WS #15895

The market narrative has decisively shifted from a 'soft landing' to a 'hard landing' risk profile following the release of hotter-than-expected US CPI data (3.7%), which has shattered hopes for imminent Fed rate cuts. This inflationary shock is driving a broad-based selloff in growth and technology stocks, with AMD and other semiconductors trading lower as rate hike fears resurface. Concurrently, geopolitical tensions in the Middle East are escalating, with oil prices hovering near $94 and significant disruptions to Strait of Hormuz shipping, creating a dual-headwind scenario for the broader equity market. Amidst this macro turbulence, specific sectoral divergences are emerging. The defense sector is seeing renewed interest as Zelensky secures UK support and geopolitical risks persist, though the narrative is complicated by reports of Starlink limitations in Ukraine. In the AI infrastructure space, CoreWeave's 15% plunge on credit concerns has sparked a broader reassessment of AI capex sustainability, dampening enthusiasm for the sector despite ongoing BlackRock optimism. Meanwhile, Berkshire Hathaway's 10-session winning streak highlights a flight to quality and defensive positioning among institutional investors.