Are the bears gathering?

June selloff may be more narrative-filling than signal

The past few weeks have been filled with quiet murmurs that the stock market’s rise had gone “too far, too fast.” A key narrative has been that the advance wasn’t grounded in reality, and the market had lost touch with fundamentals. Never mind that what many had dismissed as an irrational bubble around artificial intelligence (AI) may be something much larger. I see it as a structural shift toward agentic AI, continuous compute, and the infrastructure required to support perpetual, system-wide usage rather than sporadic chatbot interactions. The markets have spent much of 2026 appearing to try to catch up to that view.¹

The selloff of June 5 gave the perma-bears their moment. The S&P 500 fell 2.64%, the Nasdaq by 4.18%.² The question now is whether this is the beginning of the prolonged downturn that many have been predicting. I remain skeptical.

What’s striking is the set of explanations being offered for the decline. Each one, when examined closely, feels more like narrative-filling than signal to me.

1. Broadcom’s revenue “miss”

Some argue that Broadcom’s results mark the beginning of AI companies failing to meet expectations. But Broadcom’s AI semiconductor revenue grew 143% year‑over‑year, and its Q3 revenue guidance is 84% higher than last year.³ These are extraordinary numbers by any historical standard. Sometimes the bar is simply too high to clear every quarter. To suggest this is the end of the structural AI build‑out feels like a stretch.

2. Investors selling stocks to buy SpaceX

Another theory is that investors were raising cash for the SpaceX listing. But SpaceX’s float is roughly 0.8% of the nearly $70 trillion U.S. stock market,⁴ – a relative rounding error. It won’t be added to the S&P 500 immediately, and the float is tiny compared to the nearly $8 trillion sitting in U.S. money market funds.⁵ If investors want liquidity, it seems unlikely that they need to sell the Magnificent 7 to do it.⁶

3. Strong jobs numbers and fears of Fed hikes

The payroll gain of 172,000⁷ has been framed as evidence of an overheating economy. Yet it’s well below the 304,000 average monthly gain of the past decade.⁸ And since 2003, payroll numbers have been revised by an average of 57,000 in either direction.⁹ Meanwhile, oil prices fell on Friday¹⁰ and the 3-year inflation breakeven declined to 2.53%,¹¹ which, to me, isn’t the profile of an economy running too hot. Where I come from, that looks more like price stability. It will take far more than one payroll print to convince me the Federal Reserve (Fed) is preparing to raise rates.

The upshot

The market has had a strong run.¹² When volatility hits, we reach for narratives to explain it. The Fed is always a reasonable one to me, and I do maintain that rate hikes will ultimately end this cycle. I just don’t see it happening now. The more plausible explanation may be simpler: The bar for tech, especially AI-linked tech, has risen dramatically. When expectations soar, even great results can disappoint.

All is not lost. If oil prices¹³ and inflation expectations¹⁴ have indeed peaked, the market has the potential to broaden out again. Recent volatility is unlikely a sign of structural weakness. To me, it’s the price of admission for participating in a market that had enjoyed a strong advance.

Brian Levitt is Chief Global Market Strategist and Head of Strategy & Insights at Invesco.

Notes

1. Source: Bloomberg L.P., June 4, based on the year-to-date return of S&P 500 Index Industry Groups Semiconductor and Semiconductor Equipment (+45.15%) and Technology Hardware and Equipment (+32.24%).
2. Source: Bloomberg L.P., June 5, 2026, based on the one-day return of the S&P 500 Index and the Nasdaq 100 Composite Index.
3. Source: Bloomberg L.P., June 5, 2026
4. Source: Bloomberg L.P., June 5, 2026
5. Source: Investment Company Institute, June 5, 2026
6. The Magnificent 7 is Alphabet, Amazon, Apple, Microsoft, Meta, Nvidia, and Tesla.
7. Source: US Bureau of Labor Statistics, May 31, 2026, based on the monthly change in US nonfarm payrolls.
8. Source: US Bureau of Labor Statistics, May 31, 2026
9. Source: US Bureau of Labor Statistics, May 31, 2026
10. Source: Bloomberg, L.P., June 5, 2026, based on US West Texas Intermediate Crude Sweet oil.
11. Source: Bloomberg L.P., May 27, based on the 3-year US Treasury inflation breakeven. A breakeven inflation rate is a market-derived estimate of future inflation, calculated by comparing the yield on a standard government bond (nominal) to the yield on a Treasury Inflation-Protected Security (TIPS) of the same maturity.
12. Source: Bloomberg, L.P., June 5, 2026, based on the year-to-date return of the S&P 500 Index (+7.86).
13. Source: Bloomberg, L.P., June 5, 2026, based on US West Texas Intermediate Crude Sweet oil.
14. Source: Bloomberg L.P., May 27, based on the 3-year US Treasury inflation breakeven. A breakeven inflation rate is a market-derived estimate of future inflation, calculated by comparing the yield on a standard government bond (nominal) to the yield on a Treasury Inflation-Protected Security (TIPS) of the same maturity.

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