S&P 500 Falls 0.26% as Chip Rally Fizzles, June 11

The S&P 500 fell 0.26% to 7,386.65 on Tuesday as a one-day chip rally lost steam. The Nasdaq Composite dropped 0.97% to 25,678.82, while the Dow Jones gained 0.17% to 50,872.11. Semiconductor stocks, which had rebounded 6% on Monday, reversed sharply as investors questioned whether AI-driven chip valuations had climbed too high. The shift signals growing caution in the market’s most dominant sector.

Chip Stocks Reverse After Brief Recovery

The iShares Semiconductor ETF (SMH) fell 1% on Tuesday, erasing Monday’s 6% gain. Micron Technology dropped 1% after a 10% comeback the day before, while Broadcom fell 1% as its rebound fizzled. The Philadelphia Semiconductor Index had plunged roughly 10% on Friday, its worst day since 2020, as cautious AI chip guidance from Broadcom triggered the initial selloff. The whipsaw action erased over $1 trillion in market value across the sector before dip-buying emerged.

Energy Gains Offset Tech Weakness

Oil prices fell 3.4% to $88.20 a barrel after U.S. Energy Secretary Chris Wright said Strait of Hormuz ship traffic is rising meaningfully. President Trump said a U.S.-Iran deal could be reached in two or three days. Materials and consumer discretionary stocks led the S&P 500, while information technology lost almost 2%. Real estate also gained on better-than-expected existing home sales data. The rotation away from secular growth stocks into cyclical names reflects investor caution about stretched valuations.

Meyka Grades Show Mixed Signals

NVDA holds a Meyka grade of A with a 12-month target of $244.00, 20% above the current $202.73 price. MU carries a B+ grade with a yearly target of $218.20, down 76% from its current $898.68 level. With Meyka rating the semiconductor sector mixed and analysts targeting modest upside on NVDA, the data points to near-term volatility but longer-term support for chip leaders. The RSI on both stocks shows oversold conditions, suggesting potential for a rebound.

AI IPO Fever Adds to Market Pressure

SpaceX is set to debut on Friday, June 12, raising $75 billion at a $1.8 trillion valuation. OpenAI and Anthropic have announced IPO plans, with combined capital raises expected to reach $200 billion. Supermicro Computer announced a $7 billion equity raise to fund $39 billion in AI server orders, while Alphabet recently upsized its capital raise to $84.75 billion. The flood of new equity issuance and mega-cap IPOs is pressuring existing tech valuations as investors weigh allocation decisions.

Final Thoughts

The S&P 500’s decline reflects profit-taking in semiconductors after a volatile week, not a fundamental breakdown in AI demand. Meyka’s A-grade on NVDA and B+ on MU suggest selective opportunities remain in chip leaders despite near-term weakness.

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