Dow Jones Joins S&P 500 and Nasdaq in Exiting Correction
The Dow Jones Industrial Average has finally exited correction territory, joining the Nasdaq Composite and S&P 500. However, it fell just short of a major milestone on the day. The Dow rose 612 points, or 1.2%, after briefly crossing the symbolic 50,000 level. The S&P 500 ended up 1.5%, while the Nasdaq jumped 2%.
Stocks saw gains fueled by enthusiasm for chip stocks and hopes that the U.S. and Iran might reach an agreement to end the war and reopen the Strait of Hormuz. Oil prices also declined. Advanced Micro Devices (AMD) was one of the latest big firms with ties to the artificial intelligence trade that saw shares surge on earnings. AMD gained 19% and closed the day with a $687 billion market cap.
Apple, which has significant influence on both the S&P 500 and the Dow, rose 1.2% and hit its first closing high since December. Despite not closing above 50,000—something it hasn’t done since February 11—it finished 10% higher than its lowest point after entering a correction in March. The index has struggled to keep up with the S&P 500 and Nasdaq, which marked their 14th and 10th record closes of the year, respectively.
A key reason for the Dow’s underperformance is its lack of semiconductor exposure. Although the Dow committee replaced Intel with Nvidia in 2024, Intel has been a major winner this year. The PHLX Semiconductor Index (SOX) hit fresh highs again on Wednesday. More and more market observers are drawing comparisons to the dot-com bubble when discussing the recent run.
Jonathan Krinsky, BTIG’s chief market technician, wrote about the extreme move in semiconductors, noting that they have not been seen since the dot-com bubble. He pointed out that the top 10 Nasdaq 100 stocks were up 784% over the last year on average. In 1999, the top 10 were only up 559%, and around March 24, 2000, they were up 662%. Krinsky warned that the issue during the dot-com bust was that fundamentals didn’t support the price, and the SOX ultimately lost 84% from 2000-2002. While fundamentals are better now, he is concerned about a potential correction.
Hot Stocks and Market Performance
Super Micro Computer surged 24.5%, while CDW dropped 20.3%. The Industrials sector was the best performer, gaining 2.6%, whereas the Energy sector was the worst, falling 4.1%.
If every day has been a party for chip stocks, tomorrow could bring a hangover. This is if the reaction to Arm’s earnings report is any indication. Adam Levine reported that adjusted earnings of 60 cents per share beat expectations of 58 cents, and revenue of $1.49 billion exceeded the consensus estimate of $1.47 billion. The stock initially surged in late trading but fell 6% at last check.
The iShares Semiconductor ETF was down 0.5% in late trading. Traders chasing chip stock momentum may want to stay hydrated tomorrow morning.
Upcoming Earnings Reports
Several major companies will release their results tomorrow, including McDonald’s, Airbnb, Datadog, Texas Roadhouse, Planet Fitness, The RealReal, and TripAdvisor.
What’s Being Read Today
Kevin Warsh’s 3-Part Plan Could Prove His Fed Critics Wrong. AMD Stock Spikes After Earnings. The Chip Maker Is on Track to Surpass a $600 Billion Market Cap. Disney Stock Pops After Earnings—and a 3,000-Word Memo From the New CEO. This Big Private-Credit Fund Is Riskier Than It Looks. Flutter Stock Rises on Solid Earnings. Why the CEO Is All In on Prediction Markets.
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