The Dow Couldn’t Keep Up With Chip Stocks on Monday
Chip stocks led a Monday rally that lifted two of the three major indexes while leaving the third stuck near the flatline.
The Nasdaq Composite (^IXIC +1.20%) gained 1.3% by 12:48 p.m. ET. The S&P 500 (^GSPC +0.79%) rose 0.7% at the same time. The Dow Jones Industrial Average (^DJI +0.12%) slipped 0.1% after briefly touching an intraday record earlier in the session.
The iShares Semiconductor ETF (SOXX +3.19%) gained 4.1%, bouncing back from a two-week losing streak that had investors wondering if the chip trade was finally running out of steam.
A tale of two market structures
Broadcom (AVGO +4.14%) kicked off the tech rally with a 4.4% gain after announcing that its chip supply deal with Apple (AAPL +1.49%) will extend through 2031. That’s five more years of custom silicon revenue locked in, covering multiple generations of iPhones and whatever else Apple dreams up. The stock added $78 billion in market capitalization.
Advanced Micro Devices (AMD +7.15%) joined in with an 8% surge. Japanese autonomous driving start-up Turing said it’s now using AMD graphics processors for about 10% of its AI training needs. This notice reminded Wall Street of AMD as the budget-friendly alternative in self-driving tech. AI hardware leader Nvidia (NVDA +0.86%) didn’t seem bothered, rising 1.8% anyway.
Tesla (TSLA +5.95%) quietly jumped 5.8% and added $91 billion in market value to become the Nasdaq Composite’s single largest contributor. No major news; sometimes stocks just decide to go up on a bullish day.
Image source: Getty Images.
The Dow lagged, but not for a lack of winners. Goldman Sachs (GS +2.78%) rose 2.9% and IBM (IBM +3.22%) gained 3.4%. But the Dow is price-weighted, so Honeywell International‘s (HON 1.37%) 7.2% post-spinoff slide subtracted 104 points all by itself. Amgen (AMGN 1.94%) chipped in another 58-point drag with a 2.6% decline. The blue chips that went up couldn’t quite balance out the ones that went down.
Microsoft (MSFT 1.09%) fell 1.4% after announcing 4,800 job cuts and a smaller Xbox gaming division. Analysts suggested the layoffs signal Microsoft is choosing AI infrastructure spending over headcount, and investors weren’t sure that it’s the right trade-off.
Over in the Strait of Hormuz, shipping traffic picked up to 25 daily transits from just 5 last Thursday. That’s progress, though 350 vessels still sit in the queue waiting for calmer waters. Oil prices drifted lower anyway, apparently satisfied with the diplomatic direction.
Today’s Change
(1.20%) $310.17
Current Price
$26142.84
Key Data Points
Day’s Range
$25963.44 – $26209.76
52wk Range
$20412.52 – $27093.90
What’s next
Fed Chair Kevin Warsh’s June meeting minutes will drop on Wednesday, and traders are sure to parse every word for hints about rate policy. Last week’s soft jobs report has already pushed the odds for a July rate hike down from 30% to 23%.
Earnings season arrives later this week with Delta Air Lines (DAL 1.08%) and PepsiCo (PEP 0.72%). Korean memory chipmaker SK Hynix is joining the Nasdaq by the end of this week, adding yet another chip stock to an exchange that clearly can’t get enough of them.
Anders Bylund has positions in International Business Machines and Nvidia. The Motley Fool has positions in and recommends Advanced Micro Devices, Amgen, Apple, Broadcom, Goldman Sachs Group, Honeywell Technologies, International Business Machines, Microsoft, Nvidia, Tesla, and iShares Trust-iShares Semiconductor ETF. The Motley Fool recommends Delta Air Lines. The Motley Fool has a disclosure policy.
