Chip Stocks Lead Nasdaq Rebound Amid Rate Hike
Semiconductors drove a 0.4% Nasdaq gain on Friday, offsetting a broader market stall caused by triple witching and a rising two-year Treasury yield.
US equity markets closed mixed on Friday as the Nasdaq gained 0.4% on strength in the semiconductor sector. The Dow Jones Industrial Average slipped 0.2%, while the S&P 500 rose 0.2%. This divergence followed a volatile week characterized by swings in oil and bond markets, culminating in the Federal Reserve's first interest rate hike in three years.
Traders attributed the lack of broader upside to the triple witching expiry event, which involved the simultaneous expiration of stock options, futures, and index options. According to Axel Rudolph, chief technical analyst at IG, the notional value of these expiries exceeded $2 trillion, creating technical friction that limited index gains despite sector-specific rallies.
Semiconductors Drive Index Performance
Chip and memory stocks led the Nasdaq 100 risers, reversing a week of losses driven by AI slowdown concerns. Seagate Technology climbed 7.73% to $858.79, while Advanced Micro Devices added 5.96% to reach $559.82. Applied Materials and Micron Technology also posted gains of 4.56% and 4.48%, respectively.
Intel Corp. rose 3.36% to $108.60, joining Lam Research and Broadcom among the top performers. SanDisk jumped 11%, highlighting broad momentum in data storage and hardware components. This sector strength provided the primary tailwind for the tech-heavy Nasdaq index.
Bond Yields Pressure Broad Market
Fixed-income markets exerted downward pressure on equities as the two-year Treasury yield hit 4.741%, its highest level in over two years. The 10-year yield rose 6 basis points to 4.997%, nearing its 2007 high. Rising borrowing costs have increased discount rates for future earnings, particularly impacting long-duration growth stocks.
Industrial Output Stalls in August
The Federal Reserve reported that US industrial production remained flat in August, with a 0.3% drop in manufacturing offsetting gains in mining and utilities. Total output was 1.4% higher than a year earlier, but capacity utilization stayed at 76.3%, roughly three points below the long-run average. Netflix fell 6.24% to $71.79 after a Wells Fargo downgrade cited a weaker content pipeline.
