Midday trading saw significant volatility across sectors, with tech stocks, particularly semiconductors, experiencing a sharp decline. Apple’s shares dipped despite new AI product announcements, while AI infrastructure plays also faltered. Conversely, DraftKings surged on strong growth in its prediction offerings, and the home construction sector gained momentum. J.M. Smucker beat earnings expectations, contributing to a 10% stock jump.
Wall Street experienced significant shifts midday Tuesday as semiconductor stocks bore the brunt of a renewed tech sell-off, while other sectors saw notable movement. The VanEck Semiconductor ETF (SMH) plummeted 5%, signaling broader concerns within the tech industry.
Semiconductor Shakeout
Chip manufacturers faced a challenging trading session, with Advanced Micro Devices shedding 8% and Nvidia losing nearly 3%. Micron Technology's stock tumbled 6%, while Qualcomm saw a sharp decline of nearly 9%. This downturn follows broader market trends and investor reactions to recent tech developments.
Apple's AI Ambitions Meet Investor Caution
Apple, despite unveiling its new artificial intelligence software at its annual Worldwide Developers Conference on Monday, saw its shares drop more than 3%. While analysts offered largely positive reviews of the company's AI announcements, investors appeared to react cautiously, leading to a midday dip.
DraftKings Soars on Strong Prediction Growth
In stark contrast, DraftKings experienced a significant boost, with its stock jumping 9%. This surge followed a Securities and Exchange Commission filing revealing that DraftKings Predictions saw a remarkable 24% month-over-month increase to $1.3 billion in May. The filing also indicated that annualized total volume traded rose 34% month-over-month to $3.1 billion, showcasing robust growth in its prediction offerings, though the data is noted as preliminary.
AI Infrastructure Faces Headwinds
Stocks associated with artificial intelligence and data center infrastructure also took a hit as the tech sector weakness persisted. Coherent's stock fell 13%, Lumentum dropped 10%, and shares of specialty glass and fiber optic provider Corning were down 10%, reflecting the sector-wide pressure.
Home Construction Sector Builds Momentum
Shifting gears, the home construction sector showed strength. May's existing home sales grew 3.2% to 4.17 million, boosting investor confidence. The iShares U.S. Home Construction ETF (ITB) advanced nearly 3%, with individual stocks like Toll Brothers and Builders FirstSource adding almost 4%, and Floor & Decor gaining 5%.
GSK to Acquire Nuvalent; J.M. Smucker Beats Expectations
In the pharmaceutical space, U.S. drugmaker Nuvalent saw its shares surge 39% following the announcement of an agreement by U.K.-based biopharmaceutical company GSK to acquire it for $10.6 billion. Meanwhile, J.M. Smucker Co. impressed investors as its shares jumped 10%. The maker of Smucker's jam and Jif peanut butter reported fourth-quarter results that exceeded expectations, with earnings of $2.77 per share (adjusted) surpassing the $2.64 FactSet consensus and revenue of $2.27 billion topping the anticipated $2.26 billion.
SailPoint's Guidance Disappoints; Vail Resorts Misses Earnings
Conversely, SailPoint experienced a significant downturn, with shares plunging over 12%. The identity, data, and security intelligence platform issued disappointing full-year guidance, even though its first-quarter earnings met estimates. SailPoint anticipates adjusted earnings between 30 and 34 cents for the full year, falling within the lower range of analyst expectations. Vail Resorts also faced headwinds, with shares dropping 4% after posting third-quarter earnings of $8.81 per share, missing the LSEG consensus estimate of $8.96, although revenues were in line with expectations.
