Key insights
- US equity indexes, particularly the Nasdaq and S&P 500, retreated as the tech sell-off resumed. Apple's stock declined significantly following its AI announcements, with investors seemingly unimpressed by the company's in-house AI model development. The semiconductor sector also gave back recent gains, with major players like Nvidia and Broadcom experiencing sharp drops. Anticipation of a large IPO from SpaceX later in the week may also be contributing to market jitters, potentially signaling a shift in investor focus away from established tech giants.
Monday's semiconductor rebound lasted exactly one trading session. The iShares Semiconductor ETF (SOXX 1.63%) was down by 8.6% at 12:44 p.m. ET, reflecting broad price drops in the chip sector. The same tech giants also weighed on the usual marketwide indexes. The Nasdaq Composite (^IXIC 0.97%) index was down 2.8% at the same point, ahead of a 1.6% drop for the S&P 500 (^GSPC 0.26%) and a 0.6% Dow Jones Industrial Average (^DJI +0.17%) retreat.
^IXIC data by YCharts
The session started promisingly enough. All three indexes (and the semiconductor ETF) opened higher and climbed until around 9:50 a.m. ET before the bottom fell out.
Apple (AAPL 3.65%) is a leading drag on all three indexes. The stock fell 3.8% after Apple unveiled an AI-oriented update of the Siri personal assistant app. Analysts liked the long-awaited AI announcement just fine, but many investors still sold the news. Notably, the company isn't leaning on well-known AI models such as Anthropic's Claude or OpenAI's ChatGPT. Instead, the company has developed a new high-performance AI model in partnership with Alphabet (GOOG +0.31%) (GOOGL +0.30%). It might be good, but nobody knows yet. As a result, Apple is on track for its worst day since February.
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The chip sector has given back most of Monday's gains. Sector heavyweights like Nvidia (NVDA 0.43%), Broadcom (AVGO 1.30%), and Micron Technology (MU 2.40%) didn't do anything wrong today, but they're all down sharply anyway. It looks like yesterday's chip-stock surge lacked conviction.
Part of the jitters may stem from what's coming later this week. SpaceX is set to go public Friday in what's expected to be the largest IPO ever, with a $1.75 trillion valuation at the official starting price of $135 per share. And that's just the start of a giga-cap IPO spree. OpenAI filed confidentially for its own IPO late Monday, and Anthropic has reportedly done the same.
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Oil prices, meanwhile, are taking a breather from their recent surge. WTI crude dropped 3.9% to $87.74 per barrel after Energy Secretary Chris Wright said Strait of Hormuz traffic is "rising very meaningfully." President Trump is once again promising an Iran deal within days, though similar statements in recent weeks have not produced results. The United States Oil Fund (USO 2.85%) is down 3.3%.
And it's another relatively quiet day on the Dow. Apple's significant price drop only removed 70 points from the index, matched by a similar-sized point increase from Home Depot (HD +3.71%). A 3.7% Home Depot jump would never move the needle for the S&P 500, and the home improvement retailer isn't trading on the Nasdaq. But on the Dow, its $310 share price makes it roughly equal to trillion-dollar titans Apple and Amazon (AMZN 0.38%).
If you're feeling whiplash, you're not alone. The S&P 500 has now fallen in three of the past four sessions after its nine-week winning streak ended Friday. Monday's relief rally turned out to be a head fake.
Trading volumes are fairly low today, making it look like Wall Street wants a break from the recent volatility. But the SpaceX IPO is coming soon anyway, so you may want to buckle your seat belt for a while.
For long-term investors, the lesson is familiar: this week's drama makes for good headlines, but it won't determine where stocks are in five years. Check back tomorrow, or next month, depending on how you feel about market volatility headlines.