Oil Prices Plunge but Nasdaq Slumps; Micron Drops 8% as Market Fears Broadcom-Style 'Good News Out' Tragedy Repeats

TradingKey - As geopolitical conflicts ease significantly, technology stocks have faced a sell-off, weighing on market sentiment. Under traditional macro analysis frameworks, falling oil prices typically correspond to a mitigation of inflationary pressures and a recovery in market risk appetite, which in theory should provide positive support to the stock market.

However, the market failed to see the expected rebound. As of press time, the three major U.S. stock indexes fell across the board, with the Dow Jones Industrial Average down 0.05% at 51,684.44 points, the Nasdaq Composite down 1.48% at 25,779.97 points, and the S&P 500 down 0.99% at 73,999.08 points.

[Source: FutuBull]

The core logic behind this is that the main market pricing narrative has shifted from geopolitical conflict maneuvering to trading the Federal Reserve's rate hike cycle.

After experiencing a rally driven by improved AI earnings expectations, global stock valuations are currently in a relatively high range. Although the recovery in risk appetite brought by the easing of geopolitical risks acts as a positive catalyst, it is difficult to offset the valuation pressure caused by rising rate hike expectations, making it insufficient to support a new round of upward momentum.

Last week, the Federal Reserve's dot plot showed that nine officials expect at least one more rate hike this year. For details, please refer to the article " June Fed Decision Delivered: Rates Held Unchanged but Dot Plot Significantly Raised, 9 Back Continued Rate Hikes in 2026. ".

For the AI-themed rally that has driven global stock markets continuously upward over the past two years, the marginal rise in interest rate hike expectations is undoubtedly one of the core negative headwinds.

The valuation system of high-growth tech companies is built under the discounted cash flow (DCF) framework. Rising interest rates will directly push up the discount rate center, causing the corresponding present value of future earnings to decline. Among them, long-duration assets that rely heavily on long-term growth expectations to support high valuations are often the first to face valuation correction pressures.

Looking at the sectors leading the decline today, memory stocks and chip stocks are both AI-related stocks that had previously registered large gains. Among them, SanDisk ( SNDK) fell 12.06%, Western Digital ( WDC) fell 9.98%, Micron Technology ( MU) fell 9.89%. Qualcomm ( QCOM) fell 8.51%, Arm Holdings ( ARM) fell 8.26%, AMD ( AMD) fell 5.10%, Intel ( INTC) fell 2.65%.

It is worth noting that the market currently views Micron's upcoming earnings release as a critical validation window to observe the momentum of the AI theme. The logic is that the current wave of AI investment has continuously pushed up overall U.S. stock valuations and the semiconductor sector's performance; the market urgently needs financial results from core computing power supply chain plays like Micron to verify whether data center construction and AI chip demand remain on an accelerating expansion track.

Several Wall Street investment banks have recently raised Micron's price target, with TD Cowen and Deutsche Bank even hiking it to a high of $1,500 in one go. The core logic is that the rapid adoption of AI applications has significantly boosted memory demand, further widening the supply gap. In Deutsche Bank's view, this trend will not reverse in the next few years and will continue to provide support for Micron's stock price.

Notably, Micron is scheduled to release its earnings tomorrow after the bell. However, over the past eight trading days, the company's stock price has repeatedly hit all-time highs, with a gain of up to 30%. The market is concerned that Micron's short-term stock price gains are too large and technically overbought, and that strong earnings results may have already been priced in.

In fact, there has been a similar case recently. Broadcom ( AVGO) released strong quarterly results earlier this month but was subsequently hit by a heavy sell-off, plummeting 12% on the day and wiping out hundreds of billions of dollars in market value.

On the other hand, the PCE inflation data to be released this Thursday is also in focus. If inflation exceeds market expectations again, it will further strengthen bets on renewed rate hikes.

Most importantly, as we approach July, quarterly reports from major tech companies are about to be released. Investors need to verify whether this AI demand can translate into actual revenue and earnings on the financial statements.