Wall Street Highlights: S&P 500, Nasdaq Erase Gains As Chipmakers Extend Losses To Third Day

Equities had climbed at the market open, with oil prices dropping as the US paused strikes against Iran and a Kazakh export terminal resumed loadings, easing supply pressures.

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The Nasdaq 100 Index shed 0.3% to close at its lowest level since early May, while the Philadelphia Semiconductor Index dropped 2.2%, finishing at its lowest since May 19 after falling as much as 5.1%.
(Photo: Bloomberg News)
The S&P 500 Index finished flat on Monday, erasing an early morning rally as chipmakers weakened, pushing the Philadelphia Semiconductor Index down for a third consecutive session.

The Nasdaq 100 Index shed 0.3% to close at its lowest level since early May, while the Philadelphia Semiconductor Index dropped 2.2%, finishing at its lowest since May 19 after falling as much as 5.1%. Chip stocks Sandisk Corp., Advanced Micro Devices Inc. and Nvidia Corp. were among the S&P 500's biggest decliners.

Equities had climbed at the market open, with oil prices dropping as the US paused strikes against Iran and a Kazakh export terminal resumed loadings, easing supply pressures. West Texas Intermediate fell around 8% to about $82 a barrel.

Traders' attention will be on a slew of earnings later this week, with more than 170 companies in the S&P 500 set to report. Artificial-intelligence spending is in sharp focus after last week's selloff in shares of Alphabet Inc. Meanwhile, Nvidia's fresh round of AI infrastructure deals put a spotlight on the circular financing supporting the sector.

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This will be a busy week, with "plenty of reasons to cut risk if anyone played a short term bounce last week," Natixis Advisors portfolio manager Jack Janasiewicz said. He cited the Federal Reserve's interest-rate decision due on Wednesday, upcoming mega-cap earnings, geopolitical developments and Nvidia's dealmaking.

Nvidia said on Monday that it has made a "substantial" investment in Safe Superintelligence Inc., the AI startup co-founded by former OpenAI chief scientist Ilya Sutskever. The company's said to have committed to investing $5 billion, marking one of its largest funding deals of the AI boom.

"We're not entirely new to this circular financing debacle," Jefferies equity trader Jeffrey Favuzza wrote. Even so, it's "very unclear how the market is going to take this."

Dutch chipmaker ASML Holding NV's shares also tumbled after a report that a Chinese state-backed company has started mass producing immersion deep ultraviolet, or DUV, lithography tools.

Monday's broad drop in semiconductor stocks "suggests we still have a ways to go in this AI correction," BTIG Chief Market Technician Jonathan Krinsky wrote in a note.

"We continue to see meaningful downside for the group," Krinsky said. The chance of the iShares Semiconductor ETF falling below its 200-day moving average - representing a more than 20% drop - is "fairly likely," he said, "but not one many tech investors are prepared for."

At the same time, rotation out of large-cap tech stocks is likely about three-quarters of the way through as "elevated" positioning has fallen sharply, according to Deutsche Bank strategists. Morgan Stanley also said that US stock investors are likely to shift into high-quality stocks as their focus turns to free cash flow generation and margin expansion.

In other news, traders have a new avenue for investing on as CME Group Inc. launched single-stock futures on Monday. The contracts on more than 50 of the biggest US companies offer leverage without the complexity of options and will be cash-settled on the closing price of the stocks they're tied to.

ALSO READ: Nvidia, AMD, SK Hynix, Micron Shares Plunge Up To 9% After China Cracks DUV Lithography

Sectors in Focus

  • Memory, after CXMT's debut in Shanghai and a WSJ report of Micron Technology Inc. warning the US against letting American companies buy Chinese chips.
  • Energy stocks, airlines and cruiselines, with oil prices slipping.
  • Quantum stocks outperformed as D-Wave Quantum Inc. jumped following the announcement of an expanded pact with AT&T Inc.
  • Restaurants rallied ahead of earnings this week and as oil slumped, and as the US Department of Agriculture will start a phased reopening of cattle imports from Mexico, easing a domestic shortage that's led to beef inflation.

(This story has not been edited by NDTV staff and is auto-generated from a syndicated feed.)

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