Tech Stocks Lag
Investors currently looking at the S&P 500 Index and nothing else would have little idea about the carnage currently plaguing the tech sector. For example, the S&P 500 Index is less than 3% off its all-time high. Conversely, leading AI companies such as Micron (MU), SanDisk (SNDK), and Marvell Technologies (MRVL) are each down more than 20% over the past month.
Image Source: Zacks Investment Research
3 Key Market Uncertainties Exist
Typically, Wall Street investors hate to contend with market uncertainty. Currently, three significant market uncertainties exist, including:
· The Iran War Drags On: If investors have learned anything over the past few months, it’s that, when it comes to Iran, one must see it to believe it. The 2026 Iran war has now been going on for five months. While the Trump Administration has hinted at a potential resolution several times and there was a ceasefire last month, a lasting peace deal remains elusive. Worse yet, Wall Street investors are beginning to come to terms with this troubling trend. For example, a few weeks ago the market would have shot higher on talk of renewed negotiations. However, Monday stocks fell despite talk of renewed peace talks. In Q1, the market climbed the Iran Wall of Worry to trend higher. That said, in this instance, the price action versus news is telling.
· Mid-term Elections Loom: Investors are often cautious before mid-term elections, and it appears that this cycle is no different. With mid-term elections fast approaching, it appears that most investors want to take a wait-and-see approach.
· AI Concerns: In 2026, equity markets have largely climbed the Wall of Worry thanks to strength and hopes for future growth in U.S. AI companies. However, China’s Moonshot AI recently shook up the AI landscape with its release of the Kimi K3 model. According to the latest benchmark, Kimi K3 has nearly caught up to the performance of leading AI models like ChatGPT and Anthropic. Meanwhile, appear to have reached their limit with AI CAPEX spending. Investors smashed Tesla (TSLA) and Alphabet (GOOGL) after the two companies announced higher-than-expected CAPEX guidance.
Summer Seasonality is Suspect
Over the past few decades, summer trading has not been kind to bulls. In fact, since 1990, the S&P 500 has averaged negative returns in August and September.
Image Source: Z@almanactrader
Meanwhile, VIX seasonality suggests that volatility is likely to persist into the foreseeable future.
Image Source: Topdowncharts.com
Bottom Line
Between the lingering geopolitical conflict, the upcoming mid-term elections, AI concerns, and poor seasonality, market volatility is likely to persist.
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Free: See Our Top Stock And 4 Runners UpMicron Technology, Inc. (MU) : Free Stock Analysis Report
Sandisk Corporation (SNDK) : Free Stock Analysis Report
Marvell Technology, Inc. (MRVL) : Free Stock Analysis Report
Tesla, Inc. (TSLA) : Free Stock Analysis Report
Alphabet Inc. (GOOGL) : Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
