AI is losing its stranglehold on the U.S. stock market. Here's why

A key tech-stock volatility metric options traders have been watching all year is reversing, sending a sign to investors that the U.S. bond market may now be usurping AI optimism as the primary driver of the stock market.The spread between the volatility of big tech names and the rest of the stock market – measured most frequently by the difference between the Cboe's VIXEQ and VIX indexes – blew out to record highs this summer as tech giants behind the AI boom regularly moved hundreds of billions of dollars of market cap per day while the rest of the market stayed stagnant. Now the trend is reversing, with traders selling broad chunks of index-wide equity exposure as VIX jumps to the highest since April relative to VIXEQ.Paired with an accelerating sell-off in U.S. Treasury bonds and the 10-year yield approaching a three-year high of 5 percent, it's a sign that investors are likely shifting their focus to macroeconomics and policy as the primary catalysts for the market's direction.Stock Chart IconStock chart iconU.S. 10-year Treasury, YTD"Throughout the summer single-name implied volatility raced ahead of S&P 500 implied volatility as traders discounted macro issues and focuse...