At a glance, the bulls seem to have it all going their way. The S&P 500 finally hurdled that elusive record high courtesy of NVIDIA's blistering 147% rally that minted the chipmaker as a $3 trillion behemoth. The AI euphoria powering tech's meteoric ascent shows no signs of letting up ahead of NVDA's highly anticipated stock split.
But look under the hood, and storm clouds may be gathering. A divergence is emerging between the frenzied speculative excess in big tech and data pointing to brewing economic cracks. From the latest jobless claims ticking higher to the ISM manufacturing gauge diving deeper into contraction territory, the indicators are flashing yellow for those willing to heed the warnings.
The all-important monthly jobs report looms large on Friday. Will it validate fears that the blistering labor market is losing steam? Or surprise to the upside, easing imminent recession concerns? With bonds now fully pricing two Fed rate cuts by year-end, all eyes are on whether policymakers will be forced to reverse their inflation-fighting campaign to prevent a harder landing.
Get the playbook prudent investors are using to stay opportunistic on the AI craze while also bracing portfolios for potential economic shocks ahead. One mis-step amid this volatility minefield could deal a catastrophic blow.