AI Bubble Fears Intensify, Wall Street on Edge

(Central News Agency, New York, 7th, Combined Foreign Reports) A stronger-than-expected U.S. jobs report triggered a sell-off, pushing bond yields higher. The market faces several challenges in the near term, including a key inflation report, SpaceX's initial public offering, and Alphabet's $85 billion equity financing deal. When employment data beats expectations, the market logic is that the economy might be too strong, making it difficult to lower inflation and keeping interest rates high. Expectations of a hawkish Federal Reserve policy shift triggered the market sell-off. According to the Wall Street Journal, the current downturn originated from a better-than-expected jobs report released on June 5, which sent the Nasdaq Composite Index down 4.2%, leading investors to anticipate a rate hike by the Fed before the end of the year. Meanwhile, a sell-off in the bond market pushed yields on some U.S. Treasury bonds to their highest levels since early 2025, putting pressure on the stock prices of multinational corporations and small-cap companies focused on the domestic U.S. market. Gold prices fell to near their lowest levels of the year. This crash has prompted warnings from Wall Street that more turbulence may lie ahead. Ray Dalio, founder of global hedge fund giant Bridgewater Associates, said the June 5 crash is a significant indicator, highlighting the central role that the global investor frenzy for artificial intelligence and related stocks has played in driving the stock market to record highs. He noted that with valuations in related sectors already high and bond yields rising, bonds are now far more attractive than stocks. After the sharp decline on June 5, the market is in a fairly fragile state. Dalio said, "The market and the economy's capital is concentrated in a brand new industry sector, which is highly volatile, extremely risky, yet feverishly pursued by inexperienced investors. This is a classic bubble phenomenon." The report states that investors

AI Bubble Fears Intensify, Wall Street on Edge

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