Deutsche Bank strategists note that United States (US) equities experienced a classic risk-off session, with major indexes pressured by a sharp sell-off in chipmakers. The NASDAQ dropped more than the S&P 500 as semiconductor weakness dragged broader benchmarks lower. Despite the decline, some chip names remain strong year-to-date. US equity futures suggest a modest recovery following the prior session’s losses.

Semiconductor slump drives broader weakness

"Ahead of those overnight developments, markets saw a classic risk-off move yesterday, with equities sliding and bonds rallying."

"Given the importance of semiconductors for US equities, that dragged down the broader indices, with the NASDAQ slumping -2.21% yesterday, whilst the S&P 500 fell -1.44%."

"Indeed, the concentration of the decline was striking, as it was the first time this year that the S&P 500 was down more than 1% on a day when majority of companies in the index were actually higher."

"And this morning, US equity futures have risen, with those on the S&P 500 (+0.17%) pointing to a modest recovery after the index fell -1.44% yesterday, while Nasdaq 100 futures are up +0.39%."

"This decline included Sandisk (-13.64%) and Micron (-13.18%) as the two worst performers in the S&P 500 yesterday, though they remain among top four performers YTD."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)