Wall Street saw a dramatic sell-off of nearly $1 trillion in technology stocks by midday before markets partially recovered, according to fortune.com. The Nasdaq Composite dropped more than 4% by lunchtime but closed down just 1%. The sell-off targeted high-beta, volatile tech names, including chipmakers and leveraged bitcoin vehicles.
The sell-off intensified around noon as traders dumped the most volatile stocks, including Strategy (MSTR), AppLovin (APP), and photonics maker Lumentum (LITE). Chipmakers such as Marvell fell sharply, with Marvell dropping 10% a day after joining the S&P 500. Strategist Ben Emons referred to this group as the "Parabolic 7," a chip index that surged nearly 100% in recent weeks. Instead of fleeing equities entirely, investors rotated into consumer staples like peanut butter and paint, boosting companies such as Smucker, Home Depot, and Sherwin-Williams.
Market experts cited several factors behind the shift, including the need to make room for the upcoming SpaceX IPO, which is set to be the largest ever. OpenAI and Anthropic have also confidentially filed for IPOs, adding pressure on tech valuations. Richard Steinberg of Focus Partners Wealth noted that money was flowing into consumer names that had been previously overlooked. Annex Wealth’s Brian Jacobsen described the tech rally as an "Icarus trade," with soaring valuations now retreating.
The SpaceX IPO is scheduled for this Friday, marking a significant event for Wall Street and likely influencing the recent market rotation away from tech stocks, according to fortune.com.