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

The S&P 500 fell 0.26% to close at 7,386.65 on June 9 as semiconductor stocks reversed early gains and investors rotated out of AI names. The Nasdaq Composite dropped 0.97% to 25,678.82. Oil prices fell 3-4% on hopes for a US-Iran deal, but failed to support the broad market. Meyka rates the index C+ with a 12-month target of $7,250.83, suggesting limited upside from current levels.

Chip Stocks Reverse After One-Day Rebound

Semiconductor stocks led the market decline after a brief recovery on Monday fizzled. The iShares Semiconductor ETF (SMH) fell 1% after gaining 6% the previous day. Micron Technology dropped 1% following a 10% jump on Monday, while Broadcom fell 1% as its rebound lost momentum.

The sector had suffered its worst day in six years on Friday, with SMH tumbling 10% as investors feared AI-driven chip valuations had risen too far, too fast. Micron fell 13% on Friday alone, part of a 20% two-day decline.

Oil Prices Fall on Iran Deal Hopes

West Texas Intermediate crude futures fell 3.4% to settle at $88.20 a barrel after President Trump said a US-Iran deal could be reached in two to three days. Energy Secretary Chris Wright said Strait of Hormuz ship traffic is rising meaningfully. Energy stocks on the S&P 500 fell 1.6%, though the drop in oil prices helped airlines facing soaring fuel costs.

Brent crude fell 4.4% to $90.13 after briefly topping $98. US airlines spent more than $6 billion on jet fuel in April, up 78% from a year earlier, according to government data.

Market Rotation Out of Tech Accelerates

Information technology lost almost 2% on the S&P 500 as investors rotated into cyclical stocks. Materials and consumer discretionary led the broad index, which also gained from better-than-expected existing home sales data. The Dow Jones Industrial Average gained 86.10 points, or 0.17%, to 50,872.11.

Analysts at Infrastructure Capital Advisors noted that investors are shifting from secular growth stocks into cyclical names like Home Depot that could benefit from a Strait of Hormuz reopening. June is typically a weak month for equities, and upcoming events like SpaceX’s IPO later this week are also pressuring markets.

Volatility Persists Amid Inflation Concerns

The Nasdaq opened higher but fell more than 3.6% before dip-buyers stepped in, ending the day down just 0.97%. The S&P 500 fell more than 2.2% intraday before recovering. Investors are waiting for Wednesday’s Consumer Price Index reading to gauge inflation and potential Federal Reserve rate decisions.

Meyka’s technical indicators show an RSI of 50.55 and an ADX of 27.98, signaling a strong downtrend. The index remains within 2.5% of its all-time high set one week ago, despite recent volatility.

Final Thoughts

The S&P 500 closed near flat on June 9 as chip stock selling offset oil price relief. With Meyka rating the index C+ and targeting $7,250.83 over 12 months, the data suggests consolidation ahead as investors reassess AI valuations.

FAQs

Disclaimer:

The content shared by Meyka AI PTY LTD is solely for research and informational purposes.  Meyka is not a financial advisory service, and the information provided should not be considered investment or trading advice.