Tech set to still sway US stock market's course despite AI-driven swoon

Even as AI stocks experienced a significant decline, the US stock market is expected to continue being driven by technology shares. Following a month-long slump, the S&P 500 technology sector witnessed its steepest single-day drop in nearly six years. Investors are wary of potential obstacles, such as the possibility of Democratic victories in the upcoming midterm elections, which could lead to reduced data-center spending.

Despite the recent drop, technology still accounts for more than 35% of the S&P 500's weight, according to Robert Pavlik, a senior portfolio manager at Dakota Wealth Management. The tech sector's disproportionate influence on the market, combined with its sensitivity to AI, makes its weakness likely to impact the broader S&P 500.

The sector's weight in the index remains higher than it was during the peak of the internet bubble in the early 2000s.