Dow turns positive after 0.7% slide in broad market reversal

The S&P 500 narrowed its loss to 0.77% after falling as much as 1.5%, while the Nasdaq Composite cut its decline to 1.17% from a session low of 2.3%.

"The concentration of flows is driving sharp, fundamentals-detached volatility," said Kang Jin-hyeok, an analyst at Shinhan Securities. "Erratic swings are likely to become more frequent."

The reversal unfolded as the 10-year Treasury yield held at 4.51%, pressuring growth stocks before buyers stepped in at lower levels. The selloff earlier tracked weakness in Asian markets, where South Korea's Kospi tumbled 10% — triggering a circuit breaker — as foreign investors dumped a net 4.13 trillion won ($2.7 billion) in shares. Chip stocks led the declines, with Samsung Electronics and SK hynix each falling about 12%.

The recovery comes after a record $119.2 billion rushed into US stock funds in the week through June 17, the largest weekly inflow ever recorded. That followed a selloff three weeks earlier that erased about $1.3 trillion from AI and chip stocks in two sessions, underscoring how institutional positioning swings are driving market moves.

The Dow's recovery to positive territory marked the most dramatic reversal among the three major indexes. The blue-chip index had fallen as much as 0.7% before buyers emerged, pushing it to a 0.07% gain. The S&P 500's recovery from 1.5% down to 0.77% lower and the Nasdaq's narrowing from 2.3% to 1.17% reflected broad-based buying rather than sector-specific catalysts.

The move coincided with three factors: a stabilization in oil prices after Brent crude fell 3% to $78 a barrel on Friday, progress in US-Iran peace talks that reduced geopolitical risk premiums, and dip buying in technology names that had led the selloff. The US dollar index rose 0.2% to 101, while gold futures slid 1% to $4,210 an ounce.

Institutional Flows Drive the Round Trip

The pattern of sharp selloffs followed by rapid recoveries has become a defining feature of equity markets in 2026. In the week through June 5, the semiconductor index had its worst day in years after Broadcom's guidance — pointing next quarter's AI revenue to about $16 billion, just under the $17.2 billion most optimistic analysts had penciled in — triggered a broad tech rout. Within three weeks, the money came roaring back at the highest weekly pace on record.

Inflation Test Awaits

Investors now face a key inflation reading Thursday, when the May Personal Consumption Expenditures price index is due. The PCE price index rose 3.8% year-over-year in April, the largest increase in three years and well above the Fed's 2% target. Fed officials last week indicated they envision lifting the benchmark rate by a median of a quarter-percentage point before 2027.

This article is for informational purposes only and does not constitute investment advice.