US Stock Trend (July 2): Meta Shakes Up Compute Narrative, Memory Chip Stocks Plunge Over 10%

By: TechFlow Research

On the last two trading days of the first half of the year, after US stocks continuously refreshed closing records, the market experienced a structural shock on the first trading day of the second half. News that Meta plans to sell idle compute power externally directly shook the narrative of "compute scarcity," which was originally the underlying support for the valuation of the entire AI hardware sector. Memory chip stocks encountered fierce selling, and funds shifted into the software sector.

Market Performance

The S&P 500 fell 0.22% to 7483.23 points, the Dow fell 0.03% to 52305.24 points, basically flat, and the Nasdaq Composite fell 0.66% to 26040.031 points. The Nasdaq 100 fell 1.5% alone, with a decline significantly larger than the composite index, indicating that selling pressure was concentrated on a few heavyweight stocks.

Micron plunged 10.57%, SanDisk fell 10.62%, and the two leading memory chip stocks suffered rare selling. Previously, the combined market value of Micron, Intel, and AMD increased by about 2 trillion USD in the second quarter; the fiercer the rise, the harder the fall this time. In contrast, Meta's stock price surged 8.8%, the software sector overall strengthened against the trend, and signs of capital shifting from hardware to software were quite obvious.

The 10-year US Treasury yield rose 0.99 basis points to 4.4752%, and the 2-year was basically flat at 4.1702%. WTI crude oil fell 1.32% to 68.58 USD/barrel following progress in US-Iran talks, and Brent fell about 2.4% to 71.19 USD/barrel; spot gold rose against the trend by 0.57% to 4030.87 USD/ounce, and spot silver rose 0.90% to 59.0942 USD/ounce. Bitcoin was around 59703 USD, Ethereum was near 1600 USD, and the VIX closed at 16.59.

Macro and Outlook

Waller spoke at the ECB Forum in Sintra, Portugal, clarifying that the Fed will abandon interest rate forward guidance and switch to relying entirely on real-time data for decision-making. He judged that inflation risks have decreased in the past four weeks, but the ultimate impact of AI on the economy and inflation still needs observation. He also announced the appointment of former Bank of England Governor King to co-lead the newly established communication working group. White House National Economic Council Director Hassett stated that some Fed officials' voting might be "targeting Trump"; Waller himself does not wish to raise interest rates but has to face a committee that is not unified in opinion.

The employment market also failed to give strong signals; the private sector added only 98,000 jobs in June, more than 20,000 less than market expectations. Although the record of 12 consecutive months of positive growth was maintained, the growth rate slowed significantly. In terms of manufacturing, the June ISM Index recorded 53.3, 0.6 points lower than expected, but fortunately, it has stood above the expansion line for the sixth consecutive month; what indicates changes in cost pressure is the prices paid component, which plummeted 9.1 points in a single month to only 73, the largest monthly decline in nearly four years, and the effect of falling oil prices has already been reflected in the data. Eurozone June CPI and core CPI fell to 2.8% and 2.4% respectively; both data points fell more than expected, and the necessity for the ECB to continue tightening was significantly weakened.

Variables emerged in the USMCA; the US government gave up on renewal, switching to annual review, and uncertainty in the North American supply chain increased.

The highlight tonight is the US June Nonfarm Payrolls Report, along with last week's Initial Jobless Claims, May Factory Orders and Durable Goods Orders, and remarks by San Francisco Fed President Daly.

TechFlow Perspective

Meta's statement this time punctures the underlying logic of "compute power is forever scarce," which originally supported the valuation of the entire AI hardware sector. Once the market starts worrying about capital expenditures peaking, varieties like memory chips, which have risen the most fiercely this year, will naturally bear the brunt. However, it is too early to view this adjustment as a trend reversal; the gains in the chip sector over the past few quarters have already overdrafted many expectations, and a profit-taking style sell-off is the move that should happen after such gains.

The nonfarm data on Thursday night is the most direct verification window recently; if employment continues to slow, the new framework led by Waller of "abandoning forward guidance, looking entirely at data" will make the market reaction more intense, which is the biggest variable in the short term.