After the weekly surge: chip stocks plunge in New York

Investors on Wall Street ended the trading day with caution, as the sharp rise in oil prices and the weakness in technology and chip stocks overshadowed the major indices. The Nasdaq index lost 0.3%, while the S&P 500 and Dow Jones fell by 0.1% each.

However, the moderate changes in the indices masked much sharper fluctuations in other parts of the market. The focus shifted to the energy market, where the price of WTI oil jumped by about 4.96% and crossed the $82 per barrel level. Brent crude climbed by about 4.8% and reached the $87.58 per barrel area.

Energy stocks benefited from the developments, and the XLE fund rose by more than 3.3%, in its strongest day in about a month. However, for the rest of the market, the rise in oil prices renewed fears of inflationary pressures and the possibility that the Federal Reserve would be forced to respond through interest rates.

The pressure was also felt well in chip stocks. The Philadelphia SOX index retreated after jumping by more than 9% the previous week. The Photonics & Optics ETF plunged by 7.3%, while Coherent lost more than 12% ahead of the publication of its results.

Alongside the profit-taking, the artificial intelligence sector continued to make headlines. Nvidia joined major asset managers including Apollo, Blackstone, BlackRock, Goldman Sachs, and KKR as part of a $500 billion initiative designed to finance AI infrastructure, data centers, and energy capacity. At the same time, Mizuho pointed to the possibility of continued growth in Broadcom following the expansion of supply of custom AI chips to companies including Meta, OpenAI, Anthropic, and Apple.

Among the notable stocks was Palo Alto, which jumped following demand for security solutions against AI threats and after price target upgrades by BTIG and Cantor. Berkshire Hathaway also recorded a positive trend after presenting a 16% increase in operating profit and increasing the pace of share buybacks under Greg Abel.

Active activity was also recorded in the mergers and acquisitions arena. MarineMax jumped following an agreement to sell the company to Safe Harbor from the Blackstone group, in a deal reflecting a value of $1.5 billion for it. Varex Imaging rose after an agreement was signed for its acquisition by Teledyne. GameStop strengthened following reports that it had withdrawn from an unrealistic offer for its acquisition by eBay for $56 billion.

Weakness was recorded in the crypto market. Bitcoin fell to the $63.8 thousand area, while Strategy stock lost about 3.5% following reports that the company had sold Bitcoin for the fourth consecutive week.

Thus, although the indices themselves ended with relatively small changes, the trading day provided investors with several significant points of concern: surging energy prices, high bond yields, a renewed possibility of an interest rate hike, and profit-taking in chip stocks. Now the attention shifts to the upcoming price data, which may determine whether the inflationary fears that have re-emerged will receive further reinforcement.