Stock Market Hit With Volatility Swings Showing Us What Is Durable

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Last week the US stock market fell very hard, with the S&P 500 falling 2.71% on Friday, but today it is gapping up.

The news catalyst of Friday was President Trump talking tariffs again, saying he is ready to double the tariffs against China in November, because trade talks with them have broken down. Today, though, he said that everything is going to be ok, so bulls are buying.

A few days before Friday’s drop, though, another report came out saying that renting out AI computing power isn’t all that profitable. Of course, this report was nothing new, because an MIT report a few months ago showed that 95% of companies that use AI find that it provides zero return on their investment.

The problem is that so called “AI” stocks have been fueling much of this stock market rally this year.

That doesn’t mean that it is over, but when a market goes up like this, with coming future rate cuts helping it, that market can become prone to any pullback at any time on profit taking.

So, the China news was probably just an excuse for some to sell.