Good morning, traders,
You can feel it in the tape: After a summer of “AI to the moon” headlines, we’re seeing what happens when hype finally meets gravity.
On Wednesday, the Nasdaq limped lower — again — dragged down by the same big-name tech stocks that had been pumping up portfolios all year.
Nvidia, Broadcom, and Palantir all took a beating.
Palantir was down nearly 13% in two days. Nvidia and Broadcom both dropped around 2%, which is no small feat when you’re holding up trillions in market cap.
This isn’t random, either. It’s rotation.
Big money’s moving out of the high-flyers and into safety plays. Utilities, energy, staples … sectors that were basically ignored for months are now getting second looks.
And there’s one guy everyone’s waiting on: Jerome Powell.
The Fed chair is scheduled to speak Friday morning at Jackson Hole, Wyoming, an event that’s turned into the Super Bowl for Fed watchers.
Traders want one thing: clarity on interest rates.
But don’t expect Powell to hand out any gifts.
Here’s what to pay attention to as Friday approaches — and beyond.
Why Tech Is Feeling the Heat
Tech lives and dies by interest rates.
When money is cheap, tech thrives.
Future earnings get bid up, and growth gets rewarded.
But when rates are high — and staying high — investors start demanding actual cash flow now, not five years from now.
That’s when the valuation balloon pops.
We saw it happen in 2022 and we’re seeing a flashback now.
The Fed minutes released Wednesday didn’t help much, given that discussion was all about holding rates steady. No clear signal on when (or if) they’ll start cutting.
Some FOMC members are still worried about inflation being sticky. Others are watching slowing growth.
Bottom line: They’re in “wait and see” mode.
And Powell? He’s not showing his hand early.
So, until Friday, we’re in limbo. That’s why you’re seeing traders pull capital out of the riskiest names.
AI stocks had been the market’s golden children. Now they’re leading the pullback.
Meanwhile, in Retail …
Target earnings didn’t exactly inspire confidence, either.
Yes, they technically beat on profit. But the consumer’s under pressure, no question about it.
They blamed tariffs and cautious spending. And now they’ve got a new CEO stepping into a rough setup. The result? Shares down 10%.
That’s not just about Target. That’s a read-through for the consumer.
And if the average American is tightening up, that’s not great for an economy that runs on spending.
So now you’ve got two forces working against the market at once:
- A hawkish Fed keeping rates higher for longer
- A squeezed consumer pulling back on spending
That’s not a recipe for tech strength. That’s a recipe for volatility.
What I’m Watching
First, Powell’s speech on Friday.
If he hints that cuts are coming soon, tech might catch a bid.
But if he doubles down on being “data dependent,” markets could sell off even more.
Second, Nvidia earnings next week. That’ll be a real litmus test for whether the AI boom still has legs or if we’re about to see another round of profit-taking.
And third, I’m looking at rotation. If money keeps flowing into defensive sectors, that tells me this tech weakness isn’t just a blip — it’s a shift.
Regardless, this is where disciplined traders have the edge.
When everyone’s chasing headlines, emotion takes over.
But if you’ve got a system based on risk management and repeatable setups, you don’t need to predict Powell or second-guess the Fed.
The market’s telling us something right now. Make sure you’re listening.
Stay street smart,
Jeff Zananiri
P.S. Today at 2 p.m. ET, Aaron Hunziker continues day two of our AI Mania series, a no-fluff walkthrough of the exact gameplan traders need right now.
We’ll cover where the real AI setups are, how to trade them with precision, and what to avoid so you don’t get caught chasing the hype.
*Past performance does not indicate future results
