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18/07/24
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Wall Street Drops as Investors Look Further Than Megacaps
On Thursday, the major indexes on Wall Street reversed early gains after chip and megacap stocks rebounded briefly, as investors rotated into underperforming sectors from high-priced tech stocks.
Taiwan Semiconductor Manufacturing’s U.S.-listed shares dropped 2.8% and dragged the Philadelphia SE Semiconductor index 0.6% lower. This put it on target for the second straight session of losses after Wednesday’s steep sell-off in both megacap technology and chips shares.
Although megacap and semiconductor stocks initially seemed to recoup losses after TSMC increased its revenue forecast for the full year, they reversed course as investors continued moving into small caps from heavily weighted megacap growth stocks.
A trader at Triple D Trading, Dennis Dick, said although there was a snapback rally this morning due to TSMC, the tech trade was crowded. Investors who were overweight on tech stocks were lightening up and this led to tech stocks going red.
Amazon.com, Microsoft, Alphabet, and Apple reversed earlier gains and fell between 2.9% and 1.7%.
The small-cap Russell 2000 also dropped 0.7%, on track for the second session of losses after a 5-day rally.
The Labor Department reported jobless claims for the week that ended on July 13 rose to 243K – higher than previously expected – another indication that the jobs market was easing.
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