Equities: Defensive tilt as AI cycle questioned – Danske Bank

Danske Research Team notes US equities ended modestly higher, with the S&P 500 up 0.3%, Nasdaq flat and Russell 2000 outperforming. Sector performance showed a defensive bias, led by healthcare, while tech, industrials and communication services lagged on concerns about the AI investment cycle. The VIX fell toward 17, suggesting easing market anxiety, though strong AI-related earnings later challenged this rotation.

Defensive sectors lead while 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.)