The massive rotation in the U.S. stock market that has taken place over the last two weeks is killing one of the hottest subsectors of the market in recent years.
Despite nearly a 1 percent gain for the SPDR Dow Jones Industrial Average ETF DIA Monday, the iShares S&P NA Tec. Semi. Idx. Fd.(ETF) SOXX once again traded sharply lower, falling 1.7 percent on the day.
The Great Rotation
The entire technology sector has been hammered in the past week as investors seem to be taking profits in tech and pouring into banks and underperforming domestic blue chips, energy stocks and retail plays. The S&P 500 has lagged the Dow over the past five sessions and is being weighed down by a 2.3 percent decline in the Technology Select Sector SPDR Fund XLK. In that same time, the Financial Select Sector SPDR Fund XLF is up 7.1 percent and the Energy Select Sector SPDR (ETF) XLE is up 4.8 percent.
But while the entire tech sector is getting hit, semiconductor stocks have been pounded following a Nov. 28 note from Morgan Stanley suggesting NAND prices are softening in the market. Morgan Stanley’s commentary suggests the great semiconductor supercycle may finally be nearing its end.
The Market Vectors Semiconductor ETF SMH was down about 1.7 percent Monday.
Market Laggards
Three of the largest and best-performing semiconductor stocks of recent years have been leading the the tech sector sell-off. Here’s a look at how far they have fallen in the past five sessions:
- Micron Technology, Inc. MU is down 14.5 percent.
- Advanced Micro Devices, Inc. AMD is down 11.8 percent.
- NVIDIA Corporation NVDA is down 11.1 percent.
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