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The U.S. stock market continued its decline for the second day in a row, with technology companies once again leading the slide. Investors who have been riding the powerful rally in Big Tech are now seeing signs of fatigue, though market strategists suggest the broader story remains one of resilience rather than collapse.

A Rough Week for Tech Giants

The Nasdaq Composite slipped 0.67%, dragged down by declines in some of the market’s most influential players. Apple, Amazon, and Alphabet each dropped by more than 1%, marking another day of weakness for the sector that has been at the forefront of market gains throughout 2024.

The S&P 500 also recorded its fourth straight day of losses, reflecting broader concerns about the trajectory of both monetary policy and corporate earnings. Tech-heavy indexes are particularly sensitive to shifts in investor sentiment, and the latest sell-off highlights how quickly momentum can reverse after months of bullishness.

Palantir’s Decline Raises Eyebrows

Palantir, one of the standout stocks of 2024 after more than doubling in value earlier this year, continued its slide with a sixth consecutive day in the red. The drop pushed it out of the top 20 most valuable U.S. companies, erasing billions in market capitalization.

The decline was partly fueled by Citron Research, led by short-seller Andrew Left, which argued that Palantir was “detached from fundamentals.” But Palantir’s fall is also emblematic of broader investor caution in high-growth tech names that had soared during the AI boom.

Mixed Signals From Wall Street and the Fed

Market jitters are not happening in isolation. Federal Reserve officials remain divided over how to balance inflation control with employment concerns. With interest rate cuts being openly discussed, some investors are questioning the timing. Historically, rate cuts when markets are near record highs have produced volatile outcomes.

Compounding the uncertainty, former President Donald Trump has suggested Kevin Hassett could be his choice for the next Fed Chair if he returns to office. At the same time, Trump also doubled down on halting new approvals for solar and wind energy projects, a move that could have ripple effects across the renewable energy sector.

Is the AI Bubble Real?

Adding to the unease, OpenAI CEO Sam Altman recently warned of a potential “AI bubble.” While some analysts agree that valuations in artificial intelligence are running hot, others argue that the sector still has at least two to three years of strong growth ahead. Wedbush Securities’ Dan Ives, a longtime tech bull, emphasized that the current pullback looks more like short-term profit-taking than the end of the cycle.

Indeed, after some technology stocks surged 80% or more since early April, traders may simply be locking in profits as summer trading volumes thin out. Carol Schleif, chief market strategist at BMO Private Wealth, noted that markets often experience these cooling periods after strong runs.

A Seasonal Breather, Not a Crisis

Despite the losses, the broader narrative remains constructive. The summer season historically brings lighter trading activity, and many investors may simply be stepping aside after a powerful rally. With earnings growth still robust in sectors like cloud computing, semiconductors, and AI, the long-term outlook for technology stocks appears far from bleak.

For now, the pullback is a reminder that even the strongest bull markets take breathers. Whether this downturn proves to be a short-lived dip or the start of a deeper correction will depend on upcoming Fed signals, inflation data, and corporate earnings.

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