Semiconductor Stocks Flip Again, SK Hynix Loses 13%
Chip stocks are down once more after reversing course from the previous session, but energy and banking stocks are on the rise this week.
Quick overview
- Chip stocks, led by SK Hynix, fell sharply on Thursday, reversing the previous day's gains and contributing to a 0.5% loss in the Nasdaq.
- Investor concerns over the semiconductor market's longevity and high valuations led to broad declines in major chip stocks, including a 2.2% drop in the VanEck Semiconductor ETF.
- Despite the downturn in tech stocks, other sectors like energy and banks showed positive performance, buoyed by easing inflation and strong quarterly earnings.
- Analysts suggest that the Federal Reserve may hold off on aggressive rate hikes, allowing for a more favorable market environment.
Chip stocks fell broadly on Thursday in early trading, reversing the previous session’s trend as SK Hynix (SKHY) plummeted 13% during a volatile period for the sector.
South Korean chip stock SK Hynix led a broad decline in semiconductor futures on Thursday, turning over Wednesday’s upward trend and causing the Nasdaq to lose 0.5%. The S&P 500 also fell 0.1%, and the Dow gained 0.3% thanks to less focus on tech stocks and a good performance from UnitedHealth (UNH), which rose more than 7%.
SK Hynix just joined the U.S. stock market last week but is already experiencing severe decline. Mounting fear over the longevity of the semiconductor market and capex spending concerns are creating massive volatility for tech companies with ties to AI and semiconductors.
Broad Losses for Semiconductors; Cool Inflation Helps Other Sectors
SK Hynix was only one of many chip stocks to feel the impact of investor concerns on Thursday. VanEck Semiconductor ETF (SMH) slipped 2.2%, and Taiwan Semiconductor Manufacturing (TSM) lost 3.9% as investors worry about overly high valuations. Arm Holdings (ARM) fell 4% and Infineon Technologies (IFX) followed suit with a loss of 2.8%.
Broadcom (AVGO), one of the leaders in the chip sector, lost 2.15% in early market trading, while Nvidia (NVDA) fell 2.81% and then made a minor recovery. Many of these stocks performed badly at the closing of Wednesday’s session and started to make some small upward progress before the market opened on Thursday. We will have to wait and see if those gains are sustained once the market opens completely.
The back and forth that the chip futures have experienced this week has been offset by the relatively strong performance from other sectors. The U.S. stock market indices were mostly higher on Wednesday as the market continues to see positive influence from the most recent inflation reading. That data showed that inflation was not as high as expected in June, and, coupled with the recent better-than-expected jobless claims report, the economy is looking slightly stronger than it did a few weeks ago.
A number of banks reported their quarterly earnings this week, with most of them beating Wall Street analyst expectations and experiencing a stock boost as a result. Energy stocks are also performing well, as both Chevron (CVX) and ExxonMobil (XOM) are way up this week due to continued pressure on the gas and oil market from the Middle East conflict.
With inflation easing up and Treasury yields dropping, the environment is right for the Federal Reserve to hold off on aggressive rate hikes. Analysts believe that the Fed will change its plans for new hikes and instead allow rates to move sideways or to fall so that the market can have room to expand.
- Check out our free forex signals
- Follow the top economic events on FX Leaders economic calendar
- Trade better, discover more Forex Trading Strategies
- Open a FREE Trading Account
- Read our latest reviews on: Avatrade, Exness, HFM and XM
Related Articles
Sidebar rates
Related Posts
SaveAva
