Tech sector leverage cut both ways

Key Facts & Events: Global hedge fund leverage has surged to multi-year highs, with JPMorgan estimating a potential $165 billion stock selloff by June's end, primarily in crowded tech trades. This was triggered by warnings from Goldman Sachs and JPMorgan. On June 5, FNGU, a tech ETF, shed 16%, turning a $10,000 position into $8,392. NVIDIA and Broadcom, key tech stocks, fell 6% and 19% respectively after an AI semiconductor deal miss.

Market Impact: The tech sector is experiencing a sharp correction due to high leverage and profit-taking. NVIDIA and Broadcom are among the affected companies. The sell-off is driven by changing Fed rate expectations and rebalancing pressures.

What to Watch Next: Tech stocks' performance will be closely watched in the coming weeks. Upcoming earnings from NVIDIA (June 15) and Broadcom (July 27) will provide insights into their growth prospects. Additionally, Fed policy updates, particularly the June 15 meeting, could influence tech stock sentiment.