On Thursday, the S&P 500 index was interrupted in its longest continuous rise since November by large technology stocks that have driven the index's year-long upward trend.

Inflation data triggered bets that the Fed would cut rates in September, leading investors to sell off the so-called 'Seven Giants' at a record high of over a year. Nvidia (NVDA) fell 5.57%, Meta Platform (META) fell more than 4%, Tesla (TSLA) fell 8.44%, while Apple (APPL), Microsoft (MSFT), Alphabet (GOOL.) and Amazon (AMZN) all fell more than 2%. Tesla's announcement of a delay in its robot taxi launch, a key event for many investors who had high hopes for Tesla shares, impacted these stocks.

The 'Seven Giants' had a total market cap evaporation of nearly $600 billion (about RMB 4.35 trillion), equivalent to the market cap of one JPMorgan (market cap $595.46 billion). This led to the top performers in the US stock market this year being knocked out, pushing the iShare MSCI USA Momentum Factor ETF (MTUM) to its worst performance since May.

This rotation brought some stunning changes to the US stock market. The S&P 500 index fell 0.9% in a single day, despite a rebound in nearly 400 constituent stocks. The S&P 500 equal weight index soared 1.2%, its biggest increase since November 2020. The small-cap Russell 2000 index (whose constituent companies often have lower credit ratings and higher borrowing needs) rose 3.6%, its best performance relative to the S&P 500 index since March 2020. The Bloomberg index, which tracks the 'Seven Giants', fell 4.2%, its biggest drop since October 2022.

The increase of the S&P 500 equal weight index relative to the S&P 500 index is the largest since 2020.

Alexander Morris, Chief Investment Officer of F/m Investments, said on the phone: 'People take this opportunity to declare that this is a good time to re-evaluate whether we should only allocate certain stocks. I don't see yesterday's situation as the formation of any trend, but it highlights the fact that the market is looking for something different, some different trades, not just long on the top seven tech companies or long on the general large tech companies.'

So far this year, the Nasdaq 100 index (NDX) has risen 23% and its market cap has grown by $6 trillion.

For months, investors have had few alternatives other than the few winners in the stock market, but if the Fed takes action to lower interest rates, they suddenly have many more choices.

Official data shows that inflation cooled broadly in June, with the core CPI annual rate falling to its slowest pace since 2021, sending the strongest signal yet that decision makers could cut interest rates soon.

Matt Orton, Chief Market Strategist at Raymond James Investment Management, said: 'This confirms my optimistic view of the economy's good momentum.' This is likely to shift the market's focus from earnings advantages to price advantages and push the stock market broadly higher.

Economic data pushed up Goldman Sachs' unprofitable tech stock index (which includes companies with typically heavy debt burdens) by 3.8%. Residential builders such as DR Horton Inc., PulteGroup Inc., and Lennar Corp. were among the companies with the biggest gains in the S&P 500 index on Thursday, with the industry index seeing its biggest increase since November 2022. Utility stocks in the S&P 500 index rose 1.8%, their biggest one-day increase since April.

On Friday, major banks such as JPMorgan will release their earnings reports, kicking off the second quarter earnings season and shifting investors' attention to another catalyst.