Friday U.S. stock market plunge review: AI boom cools, tech stock rotation intensifies, next week's employment + CPI in focus!

Hello everyone, the U.S. stock market closed lower again on Friday (December 12), with the Nasdaq plunging 1.6%, the S&P 500 down 1%, and the Dow slightly down 0.5%. Tech stocks had a bleak week overall, with the Nasdaq down over 1.5% for the week, the S&P barely flat, and the Dow actually up slightly by 1%. What triggered the big drop? Let’s recap: 1. AI investment concerns escalate, Broadcom becomes the "culprit"

Broadcom’s after-hours earnings report last night beat profit expectations, with AI chip revenue surging 74%, but CEO Hock Tan’s outlook for future sales was "below expectations," sending the stock crashing 10.9%! This blow dragged down the entire tech sector. Nvidia fell 2.1%, Oracle continued to drop 4.6%, and AMD and Micron also suffered.

Earlier this week, Oracle had already warned about massive AI spending and uncertain returns. Now, with this follow-up from Broadcom, the market is starting to question: Is the AI bubble about to burst? Investors are accelerating their rotation from high-valuation tech stocks to value stocks (e.g., energy, financials), and this wave of "de-tech" has pulled the Nasdaq down from record highs. 2. Macro backdrop: Stubborn inflation + Fed signals

Although the Fed cut rates by 25bps this week, Powell emphasized that the "path is uncertain," and inflation’s "stickiness" has kept the market on edge. Coupled with concerns about a global economic slowdown, U.S. stocks retreated from mid-week highs, and the VIX fear index also rose slightly. In short, today wasn’t a systemic crash but a "self-correction" for tech stocks—valuations were too high (Nasdaq PE over 30x), making a pullback inevitable. What to watch next week (12/15-19)? Don’t miss these key events!

The last week before Christmas is packed with data, and U.S. stocks may continue to fluctuate. Focus on these points: Tuesday (16th): Non-farm payrolls (November data + October revisions). Expectations are for 150-200K new jobs. If it exceeds expectations, rate-cut hopes will cool, hurting stocks; if weak, it could be a "dovish surprise."

Wednesday (17th): Retail sales. Post-Black Friday consumption data will reflect economic resilience. If strong, the rotation continues; if weak, tech may rebound.

Thursday (18th): CPI inflation data. Core CPI is expected at 2.7%. If higher, bonds and stocks will face pressure. PPI is also released, so watch for commodity price pass-through.

Others: Monday’s Empire Manufacturing Survey, Friday’s Michigan Consumer Sentiment Index + existing home sales. Plus, Micron’s earnings (a big player in AI memory)—could tech rebound?

Fed’s Williams speech (Monday) is also worth listening to for hints on next steps. Overall, if the data supports a "soft landing," stocks may stabilize; otherwise, the rotation will intensify, and value stocks will keep attracting funds.

Summary & advice: Today’s big drop is a normal reaction to AI’s "fever breaking." Don’t panic! Long-term, AI is still the trend, but short-term valuation adjustments are necessary. Next week’s data will decide the direction. Advice: Diversify holdings, don’t go all-in on tech, and watch value ETFs. Have a great weekend, invest wisely, and don’t chase highs or sell lows before Christmas!