Broadcom slump halts S&P 500 streak as hawkish Fed bets intensify
Markets react to mixed signals from Broadcom earnings, resilient US labour data, and persistent oil price pressures driven by Middle East tensions.
Broadcom shares plummeted more than 13 per cent after missing sales and revenue forecasts, bringing an end to the S&P 500’s potential tenth consecutive daily gain. The decline highlights the elevated standards now required by investors amid the artificial intelligence boom, with analysts noting that the market currently demands perfection from major technology firms. Despite the broader frenzy in the chip sector, the world’s sixth-largest company by market capitalisation stumbled, reflecting rising competition within the industry.
The negative reaction to Broadcom’s results coincided with strong US economic data that has increased market bets on a Federal Reserve interest rate rise as soon as October. The Fed’s Beige Book indicated that economic activity has picked up, aligning with May ISM business surveys and ADP private sector payrolls, which rose by 122,000. U.S. economic surprise indexes are currently running at their most positive level in three years, fuelling hawkish sentiment ahead of the central bank’s upcoming meeting.
Energy markets remain tight as global crude supplies enter a critical period. Oil prices have stayed elevated due to supply concerns and ongoing geopolitical tensions in the Middle East, with global crude costs remaining approximately 35 per cent higher than pre-conflict levels. U.S. crude stockpiles fell by 8 million barrels in the week ended May 29, a drawdown twice the size analysts had expected, according to the Energy Information Administration.
In currency markets, the Japanese yen weakened towards the 160-per-dollar level despite warnings from Bank of Japan sources that an interest rate rise is likely this month. The yen’s depreciation occurred even as a ceasefire between Israel and Lebanon boosted hopes for a broader Iran deal, although fighting continued in southern Lebanon and the Gulf region. Investors are closely monitoring whether a sharp escalation in the Middle East conflict could disrupt these market trends.
Liquidity constraints are also emerging in private equity, with Swiss asset manager Partners Group capping withdrawals from its $16 billion U.S.-based fund after redemption requests exceeded the 5 per cent quarterly limit. Meanwhile, U.S. stock index futures were in the red at Thursday’s open, and bitcoin shed almost 20 per cent since mid-May, falling to its lowest level since February. In contrast, Marvell Technology shares touched a record high after Nvidia CEO Jensen Huang stated the company is likely to become a trillion-dollar enterprise.
