The stock market presented a mixed picture on Monday as a sharp selloff in Alphabet and other megacap technology stocks weighed on the Nasdaq and S&P 500, while a decline in crude oil prices gave a lift to the Dow Jones Industrial Average. The divergence highlighted a rotation out of high-flying AI beneficiaries into sectors that could benefit from lower energy costs.
Alphabet (NASDAQ:GOOGL) plunged 5.5% during the session, with losses extending as much as 6%, as investors grew increasingly concerned about the soaring costs associated with artificial intelligence infrastructure. The company's announcement that Nobel laureate and DeepMind scientist John Jumper would depart for rival Anthropic added to the unease, stoking fears of talent attrition in the fiercely competitive AI landscape. The selloff quickly spread to other major tech names, with Meta Platforms (NASDAQ:META), Amazon.com (NASDAQ:AMZN), and Microsoft (NASDAQ:MSFT) each falling between 2% and 4.2%.
The Nasdaq Composite ended the day down 1.41% at 26,143.95, while the S&P 500 slipped 0.48% to 7,464.36. In contrast, the Dow Jones Industrial Average managed a modest gain of 0.12% to close at 51,628.79, buoyed by strength in financial and industrial stocks as well as the drop in oil prices. The divergence was not merely a story of sector performance—it was also a tale of index construction. Despite eight of the 11 S&P 500 sectors finishing in positive territory, the benchmark index declined because of its float-adjusted market-cap weighting, which gives outsized influence to the largest companies.
"The AI market is increasingly splitting between those receiving the checks and those writing the checks," noted David Wagner, portfolio manager at Aptus Capital Advisors. This dynamic was evident as Micron Technology (NASDAQ:MU), a supplier of memory chips for AI systems, saw its shares outperform ahead of its earnings report this week. Micron's stock has already rallied this year following a supply deal with Anthropic.
Crude oil prices fell sharply, with Brent crude settling at $77.90 a barrel, down 3.38%, after reports of progress in U.S.-Iran nuclear talks. The decline in oil helped lift sectors such as industrials and financials, but it did not remove the broader interest rate risk. The yield on the 10-year Treasury note edged up to around 4.51%, putting pressure on long-duration growth stocks that rely on future earnings expectations. The Federal Reserve held its target rate steady at 3.5% to 3.75% last week and reiterated that inflation remains above its 2% target. The next major inflation data point, the personal consumption expenditures (PCE) price index, is due on June 25.
In corporate news, AbbVie (NYSE:ABBV) announced it will acquire Apogee Therapeutics (NASDAQ:APGE) for $135.11 per share in cash, valuing the deal at approximately $10.9 billion. AbbVie CEO Robert A. Michael said the acquisition will bolster the company's immunology pipeline. Separately, SpaceX (NASDAQ:SPCX) continued its post-IPO slide after the company opted to raise capital through bond issuance rather than an equity offering. Adam Sarhan, CEO of 50 Park Investments, commented that the move avoids "shareholder dilution" but signals caution in the capital markets.
The market's current fragility suggests that any upside surprise in the PCE reading or further rise in yields could quickly turn Monday's low-volume rotation into a broader selloff if AI optimism falters. Conversely, a softer inflation print might encourage investors to rotate out of megacap tech into other segments of the market. Meanwhile, Bank of America and Deutsche Bank have revised their forecasts to include a potential Fed rate hike in September, though that view remains a minority among the consensus expectation of steady rates.
