US markets closed mixed on Monday as Big Tech weakness and rising Treasury yields overwhelmed optimism from US-Iran peace talks. The Dow eked out a modest gain, but the Nasdaq Composite fell 1.3% — its worst session in over a week — after Alphabet suffered its steepest single-day decline since February. Meanwhile, the Russell 2000 quietly crossed the 3,000 threshold for the first time in history, a milestone that went largely unnoticed amid the megacap turmoil.
The session told a story of rotation in real time: money flowed out of AI hyperscalers and into memory chipmakers, banks, and small caps. Investors are selling the companies spending billions on AI compute and buying the companies collecting the checks.
Index Performance
Rates, Dollar, Commodities
The 10-year Treasury yield climbed to 4.50%, its highest level in roughly two weeks, while the policy-sensitive 2-year yield pushed above 4.20% — the highest since February 2025. Bond markets continue to digest last week’s hawkish FOMC under Chair Kevin Warsh, where the median dot shifted to 3.8% from 3.4%, signaling at least one rate hike before year-end. CME FedWatch now prices a roughly 50% probability of a September hike, with Deutsche Bank and BofA both revising their forecasts to include one.
WTI crude hovered near $73, extending its decline on hopes that renewed Iranian supply will ease the global energy crunch. Gold traded around $4,138. The VIX ticked up to 17.28.
Alphabet’s AI Talent Exodus
The day’s most consequential story had nothing to do with earnings or economic data. Alphabet plunged approximately 5%, erasing some $269 billion in market capitalization, after losing two of its most prominent AI researchers to rivals within the span of a single week.
Noam Shazeer, VP of Engineering and co-lead of the Gemini AI models, departed for OpenAI on June 18. Shazeer co-authored the landmark 2017 “Attention is All You Need” paper that birthed the Transformer architecture — and Google had paid $2.7 billion just two years ago to bring him back through the Character.AI acquihire. Less than two years into that arrangement, he walked across the street to Sam Altman’s shop.
Then, over the weekend, John Jumper — a Nobel Prize-winning DeepMind researcher who led AlphaFold, one of the most celebrated scientific achievements in AI history — announced he was leaving to join Anthropic after nearly nine years at the lab. “After nearly 9 years, I have decided to leave Google DeepMind and join Anthropic,” he posted on X.
The double departure struck a nerve. D.A. Davidson’s Gil Luria noted that “the race at the frontier right now appears between Anthropic and OpenAI,” and that investors were actively rotating out of companies spending on AI compute and into companies like Micron that are monetizing the infrastructure buildout. The sell-off was entirely company-specific — the broader Technology Select Sector SPDR (XLK) actually finished the day in the green.
SpaceX’s Post-IPO Reckoning
SpaceX (SPCX) dropped 16.4% on Monday, marking its third consecutive day of decline and erasing approximately $600 billion in cumulative market value since its all-time high. The catalyst was the company’s announcement of a $20 billion investment-grade bond offering — its first-ever debt issuance — to fund AI ambitions under Elon Musk’s expanding empire. CNBC’s Jim Cramer was blunt about the read-through: “SpaceX could not maintain its meme status.”
Despite the brutal three-day drawdown, the stock remains roughly 40% above its IPO price from just ten days ago. The question now is whether the pullback represents healthy profit-taking after a euphoric debut, or the beginning of a more sustained repricing as valuation hawks sharpen their pencils.
Micron Surges on Anthropic Partnership
On the other side of the AI trade, Micron Technology (MU) rallied 7% to fresh highs after announcing a sweeping strategic agreement with Anthropic. The deal spans memory and storage architecture co-design, a multi-year supply agreement, enterprise deployment of Anthropic’s Claude models across Micron’s operations, and a strategic investment in Anthropic’s Series H funding round — the same round that valued the AI lab at $965 billion.
Micron’s CBO Sumit Sadana framed the deal as a reflection of memory’s elevated role in the AI era, while Anthropic co-founder and chief compute officer Tom Brown emphasized that “memory and storage are central to how efficiently we can train and serve Claude.” With Micron’s earnings due Wednesday, the partnership announcement served as a well-timed catalyst — and a clear signal that the “picks and shovels” trade in AI infrastructure is far from over.
Iran Sanctions Waiver: 60 Days on the Clock
On the geopolitical front, the US Treasury issued a 60-day sanctions waiver allowing Iran to produce, deliver, and sell oil on international markets through August 21 — the most significant easing of Iranian oil restrictions in years. The license follows the memorandum of understanding signed on June 17 between Washington and Tehran, which established a structured 60-day window for negotiating a final agreement.
Vice President JD Vance, who led the US delegation at the Lake Lucerne Summit in Burgenstock, Switzerland, described Sunday’s talks as a “very, very good” day, adding that the two sides had “laid a successful foundation.” Vance also claimed Iran had agreed to admit IAEA nuclear inspectors — a statement Tehran later pushed back on. Treasury Secretary Scott Bessent confirmed the linkage: Iran committed to free transit through the Strait of Hormuz and IAEA access in exchange for the temporary sanctions relief.
The waiver could unlock an estimated $8 billion in revenue for Tehran over two months and represents a potential inflection point for global oil supply. Shipping traffic through the Strait of Hormuz showed early signs of recovery on Monday, with several supertankers and Qatari LNG carriers transiting the waterway for the first time in weeks.
The Week Ahead: PCE Takes Center Stage
With the hawkish FOMC still reverberating through markets, all eyes turn to Thursday’s May Personal Consumption Expenditures (PCE) price index — the Fed’s preferred inflation gauge. Last week’s meeting raised the stakes considerably: nine of nineteen policymakers now project at least one rate hike before year-end, and both Deutsche Bank and BofA have penciled in a September move. A hot PCE print could accelerate that timeline; a soft one might offer temporary relief.
Other key events this week include FedEx earnings on Tuesday, Micron earnings on Wednesday, the third estimate of Q1 GDP on Thursday, and the University of Michigan’s revised June consumer sentiment report on Friday. A $69 billion 2-year Treasury auction on Tuesday will also test demand at these elevated yield levels.
Bottom Line
Monday’s session captured the defining tension of this market: the AI trade is no longer a monolith. Investors are making sharper distinctions between the companies building frontier models, the companies spending billions to compete with them, and the infrastructure providers quietly collecting revenue from all sides. Alphabet’s $269 billion single-day wipeout on a talent story — not a revenue miss — is the starkest illustration yet that in the age of AI, human capital is being priced like financial capital.
Meanwhile, the Russell 2000’s quiet crossing of 3,000 suggests the broadening trade hasn’t died — it’s just been overshadowed by megacap fireworks. With PCE on deck and rate hike expectations crystallizing, this week will test whether the market can hold its breadth as the policy backdrop tightens.
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