The Market Pulse: Weekly Sector and Tech Stock Movers

Week Ending May 23, 2025

AI Exhaustion Triggers Broad Market Reversal

The U.S. stock market closed lower this week, with the S&P 500 slipping -1.37%, as signs of fatigue emerged across both cyclicals and tech leadership. The rally that defined much of Q1 and early Q2 began to fracture under the weight of weak guidance from chipmakers and cautionary tone from hyperscalers. Equity markets entered a risk-off posture midweek, with profit-taking spreading across AI-linked names, capital goods, and semiconductor equipment. Although the headline decline was modest, underlying sector dispersion revealed far deeper vulnerabilities.

The biggest losses were concentrated in real estate (-2.62%), energy (-4.24%), and financials (-2.09%). Technology also struggled, falling -1.85%, led by sharp declines in hardware and semiconductors. On the flip side, telecom was the only sector to post gains, rising 0.65%, buoyed by strength in defensive holdings and select large-cap communications stocks like Alphabet. With the AI trade looking temporarily exhausted, investors shifted toward defensive and income-oriented names, while small-cap speculative tech remained largely out of favor.

Next week’s market focus will turn toward updated PCE inflation data and fresh earnings from cloud infrastructure providers. Any sign of further hyperscaler spending caution or softening in enterprise IT could compound recent losses in semiconductors and equipment stocks. However, selective strength in software, healthcare, and telecom may continue to offer a near-term hedge. Macro watchers will also be tuning in to Treasury auctions and Fedspeak for clues on the Fed’s path through summer.

Sector Performance – 7-Day Returns

According to Chart 1, telecom was the only sector to finish in the green, up 0.65%. The rest of the market fell broadly, with energy (-4.24%), real estate (-2.62%), and financials (-2.09%) posting the steepest declines. Tech and consumer discretionary, typically seen as growth bellwethers, dropped -1.85% and -1.74%, respectively, reflecting cautious sentiment heading into summer earnings season.

Tech Subsector Returns