Key Takeaways:
Semiconductor stocks staged a sharp reversal on quadruple witching day, pulling the broader market higher.
The S&P 500 rose as semiconductor stocks bounced on quadruple witching, the year's largest options and futures expiration session. The rally recouped a portion of the $2 trillion in market value erased from the Magnificent 7 during the first two weeks of June.
"The semiconductor bounce is the story today — it's pulling everything up with it," said Joe Mazzola, director of trading and education at Charles Schwab. "Thursday's moves will likely highlight the stock market's next momentum shift."
The tech-heavy Nasdaq Composite outperformed as chip stocks reversed a weeks-long slide. Nvidia, which closed flat at $207 on Wednesday after digesting its buyback announcement, led the rebound alongside other semiconductor names. The Philadelphia Semiconductor Index rose more than 2%, its best single-day gain in three weeks. Apple, the lone Mag 7 gainer in Wednesday's session with a 1.7% advance to $295.95, extended those gains as investors bet on AI feature announcements ahead of the next product cycle.
The rally unfolded against a complex macro backdrop. The Federal Reserve on Wednesday signaled that interest rates could stay higher for longer than markets had priced in, a shift that had driven the Mag 7 selloff. The 10-year Treasury yield pushed toward 4.5%, while the US dollar index held near recent highs. Gold traded flat near $2,340 an ounce as equities absorbed the rate signal.
Volume ran well above the 20-day average as quadruple witching forced institutional repositioning. The VIX, which had climbed above 18 earlier in the week on rate uncertainty, pulled back as the semiconductor-led rally gained traction. Breadth was positive, with advancing stocks outpacing decliners by a roughly 3-to-1 ratio on the New York Stock Exchange.
The session carried added significance because the New York Stock Exchange and Nasdaq will be closed Friday for Juneteenth, the federal holiday commemorating the end of slavery in the US. With a three-day weekend ahead, traders had to settle options and futures positions by Thursday's close, amplifying the volume and price impact of the expiration.
Bitcoin failed to participate in the risk-on move, trading lower on the day as capital rotated toward equities. The divergence between tech stocks and crypto assets widened, with the largest digital currency unable to hold above $68,000.
For investors, the question is whether the semiconductor bounce marks a genuine reversal or a technical reprieve within a broader repricing of AI-related growth stocks. The Fed's next policy decision and the upcoming Nvidia quarterly print will provide the next test of whether the AI infrastructure build-out can sustain the valuations that drove the Mag 7 to record highs earlier this year.
This article is for informational purposes only and does not constitute investment advice.
