I believe U.S. markets are currently at one of their most sensitive stages since the rally led by technology and artificial intelligence stocks began over the past two years.
Although the Nasdaq 100 remains near historically elevated levels compared with previous years, the broader macroeconomic landscape has become increasingly complex due to the convergence of three major factors: the return of geopolitical risks, rising U.S. Treasury yields, and growing uncertainty surrounding the future path of inflation and U.S. monetary policy.
In my view, these factors combined will have a greater influence on the direction of U.S. equities during the second half of 2026 than any other variable.
Over recent days, major technology stocks have experienced a noticeable pullback, which has been clearly reflected in the performance of the Nasdaq 100 relative to other U.S. indices. In my opinion, this decline does not signal a fundamental weakness in the technology sector itself.
Rather, it represents a repricing of risk after a prolonged period of excessive optimism surrounding artificial intelligence. Investors have become increasingly sensitive to any rise in bond yields or shifts in interest rate expectations, particularly because the valuations of many technology companies are heavily dependent on long-term earnings projections. As real bond yields rise, pressure on these elevated valuations inevitably increases.
In my assessment, the most important factor at present is not corporate earnings or operational performance, but rather expectations regarding U.S. inflation. After months of believing that inflation was steadily moving lower, energy prices have once again emerged as a source of concern for markets. Although oil prices initially declined following diplomatic progress between the United States and Iran, the resurgence of geopolitical tensions and more hawkish rhetoric has rebuilt a significant portion of the geopolitical risk premium in energy markets. This development could hinder the anticipated decline in inflation over the coming months.
From my perspective, this week’s Core Personal Consumption Expenditures (PCE) Price Index carries significance far beyond that of a routine economic release. It represents the first real test for financial markets following the Federal Reserve’s more hawkish tone at its latest meeting. If the data reveal persistent or accelerating inflationary pressures, markets may be forced to reprice interest rate expectations once again, potentially driving Treasury yields even higher and increasing pressure on growth and technology stocks.
I also believe that the rise in the U.S. 10-year Treasury yield toward the 4.50% level sends an important message that should not be ignored. Markets are no longer treating inflation as a temporary issue; instead, investors are reassessing the likelihood of monetary policy remaining restrictive for a longer period. As yields climb, investors gain access to increasingly attractive alternatives to risk assets, often resulting in a shift of capital away from equities, particularly from high-valuation companies.
Despite these challenges, I do not believe that the long-term bullish trend in the Nasdaq 100 has come to an end. The artificial intelligence revolution remains a powerful structural growth driver, while major technology companies continue to benefit from strong balance sheets, substantial cash flows, and exceptional capacity for investment and expansion. However, I expect the next phase to differ from the previous rally, as markets become more selective and not all technology companies benefit equally from investment inflows as they did before.
In my view, institutional investors have already begun transitioning from indiscriminate AI-driven buying toward a more focused approach centered on companies that can genuinely convert technological momentum into sustainable earnings growth. Consequently, the current volatility may represent a healthy repricing process rather than the beginning of a prolonged bear market.
As for the current week, I believe markets will remain hostage to two key factors. The first is the outcome of discussions involving Iran and whether they lead to a lasting de-escalation capable of stabilizing energy prices. The second is the upcoming U.S. inflation data. If the Core PCE reading comes in above expectations while oil prices continue to rise, the Nasdaq 100 could face an additional corrective move in the short term. Conversely, if the data indicate a clear slowdown in underlying inflation, we could see renewed demand for technology stocks and a resumption of the broader uptrend.
Based on current conditions, I am inclined to view the Nasdaq 100 as undergoing a period of correction and valuation adjustment rather than a fundamental change in trend. Nevertheless, I expect volatility to remain elevated in the near term as investors continue to monitor the outlook for inflation and interest rates. Therefore, my base-case scenario is for choppy, range-bound trading in the short run, followed by a gradual resumption of the bullish trend if economic data begin to confirm easing inflationary pressures and greater stability in energy markets. Until then, U.S. equities—and the Nasdaq 100 in particular—will remain caught between the powerful forces of technological innovation on one side and the challenges posed by inflation and monetary policy on the other.
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