Markets
The Nasdaq Rose 1.1% on Monday as the Chip Index Snapped Its Longest Losing Streak Since 2008. The VIX Fell 8%
The Nasdaq Composite closed at 26,430.89 on October 19, up 1.11%, and the S&P 500 at 7,690.73, up 0.41%, while the Dow slipped 0.07% to 51,966.03. The Philadelphia Semiconductor Index rose for the first time in nine sessions, Micron gained 3% and Lam Research 4.9%, and the VIX fell 7.95% to 18.4. Tuesday's Asian session gave a third of the Kospi's Monday gain straight back.
The rebound that Seoul started on Monday morning reached New York by the close. The Nasdaq Composite rose 290.85 points, or 1.11%, to 26,430.89 on October 19, and the S&P 500 added 31.29 points, or 0.41%, to 7,690.73. The Dow Jones Industrial Average slipped 36.38 points, or 0.07%, to 51,966.03, held back by industrial and energy names, and the CBOE Volatility Index fell 7.95% to 18.4 after Friday's spike to its highest since June on a hedge fund rumour that produced nothing over the weekend.
The buying was concentrated where last week's selling had been. The Philadelphia Semiconductor Index rose 1.6%, according to Investing.com, ending an eight-session losing streak that was its longest since 2008 and that had erased close to $2 trillion of market value across the sector. Micron Technology gained 2.97%, AMD 1.76% and Nvidia 1.38%; Intel added 2.4% after a JPMorgan upgrade. Lam Research, which reports on Wednesday after losing 17% last week, rose 4.93% to $276.95. Among the day's largest gainers on the main exchanges were Applied Digital, up 6.9%, SanDisk and Western Digital, each up 5.9%, Datadog, up 5.5%, and SK hynix's US-listed shares, up 5.1%. Sea fell 5.3% and Constellation Energy 3.0%.
What the day did not do is change the backdrop. The 10-year Treasury yield rose six basis points to 5.15%, according to Forbes Advisor, after a week in which it had fallen from 5.23% to 5.08%; gold slipped below $4,150; Brent crude was back near $110 on new attacks on tankers in the Gulf. The Fed is in its blackout period before the October 28 meeting, and futures price a December hike at close to 92%, according to FXStreet. The index gains were, in other words, a reversal of positioning rather than a reversal of the news that drove the positioning.
Tuesday's Asian session made the same point from the other direction. Nasdaq 100 futures were up only 0.1% by the European morning and the Kospi was down 2.5%, with SK Hynix off 3.5% and heading for its lowest close since April, one day after the index had closed 1.42% higher. Korea's Elice Group, an AI data-centre company, fell as much as 32.6% below its offer price on its Kosdaq debut. The semiconductor trade is being re-priced one session at a time, in both directions, until Wednesday evening's reports from Lam Research and Meta tell the market what the buyers of chips intend to spend.
Netflix reports after Tuesday's close, with consensus at $0.82 a share on $12.87 billion of revenue; SpaceX reports its first full public quarter the same evening. Meta, Tesla and IBM follow on Wednesday, and the 20-year Treasury auction at 1 p.m. ET on Wednesday is the first test of long-end demand since the mid-October rally in bonds. A VIX at 18 says the market expects an ordinary week. The calendar says otherwise.