The S&P 500 closed down 0.37% today, and the Nasdaq also took a hit, falling 1.32%. The VIX, which measures market volatility, jumped 4.31% from the previous day to hit 17.51.
In the commodities market, Brent crude dropped to $77.85 a barrel, and WTI weakened by about 1.2% to $74.20. What’s unusual here is that despite a clear drop in international oil prices, the 10-year Treasury yield—a major market benchmark—actually surged. It jumped 5 basis points in a single day to reach 4.51%, inevitably pushing bond prices down. The short-term 2-year yield also rose 5 bps to 4.23%, adding further pressure to the market.
Meanwhile, the dollar index edged up 0.18% to 100.78. For investors who exchanged dollars at high rates to buy US big tech stocks, we are unfortunately entering a frustrating phase where foreign exchange losses are starting to creep in. Naturally, this is dragging down the overall momentum of tech stocks.
On the geopolitical front, US Vice President Vance recently traveled to Switzerland for talks with Iranian negotiators, and reports suggest the discussions are going very well.
With the US temporarily lifting sanctions to allow Iranian oil exports during a 60-day negotiation period, the Dow Jones—heavily weighted with mid- and small-cap stocks—managed to successfully rebound.
Looking ahead, all eyes are on this Thursday’s release of the core PCE inflation data.
Major institutions are cautiously predicting that headline PCE will tick up from 3.8% to 4.1%, with core PCE also rising slightly from 3.3% to 3.34%. According to the FedWatch tool, the probability of a September rate hike has already jumped to 73.6%. Local US gasoline prices are sitting at $3.92 a gallon—a massive $1 increase compared to the $2.90 levels seen before the war. It's clear that everyday inflation still feels painfully high for the average person.
In other news, SpaceX-related stocks, which had carried massive market hype, experienced a brutal 16% drop in a single day. For those of us who felt left out because we couldn't participate in past IPOs, this bursting bubble feels like a natural market correction. Trading at absurd premium valuations—over 100 times actual revenue—was simply never going to be sustainable.
If we look at the current political stance of the Trump administration, tackling the massive US national debt is an absolute priority. The initial plan to heavily tariff imports and use the revenue to buy back treasury bonds has essentially been scrapped. Now, rather than just trying to passively cut debt, the only viable path forward is to aggressively invest in AI companies and technology to grow overall GDP.
To make this happen, the US government is strongly pushing for massive investments in core infrastructure, like AI data centers. At the same time, they are going all-in on supporting domestic champions like Intel to ensure the reshoring of manufacturing and the expansion of semiconductor facilities on US soil.
Despite the broader market slump, the stock market’s massive expectations for AI agents are still very much alive. Demand for memory semiconductors and inference servers is explosive and shows no signs of slowing down, driven by the narrative that physical AI deployment will drastically boost industrial productivity.
In reality, AI agents are already doing a fantastic job reducing task complexity for individual workers, and employee satisfaction is extremely high. The dilemma, however, lies with the executives: these massive investments aren't immediately translating into visible revenue growth. Take a traditional fertilizer manufacturer, for example. The harsh reality is that they simply don't have the spare capital lying around to completely overhaul their outdated legacy processes with expensive new AI infrastructure.
Ultimately, it looks like the existing cloud giants, armed with massive capital, will monopolize AI agent services and seize the biggest opportunities for future revenue expansion.
For those of us managing a 30-year long-term pension to secure our family's future, there's no need to panic over these market swings. I am absolutely convinced that the most realistic and stress-free retirement strategy is to simply keep our heads down. Whenever we have spare cash left over from living expenses, we should consistently dollar-cost average into core AI infrastructure ETFs, sticking to our pre-determined asset allocation ratios.
