22 Mar

Why Chip Stocks Continue to Surge

WRITTEN BY Sanmit Amin

Tech stocks continue to surge

Stock markets were choppy on March 20, after the Fed’s dovish comments worried investors about an economic slowdown. However, stocks surged yesterday due to low interest rates, which have supported stocks for a decade. The NASDAQ Composite rose 1.4%, nearing a six-month high.

After Micron Technology (MU) reported better-than-expected earnings results and surged 9.6% yesterday, most major chip makers’ stocks rose. NVIDIA (NVDA), AMD (AMD), and Applied Materials (AMAT) rose 5.4%, 8.5%, and 4.4%, respectively, while the VanEck Vector’s Semiconductors ETF (SMH) jumped 3.46%.

Why Chip Stocks Continue to Surge

Semiconductor stocks have soared in the last couple of weeks

As they did last year, semiconductor stocks outperformed the tech sector and broader markets last week, with Broadcom (AVGO) announcing better-than-expected earnings.

Chip stocks underperformed broader markets in the last quarter of 2018, due to worries about how US-China trade tensions would affect the companies and fears of fundamentals weakening with the economic slowdown.

This year, trade tensions are still hovering but have eased. Solid earnings reports have soothed investors, resulting in the NASDAQ being up 19.0% year-to-date. SMH is up 26.5%.

That said, there are still several risks for the tech sector that markets seem to be ignoring. Valuation has stayed high despite guidance suggesting slowing earnings growth, US-China trade tensions remain, and the global economy is showing more signs of a slowdown.

Latest articles

Tesla (TSLA) stock short sellers seem to be getting exasperated. Notably, Tesla stock has been the short sellers’ favorite.

In the week that ended on November 15, natural gas prices fell 3.5% and settled at 2.688 per MMBtu (million British thermal units).

The Dow Jones Index (DIA) and S&P 500 (SPY) are trading at record highs and on Friday the Dow Jones crossed the 28,000 level for the first time.

Goldman Sachs (GS) settled a lawsuit that alleged it rigged bond prices. Also, Deutsche Bank agreed to pay a fine of $15 million to settle a lawsuit.

In the November 15 premarket trading session, Amarin Corporation (AMRN) stock rose more than 7%, caused by the FDA positive decision for Vascepa.

In the November 14 trading session, Aurora Cannabis (ACB) stock fell 12.7% from the previous session during after-hours trading.