one week, while the outlook in the CDS market, an indicator of the company's financial risk, raised concern.
Resource stocks were relatively firm, while Walmart rose approximately 6.7% from the previous week amid capital-market volatility affected by persistently high crude oil prices. Long-term interest rates have been declining, and the US 10-year Treasury yield dipped below 5% at times. As a result, the non-AI Dow Jones Industrial Average rose slightly on a weekly basis.
This week's focus will shift to Meta Platforms' earnings, due on the 22nd, and expectations for the future of AI-related investment. Expectations of a rebound in AI stocks could build ahead of the earnings announcement, while semiconductor giants TXN and LRCX are also scheduled to report on the same day. The market is expected to react sensitively to macro factors including the FOMC's interest-rate outlook, developments in the Middle East and crude oil trends.
This week, investors will need to assess a potential rebound in AI-related stocks while also watching the risk that lending to AI funds, including regional banks, and credit concerns could spread. Strong earnings from ASML and TSMC could improve overall market sentiment. Attention was also focused on movements in security-related stocks.