Chip, storage shares rebounded on Friday. Philadelphia chip index soars 5%; AMD soared 10%; SanDisk up nearly 8%; Micron, Nvidia, Marvell, Intel, TSMC up over 6%.
The selloff in US stocks showed signs of easing after the S&P 500’s steepest drop in more than a year, while the post-election fallout continued to reverberate through markets in other parts of the world.
Global markets have been whipsawed this week as investors initially bet that the Democratic sweep of Congress would hasten an end to the Iran war, before fears of tighter regulation for data centers overwhelmed that optimism. The Philadelphia Semiconductor Index has slumped almost 16% since Monday.
“It is hard to judge at this point whether this is the end of the AI rally — the key is whether the decline stays limited to worsening investor sentiment or actually leads to a deterioration in corporate earnings,” said Kazuki Sawamura, a strategist at Shinkin Asset Management in Tokyo.
About 40% of pending data center capacity in the US is planned to be built in states where newly elected governors have promised to stop or pause such construction, according to data from Cleanview, a market intelligence company.
Many in the market are trying to decipher whether this is the start of a sizable pullback in equities or just a temporary setback.
Losses at hedge funds are adding to the sense of unease across markets.
Walleye Capital is returning some cash to investors following its worst monthly performance since March 2020. Greg Coffey’s macro shop, Kirkoswald Asset Management, recorded its worst-ever monthly decline, and credit fund Arini Capital Management, one of Europe’s fastest-growing hedge funds, lost more than 12% last month alone.
Engineers Gate, a quantitative hedge fund run by Greg Eisner, also decided to part ways with most of a team accounting for a sizable slice of its assets this week. Rob Pohly’s Samlyn Capital is dismissing senior analysts after selling off its exposure to nearly every industry except global financials.
On the economic front, investors will be looking to US monthly job data due on Friday for more clues on the Federal Reserve’s interest-rate path.
Bloomberg Economics expects nonfarm payrolls to show a modest increase of 26,000, while the unemployment rate is likely to hold around 4.18%. Neither number would deter the Fed from its glide path to a rate hike in December, economists including Anna Wong wrote in a research note.
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