Wall Street Tuesday: Dow Green, Nasdaq Bleeding, SpaceX Wild
The Nasdaq fell hard on Tuesday. One stock's wild reversal kept it from falling harder. Yep, you probably guessed the name already.
By Anders Bylund
The Dow Jones Industrial Average (^DJI 0.10%) is greener than other major market indexes for the third straight day. At the same time, the Nasdaq Composite (^IXIC 2.15%) is way down. As usual, the S&P 500 (^GSPC 1.43%) index holds the center. Meanwhile, Space Exploration Technologies (SPCX +2.84%) is riding a roller coaster with index-moving consequences.
The split continues a pattern from recent sessions: old-school beats new-school when chips are selling off. And again, SpaceX holds the wild cards to make a significant difference to the indexes that already include it.
^DJI data by YCharts
The chip rout started in Korea
Micron Technology (MU 13.92%) was down 11.2% around 1:30 p.m. ET, but the real action happened overnight. South Korea's Kospi index fell 10% after regulators warned about leveraged ETFs tracking rival memory-chip makers Samsung (SSNLF +0.00%) and SK Hynix.
These 2x leveraged products, approved in late May, have tripled in size to more than $9 billion. Korean regulators intended to cool speculation; instead, they inspired a sell-off.
The memory-based panic quickly spread across the semiconductor sector. None plunged as hard as Micron, but industry giants such as ARM Holdings (ARM 10.85%), Marvell Technology (MRVL 9.87%), and Texas Instruments (TXN 8.99%) were all down by roughly 9% in the early afternoon. That's enough to hang storm clouds over the tech-heavy Nasdaq exchange.
SpaceX added to the Nasdaq's pain before Tuesday's opening bell, but quickly flipped into positive territory. As of this writing, it's up by 8.2%, erasing premarket memories of a 3% drop.
The recovery sprung from Starfall, a new SpaceX service that will deliver cargo from space to Earth. The projected size of this business is unclear so far, but Wall Street seems to give it a multi-billion-dollar valuation before its first cargo transport. Stay tuned for more details, probably with market-moving effects at every turn.
Despite the tech sector's chip-powered crash, the Dow took another modest step forward.
Ironically, good old tech giant International Business Machines (IBM +3.48%) was a leading contributor to the Dow's gains today. Big Blue was up by 4.8% or 75 Dow points on a hat trick of bullish news. Well-respected analyst firms JPMorgan and Morgan Stanley published optimistic reviews of IBM's data center business prospects. At the same time, the company signed a multi-year partnership with ChatGPT maker OpenAI, integrating next-generation AI models in IBM's cybersecurity tools.
Looking ahead
Micron reports earnings on Wednesday evening, which should be interesting after an 11% drop on no company-specific news. The bar for "good enough" just got lower.
Thursday's producer-side inflation report is the next macro test. Economists expect 4.1%, more than double the Fed's preferred level. Rate hike expectations have doubled in two weeks, and every decimal point will matter.
And you know the drill by now. The market keeps swinging, and today was a downturn -- but patient investors should keep an eye on the far horizon. In the long run, most of the daily volatility is nothing but noise. Real wealth is built on fundamental stock research and years of patience, not catching the latest market darling in mid-air.