AI Stocks Crack, Yields Fall, Defensives Surge; What’s Next | Cameron Dawson

Market volatility and the recent sell-off in semiconductor stocks signal a potential shift in the AI-driven trade. Cameron Dawson, CIO of New Edge Wealth, emphasizes that price action often precedes fundamental data, suggesting that weakness in chip stocks and financials may foreshadow broader market deterioration. While earnings estimates remain high, the recent rotation into defensive sectors like utilities and staples indicates waning risk appetite. Rising bond yields and hotter-than-expected CPI data challenge the Federal Reserve’s patient stance, increasing the likelihood of further rate hikes. With semiconductor margins reaching historic highs, the sustainability of current growth remains a critical concern for 2027 and beyond. The widening of high-yield credit spreads further underscores growing economic caution, as investors demand higher compensation for risk in an increasingly uncertain financial environment.