Rebalancing AI investments, plus SF Fed's Mary Daly says more rate cuts are 'likely' necessary

Market Performance & Trends - The Dow, NASDAQ, and S&P 500 experienced mild losses, down approximately 03% to 04% [1] - The S&P 600 decreased by about 086%, rounding up to 09% [1] - Energy sector led with a gain of 13%, driven by a two-day crude oil rally [1] - Real estate declined by approximately 102% [1] - China markets showed strength, with Alibaba up 8%, reaching multi-year highs [1] Sector Analysis - Tesla stood out in the NASDAQ 100, increasing by about 4% [1] - Intel rose by 64%, and Marvell increased by 7% [1] - Lumentum Holdings (Lumentum Holdings Inc) decreased by approximately 685% within the semiconductor industry [1] Investment Strategy & Valuation - AI theme has driven market and technology sector growth, leading to high valuations that may predict weaker three-year returns [1] - High capital expenditures in AI may penalize companies, similar to historical trends in energy and telco sectors [1] - Healthcare and small-cap stocks present valuation opportunities, despite policy concerns and economic sensitivity respectively [1][2] Monetary Policy & Economic Outlook - The Federal Reserve's decision to cut rates by 025% was supported, with expectations of further adjustments to restore price stability and support the labor market [4] - Concerns exist regarding the strength of the job market, with potential for significant deterioration [4] - The market has often been ahead of the Fed regarding rate cuts, leading to recalibration without unraveling the market rally [2] Gold Market Analysis - Gold rallied to fresh all-time highs, topping $1900 per ounce [2] - Central banks have been significant buyers of gold over the last decade [2] - Gold benefits from a weaker dollar, lower government treasury yields, and acts as an inflation and Armageddon hedge [3] - Gold volatility (GVZ) is relatively quiet, but a rise alongside gold prices could trigger a bullish feedback loop [3] Automotive Industry - In Europe, 47% of buyers in 2025 would consider a vehicle from China, a flip from last year when 44% would consider an American automaker [10] - Geopolitics, trade wars, and the availability of cheaper Chinese EVs contribute to this shift [11][12] - Tariffs on goods sent to America may be eroding goodwill for American companies in Europe [14]