Chipmakers' weakness pressures stock indexes

What happened: On April 24, major U.S. stock indexes posted mixed results at midday, with semiconductor stocks driving sharp gains in tech-heavy benchmarks while the Dow Jones Industrial Average lagged behind. On May 11, the S&P 500 and Nasdaq Composite rose midday, led by chipmakers, while the Dow was barely changed. However, on May 12, the Nasdaq Composite and S&P 500 fell, led by a reversal in Qualcomm's early rally, as the VanEck Semiconductor ETF (SMH) dropped about 1%.

Market impact: Chipmakers' weakness pressured stock indexes, with the PHLX Semiconductor Index (^SOX) breaking an 18-day winning streak. The sell-off targeted names that had previously run hard, such as Nvidia and Intel. The broader market felt the impact, with the Nasdaq Composite leading losses on May 12, down roughly 1.7%, while the S&P 500 shed 0.8%.

What to watch next: Upcoming earnings reports from key chipmakers like TSMC and ASML on May 19 and 20 will provide insights into the AI chip market. Additionally, investors should monitor the consumer price index (CPI) inflation print on May 11 for clues about the economy's direction. Finally, technical levels in semiconductor ETFs like SMH will indicate potential trend reversals.