The sell-off is unfolding during a pivotal week for markets. The Federal Reserve is scheduled to announce its rate decision on Wednesday, with fed funds futures indicating a 38% probability of a quarter-point hike—up from about 10% two weeks ago. Meanwhile, earnings from megacap tech companies including Amazon, Meta Platforms, Microsoft, and Apple are due, and their capital expenditure plans will be scrutinized for signals on future chip demand.
Some strategists suggest the rotation out of large-cap tech may be nearing its final stages, but others warn of further downside. BTIG Chief Market Technician Jonathan Krinsky noted that the chance of the iShares Semiconductor ETF falling below its 200-day moving average—representing a more than 20% drop—is “fairly likely,” adding that many tech investors are not prepared for such a move.
What to Watch
The immediate focus now shifts to earnings reports from Samsung and SK Hynix on Wednesday, which will provide the first official read on how the memory chip leaders are navigating the current turmoil. With the AI hardware trade suddenly under a microscope, the question is whether these results can restore confidence or confirm the market’s worst fears about an oversupply cycle?
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