From the desks of Stanley Katz & Lauren Madera
THE FIRST OF APRIL IS THE DAY WE REMEMBER WHAT WE ARE THE OTHER 364 DAYS OF THE YEAR. ~ MARK TWAIN
The three major U.S. stock market indices extended their downward trajectory this week (i.e., DJIA: -0.88%, S&P 500: -1.53%, Nasdaq: -2.59%). Twenty-five years after the dot-com bubble burst, investors may be experiencing déjà vu as many leading AI stocks have hit a wall amid concerns about overinvestment. Five of the Magnificent Seven tech stocks that have invested aggressively in AI — NVIDIA, Microsoft, Apple, Amazon, and Alphabet — have declined, lagging the broader S&P 500 Index year-to-date through March 25. The pullback has punctuated what Capital Group analysts are calling a troubling moment for artificial intelligence investments. This raises a fundamental question: has the AI stock rally run out of gas?
BlackRock notes that this U.S. equity pullback has narrowed the performance gap with the rest of the world. They point to a noteworthy trend: the weight of non-U.S. equities in global equity indexes has been rising since January. While policy uncertainty has weakened U.S. growth prospects, country-specific developments (like Germany’s fiscal spending on defense and infrastructure, Japan’s corporate reforms driving improved earnings, and Mexico’s strengthening role in rewiring supply chains) are boosting international stocks. Even Chilean equities have jumped 12% this year as private investment in energy transition minerals grows. Regardless, prolonged policy uncertainty poses risks to both U.S. and global assets. Selectivity is essential in navigating today’s market landscape.
Below are links to a number of third-party research reports that we have read and analyzed over the past week. We hope you will find the information interesting, useful, and worthwhile.
Capital Group:
BlackRock:
Franklin Templeton:
J.P. Morgan Asset Management:
Northern Trust:
Stanley Katz & Lauren Madera, Financial Advisors
ClientFirst Financial Strategies, Inc.
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