US Stocks Face Correction Risk as AI Sector Shows Signs of Weakness

JPMorgan's technical strategist Jason Hunter has issued a warning that US stocks could face a correction in early September. According to Hunter, multiple bearish technical signals have accumulated beneath the surface of the market, despite the S&P 500 remaining in a bullish trend.

The index is currently stuck at its key resistance zone of 7,909-7,935 and is showing signs of stalling momentum. The widening divergence between AI hardware stocks and hyperscale cloud providers is also a concern, with the semiconductor complex facing renewed heavy selling pressure if it fails to break through after Labor Day.

Hunter recommends that investors maintain trailing stops on long positions for now, but warns that reducing equity exposure may be necessary if conditions persist into early September. Historically, August-October has been a seasonally weak period for US stocks, particularly in midterm election years.