The market pulled back on profit-taking in technology stocks. The Philadelphia Semiconductor Index and the Nasdaq Composite were among the hardest hit. Investors are gradually coming down from the euphoria tied to the SpaceX IPO and the end of the Middle East conflict. Big Tech has borne the brunt of the selloff.

SpaceX's 50% rally over three days after its initial offering was the second-largest in history. The company's market capitalization closed at $2.66 trillion, surpassing Amazon. Intraday, it rose to $2.97 trillion, a figure greater than Microsoft's.

The hype around SpaceX supported US equity indices but is increasingly a source of concern. A majority—56%—of Bank of America respondents said they believe the stock market is in a bubble; 21% voted in favor of euphoria. Fear of missing out is fueling trading. Vanda Research reports retail investors put $225.2 billion into SpaceX shares in the first two days, about 75% of all net purchases by that investor category.

Large banks, however, maintain that the S&P 500 has not yet peaked. Wells Fargo raised its year-end target for the broad index to 7,950 from 7,300, implying roughly 5 percent upside from current levels. The bank cites easing macroeconomic concerns, improved sentiment, and reduced expectations for Fed tightening as the main drivers.

Impressive corporate results add to the case. In the first quarter, earnings per share for S&P 500 companies rose by roughly 30% year-on-year, materially above Wall Street analysts' forecasts of 12%. If second-quarter results are not weaker, the broad index could pleasantly surprise investors.

Sales in the technology sector are a natural part of market dynamics. The market is undergoing rotation and portfolio diversification. Traders are shifting attention to companies that suffered from the Middle East conflict. Its resolution could serve as a springboard for their recovery and for the S&P 500 as a whole.

The pullback in the broad index also reflects position closing ahead of the Federal Reserve meeting. Some market participants expect Kevin Warsh to adopt a dovish tone. Any hawkish surprise, however, will likely trigger equity selloffs.

Technically, the S&P 500 bounced from fair value near 7,580 on the daily chart. A retracement toward support around the 7,450 area — a combination of moving averages and pivot levels — followed by a rebound could form the basis for long positions in the broad index.