STOCKS | U.S. Stock Rally Weakens as AI Trades Unwind and Hedging Demand Rises

Analysts said the stock market's upward momentum is fading while upbeat earnings expectations are under close watch, two signs they said point to a volatile summer. According to Odaily, investor concerns are mounting, overall bullish sentiment is being challenged, and market volatility is gradually rising. Unwinding in artificial intelligence-related trades is driving sharp market rotation, while demand for hedges is increasing quickly. The Nations SkewDex index, which measures the S&P 500's potential tail risk, has risen to its highest level since April, which analysts said could push other volatility gauges higher. Although the VIX remains below 20 and far from a worrying level, sharp moves in individual stocks are obscuring the broader trend. Price swings have intensified in core AI stocks tied to momentum trading, and unlike the first half of the year, the narrative of rising shares and higher volatility no longer appears to apply. Instead, stocks are falling sharply while volatility continues to climb.