"We're seeing a clear shift in sentiment," said one market strategist as chip stocks plunged sharply despite the broader market staying stable. S&P 500 futures hovered with little movement, but semiconductor shares fell hard, marking a painful pause after months of relentless gains powered by AI enthusiasm.
Intel and Micron led the selloff, with some memory-chip names like SanDisk dropping more than 12%. This came as a surprise given Taiwan Semiconductor Manufacturing's recent report showing a 77% jump in yearly profits. Still, the Philadelphia Semiconductor Index and ETFs such as VanEck Semiconductor ETF (SMH) erased nearly $1 trillion in market value, wiping out a large chunk of this year's gains, which had been a solid 70% increase.
The broader indexes reflected these jitters earlier, with the S&P 500 down half a percent and the Nasdaq slipping over 1.4%. Investors are bracing for the Federal Reserve's upcoming meeting, widely expected to deliver a 25 basis-point rate hike. These moves are happening just as major tech players Microsoft, Meta, Amazon, and Apple prepare to release earnings, which could reshape market dynamics.
The semiconductor downturn also reminds traders of the volatility buried beneath the tech rally, especially as some firms plan aggressive expansions, like TSMC's $265 billion U.S. investment, underlining the sector's high stakes and sensitivity to economic shifts.
This content is for informational purposes only and does not constitute financial advice.
