Weekly Market Recap – Week Ending June 05, 2026
U.S. equity markets moved lower this week, with weakness concentrated in growth and technology-linked areas. The NASDAQ 100 ETF (QQQM) declined 5.06%, while the S&P 500 ETF (SPYM) fell 2.78%, pressured by sharp losses in Technology (XLK), Communication Services (XLC), and Consumer Discretionary (XLY). Defensive and rate-sensitive sectors provided some offset, with Health Care (XLV), Real Estate (XLRE), Utilities (XLU), Consumer Staples (XLP), Financials (XLF), and Industrials (XLI) posting gains. Despite the broader pullback, select stocks continued to show strong 30-day momentum, led by Lenovo Group (LNVGY), Arm Holdings (ARM), Dell Technologies (DELL), Hewlett Packard Enterprise (HPE), Marvell Technology (MRVL), and Murata Manufacturing (MRAAY), highlighting continued strength in AI, semiconductor, and infrastructure-related names.
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Strategy Note:
Last week, we noted “History has not been kind to the SPDR S&P 500 ETF Trust (SPY) when it comes to the performance of the month of June in midterm election years.” Friday’s dramatic drop in the major averages augurs for another June decline in absolute terms. In fact, June in midterm years has suffered price changes so consistently below-average that a riff on the old “Sell in May…” proverb has gained popularity. “Sell in June and avoid the swoon. Just remember to be back by November!”
A number of notable pundits have opined that Friday’s anti-AI-Bubble market downturn is a sign of more to follow. In addition to talk of the AI bubble and talk of pronounced pessimism regarding the Iran conflict, a popular theory about Friday’s market meltdown was that technology investors were trimming positions in the largest Nasdaq-100 tech stocks to make room to purchase shares of the upcoming SpaceX Initial Purchase Offering (IPO). Time will tell whether this was a short-term downturn to be reversed once SpaceX (SPCX) starts actually trading and/or is added to the Nasdaq-100 fifteen days after trading commences. The latter possibility seems remote given that the initial weighting for SPCX in the Nasdaq-100 index is estimated to be relatively small, somewhere between 0.47% and 0.70%.
In view of all this, it seemed a good time to assess whether it is time to lighten, strengthen or merely hold investors’ QQQ positions. From a ValuEngine quantitative lens, the answer is that investors, especially active traders, should continue to accumulate QQQ shares or buy more when technicals are more positive given the recent dip. Our forecast model has QQQ rated 5 (strong buy), putting it among the top tier of ETFs we rate. Despite the fact that QQQ lost more than 4% last week, it is still up almost 15% for the year. Our forecast models likes its chances to continue outperforming the Invesco equally weighted S&P 500 ETF RSP and similar indices where tech stocks are not weighted by market cap. Of the top 10 holdings of QQQ, our forecast model gives 6 stocks our top rating of 5 (Strong Buy). These names include: Nvidia (NVDA); both major Alphabet share classes (GOOGL and GOOG); Broadcom (AVGO); Micron Tech. (MU); and Advanced Micro Devices (AMD). Apple (AAPL) and Amazon (AMZN) are rated 4 (Buy). Only Microsoft (MSFT) and Tesla (TSLA) are rated 3 (Hold). There are 5 QQQ holdings we rate as both a buy (4 or 5) and are also rated undervalued by our valuation model. They are: Broadcom Inc., (AVGO); Nvidia (NVDA); Palantir (PLTR); Lumentum Holdings (LITE); and SanDisk (SNDK). Several of these stocks are currently in the VE View aggressive portfolio traded by ValuEngine Capital Management (www.ValuEngineCapital.com).
Overall, the message to most investors remain to stay the course. On one hand, historical temporal factors related to June, August and September in midterm months, and macroeconomic consensus forecasts for the next three months are quite daunting. On the other hand our forecast model says full speed ahead. Investors concerned with an overvalued NASDAQ that regularly contribute monthly to 401K or similar accounts may wish to pause those contributions until October.
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