Chipmakers Sink as Wall Street Rotation Powers On: Markets Wrap
(Bloomberg) — A rotation that has seen Wall Street investors bail from high-profile chipmakers in favor of more economically sensitive industries picked up speed, driving the Nasdaq 100 close to a technical correction.
A gauge of semiconductor giants sank 5% on concerns about the sustainability of the artificial-intelligence boom. While the decline left the S&P 500 wavering, most shares rose amid strong earnings. Its equal-weighted version — which strips out market-value biases — hit record highs. A drop in oil prices drove bond yields lower ahead of the Federal Reserve rate decision.
The selloff in chipmakers deepened concerns grew over whether the hundreds of billions of dollars being poured into AI will justify lofty valuations. The slump underscores how quickly sentiment has turned on one of the market’s most-crowded trades, putting the group on track for its worst month since 2001.
“We maintain a constructive outlook on semis amid robust AI demand, but we believe the recent divergence in sector performance is in line with our view that there are more ways to participate in potential market gains than through a narrow set of AI-linked stocks,” said Ulrike Hoffmann-Burchardi at UBS Chief Investment Office.
Losses in chip powerhouses also make for a tough setup heading into earnings from a slew of megacaps. Microsoft Corp. and Meta Platforms Inc. are set to report results Wednesday, followed by Apple Inc. and Amazon.com Inc.’s figures on Thursday.
“Our sense is that although these companies offer outsized growth at reasonable valuations, investor worries over capex need to abate before these stocks are rewarded for their quarterly results,” said Chris Senyek at Wolfe Research.
Meantime, traders kept piling into a broader category of companies tuned to improving growth prospects. Strong profit growth and undemanding valuations are among the reasons keeping risk assets resilient to a more challenging inflation backdrop, according to HSBC Holdings Plc strategists led by Max Kettner.
“There is good reason for the strength in risk assets,” they wrote, citing a solid start to second-quarter earnings, a rebound in US economic forecasts, lower equity valuations and other positive catalysts.
Elsewhere, Treasuries rose for a third straight day, buoyed by a sharp retreat in oil prices as tensions in the Middle East eased.
“The oil impact of the conflict on headline energy inflation is straightforward and supports the view that the consumer price index may have peaked in May if oil prices do not break to new highs,” said Angelo Kourkafas at Edward Jones. “The soft consumer and producer inflation readings in June buy the Fed some time to assess how energy disruptions and inflation evolve over the summer.”
Corporate Highlights:
Meta Platforms Inc. and BlackRock Inc. plan to build a 1-gigawatt data center complex in Texas that will cost about $14 billion to develop, adding to a wave of investment in the computing hubs that power AI. Boeing Co. generated better-than-expected cash flow in the second quarter on continued strong demand for its aircraft, extending the US manufacturer’s turnaround efforts after years of crises. Coca-Cola Co. raised its full-year outlook, bolstered by demand last quarter while it served as a major sponsor of the FIFA World Cup. United Parcel Service Inc. warned of lower delivery volume after a pullback in its relationship with e-commerce giant Amazon.com Inc., pressuring the courier’s shares despite an increase in its full-year financial outlook. Visa Inc. is eliminating about 2,600 jobs as Chief Executive Officer Ryan McInerney seeks to make the firm more efficient as it competes in an increasingly tough payments industry. Some of the main moves in markets:
Stocks
The S&P 500 was little changed as of 11:15 a.m. New York time The Nasdaq 100 fell 1.4% The Dow Jones Industrial Average rose 0.7% The Stoxx Europe 600 rose 0.1% The MSCI World Index fell 0.2% Currencies
The Bloomberg Dollar Spot Index was little changed The euro rose 0.2% to $1.1388 The British pound was little changed at $1.3295 The Japanese yen was little changed at 163.81 per dollar Cryptocurrencies
Bitcoin fell 2.5% to $63,294.8 Ether fell 3.1% to $1,885.08 Bonds
The yield on 10-year Treasuries declined four basis points to 4.61% Germany’s 10-year yield declined one basis point to 3.12% Britain’s 10-year yield declined three basis points to 4.96% Commodities
West Texas Intermediate crude fell 1.6% to $81.25 a barrel Spot gold fell 1.2% to $4,028.12 an ounce ©2026 Bloomberg L.P.
