Just one step away from technical adjustment! S&P 500 hit a new low in August last year, and the valuation premium of technology stocks has plummeted to freezing point, releasing a signal of a historic turning point.

On Monday, the US stock market opened high and then went lower, exacerbating the selling pressure. The major stock indexes recorded the longest weekly consecutive decline since 2022, as the market is concerned about the escalation of the Middle East conflict - more US troops have arrived in Iran, and the risk of conflict continues to escalate. The S&P 500 index rose 0.9% in the morning session, but fell 0.4% in the final hour of trading, closing at the lowest level since August last year, less than 1 percentage point away from a technical correction (a 10% drop from the high point). The Nasdaq 100 index, which entered a correction zone last Friday, fell by 0.8% on the same day. The White House threatened to further escalate strikes on Iran, targeting critical civilian energy facilities. Although President Trump claimed progress in negotiations, there is currently no sign of a ceasefire. He warned on social media that if the Strait of Hormuz is not reopened soon, he will destroy Iran's energy assets. Investors are also digesting Federal Reserve Chairman Powell's contradictory statements: on the one hand, he reiterated that the Fed will eventually achieve its 2% inflation target, while on the other hand, he admitted that the Fed is almost powerless in the face of supply shocks caused by the turmoil in the Middle East. As concerns about economic growth and bets on Fed rate hikes cooled, US Treasury prices rose; US oil prices closed above $100 per barrel for the first time since 2022. Energy stocks have risen for 14 consecutive weeks, setting a record for the longest continuous rise in history. However, Morgan Stanley strategist Mike Wilson believes that more and more signs suggest that the recent decline in the stock market over the past five weeks is "coming to an end," indicating that investors' pricing of growth risks is higher than the market's general expectations. Meanwhile, Goldman Sachs trading department pointed out that hedge funds are showing signs of surrender, and the operating momentum of systematic funds is weakening. The department predicts that commodity trading advisors (CTAs) will become buyers in any scenario in the next month. Currently, the S&P 500 is experiencing its worst monthly performance since 2022; the Nasdaq 100 has fallen by 12% from its historical high in October last year, officially breaking through the technical correction threshold last Friday. The current market drop is due to concerns that the Middle East conflict, which has raised oil prices, could stifle economic growth and reignite inflation. The weak performance of large technology stocks is sending a signal that often indicates a turning point in sector trends. The current expected price-to-earnings ratio of the Nasdaq 100 index is approximately 21 times (based on earnings expectations for the next 12 months), only 1.7 percentage points higher than the S&P 500 index. The last time the index's relative valuation premium over the broader market was so low, it outperformed the S&P 500 by a record margin over the following year. JPMorgan's strategy team emphasizes that the current situation is significantly different from 2022. At that time, the conflict between Russia and Ukraine and disruptions caused by the pandemic pushed inflation to a 40-year high; whereas now, policy rates are high, wage growth is slowing, and the development of artificial intelligence (AI) has increased the risk of deflation over stagflation. The strategy team led by Mislav Matejka wrote: "From the stock price perspective, although the market has not priced in an economic recession, it is far from universally complacent."