Semiconductor stocks were mostly positive on Wednesday, a day after bears pounced on the sector following negative economic news. Analysts said Broadcom’s (AVGO) earnings report, due later Thursday, will be closely watched as a gauge of sentiment.
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Broadcom earnings call: Will Nvidia spur a move?
On the stock market today, the Philadelphia Semiconductor Index (SOX) rose 0.3%. The SOX includes the top 30 semiconductor stocks traded in the United States.
On Tuesday, the SOX index plunged 7.8%, led by declines in major stocks such as AMD (AMD), Marvell Technology (MRVL), Micron Technology (MU), and Nvidia (NVDA). The SOX index’s drop was its worst daily drop since March 2020.
Semiconductor stocks and the broader market fell after a weak reading from the Institute for Supply Management (ISM) manufacturing index, a key gauge of U.S. manufacturing activity, which fell for the fifth straight month, MarketWatch reported.
Semiconductor stocks also reacted negatively to reports that factory activity in China contracted for a fourth consecutive month in August.
Also on Tuesday, the Semiconductor Industry Association reported that semiconductor sales in July were unseasonably strong.
Semiconductor stocks mostly up
Some semiconductor stocks continued to fall on Wednesday, including ARM Holdings (ARM), Intel (INTC), Nvidia, and Power Integrations (POWI).
But most semiconductor stocks rebounded, with gainers including AMD, Marvell, MaxLinear (MXL), and Micron.
Jordan Klein, a trading desk analyst at Mizuho Securities, said in a Wednesday note that Tuesday’s sell-off was likely driven by program trading.
“Machines don’t care about industry or end market fundamentals,” Klein said. “There’s been no change in the last three or four days to the growth potential or upside from AI or the broader half cycle.”
Klein said Broadcom’s earnings report and outlook after the close of trading on Thursday will be “hugely significant” for semiconductor stocks and industry sentiment.
Broadcom shares rose 0.9% on Wednesday to close at 154.12.
To read more coverage on consumer technology, software and semiconductor stocks, follow Patrick Seitz on X (formerly Twitter) at @IBD_PSeitz.
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