S&P 500 Falls 0.26% as Chip Rally Fizzles, June 10

The S&P 500 fell 0.26% to 7,386.65 on Tuesday as a one-day rebound in semiconductor stocks collapsed. The Nasdaq Composite dropped 0.97% to 25,678.82. Investors pulled back from AI-related shares after last week’s 2.6% plunge, the worst day since October. Oil prices fell 3.4% to $88.20 a barrel on hopes for a Middle East ceasefire.

Chip Stocks Reverse Course After Brief Rally

Semiconductor stocks erased Monday’s gains on Tuesday. The iShares Semiconductor ETF (SMH) shed 1% after rebounding 6% the day before. Micron Technology dropped 1% following a 9.9% jump Monday. The stock had plunged 13.3% on Friday, the largest single-day loss in the S&P 500.

Broadcom fell 1% as the brief rebound fizzled. Both companies had suffered steep two-day drops the prior week. Investors feared AI-driven chip valuations had climbed too far, too fast, triggering profit-taking across the sector.

Market Rotation Favors Cyclical Stocks

Materials and consumer discretionary stocks led the S&P 500 on Tuesday. Real estate gained after better-than-expected data on existing home sales. Information technology lost almost 2% as investors rotated away from secular growth names into cyclical plays like Home Depot that could benefit from reopening the Strait of Hormuz.

Energy stocks fell 1.6% despite lower oil prices. The Dow Jones Industrial Average gained 86.10 points, or 0.17%, to 50,872.11, outperforming the broader market.

Oil Prices Fall on Ceasefire Hopes

West Texas Intermediate crude futures lost 3.4% to settle at $88.20 a barrel after U.S. Energy Secretary Chris Wright said Strait of Hormuz ship traffic is rising meaningfully. President Trump said a deal between the U.S. and Iran could be reached in two or three days that reopens the strait immediately.

The drop in oil prices provided some market support. However, the chip stock rebound failed to sustain gains as investors remained concerned about AI stock valuations.

Meyka Rating Signals Caution Ahead

Meyka rates the S&P 500 a C+ with a HOLD suggestion. The 12-month price target sits at $7,250.83, about 1.8% below the current level. The RSI stands at 50.55, indicating neutral momentum. The ADX of 27.98 shows a strong trend, while the MACD histogram of -29.51 suggests downward momentum. With nearly three out of four stocks in the S&P 500 rising despite the index decline, the data points to ongoing sector rotation rather than broad-based weakness.

Final Thoughts

The S&P 500 fell 0.26% as semiconductor stocks reversed gains and investors rotated into cyclical names. Meyka’s C+ rating and $7,250.83 target suggest limited upside. Watch Wednesday’s CPI data for clues on Fed rate decisions.

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