Nasdaq Index and S&P500: Chip Selloff Drives Stock Market Lower as Tech Stocks Face Pressure
SK Hynix begins trading on the Nasdaq later this week. That listing is the next test of whether money is willing to come back into chip stocks at current prices or whether the rotation has further to run.
Buyers Moved Into Healthcare and Staples
The money leaving chips is not leaving equities. Healthcare and consumer staples led the session. Eli Lilly rose about 3%. Walmart advanced after announcing price cuts on products including ground beef and Coca-Cola. JPMorgan Chase and Microsoft also picked up buyers.
The rotation has been building for sessions and Tuesday’s semiconductor selloff gave it more fuel. Financials attracted money alongside healthcare and staples. The trade is not about getting out of the market. It is about lowering exposure to the sector where the valuation risk is highest and moving into names where the earnings bar is easier to clear.
Stocks in the News
Fiserv climbed 3.5% after reports the payments company held discussions with JPMorgan Chase, Bank of America and other large U.S. banks about selling its debit card payments infrastructure business.
SpaceX gave back 4.5% in its first session as a Nasdaq-100 component despite several bullish analyst initiations after the quiet period expired.
Rivian tumbled 13.3% after announcing plans to sell 75 million shares, overshadowing guidance that projected second-quarter revenue above estimates.
Brent crude traded above $73 and West Texas Intermediate pushed above $70 after reports of attacks on vessels near the Strait of Hormuz.
What to Watch
The chip selloff is running the market and earnings season is about to test whether it accelerates or stalls. Samsung’s blowout quarter got sold. SK Hynix lists on the Nasdaq this week. Every semiconductor report from here walks into expectations that Q1 set too low and Q2 hype raised too high. The rotation into healthcare, staples and financials keeps building as long as chip stocks give money a reason to leave. The Dow posted a record high and reversed in the same session, which tells you even the broadest index cannot hold gains while tech is getting repriced.
Wednesday’s release of the June FOMC minutes gives traders their first detailed read on how Chair Kevin Warsh is approaching monetary policy. The Nasdaq is pressing the 50-day moving average and the S&P 500 is sitting on a retracement zone above its own 50-day. If the chip selling carries into Wednesday, those levels determine whether this stays a sector rotation or turns into something the rest of the market has to deal with.
More Information in our Economic Calendar.
