The stock rally is entering the end of June with a new stress test. The S&P 500 and Nasdaq just limped through a week where AI doubts, private-credit worries and Fed rate-hike risk all hit at once.
That does not mean the bull market is broken. It does mean the first-half playbook - buy AI leaders, ignore rates, expect liquidity to stay friendly - suddenly looks less automatic.
What happened
The Wall Street Journal reported that the S&P 500 and Nasdaq fell every day of the week for the first time since April 2024, losing about 2% and 4.6%, respectively.
MarketWatch said tech stocks had one of their worst weeks in a year as AI momentum came off the rails. At the same time, the Fed's preferred inflation gauge rose 4.1% from a year earlier.
Why the first-half stress test matters
The market spent much of 2026 rewarding AI capital spending and treating dips as buying opportunities. A week of selling in megacap tech challenges that reflex.
The second pressure point is rates. If investors believe the Fed's next move could be a hike, high-duration growth stocks have less room for valuation error.
Market impact
Rotation helped cushion the damage. Defensive sectors and equal-weighted market measures held up better than the headline tech-heavy indexes, suggesting investors are moving money rather than leaving equities entirely.
Key numbers
- WSJ reported the S&P 500 lost about 2% for the week.
- WSJ reported the Nasdaq Composite fell about 4.6% over the same stretch.
- BEA reported May PCE inflation rose 4.1% year over year.
- MarketWatch reported the equal-weighted S&P 500 rose 1.6% for the week while the cap-weighted index fell.