U.S. Stocks Face Summer 2024 Pullback Risk as Philadelphia Semiconductor Index Falls 20%

BTIG Chief Market Technician Jonathan Krinsky stated that the biggest risk in the current market is investors questioning the market logic. The Philadelphia Semiconductor Index has fallen about 20% from its June peak, entering bear market territory, while the South Korean KOSPI Index has dropped over 25%, and the Nikkei 225 Index has also entered a technical correction, indicating pressure on global tech stocks. Krinsky warned that U.S. stocks may repeat a significant adjustment in the summer of 2024, with the S&P 500 Index at risk of falling below the 200-day moving average (6,983 points). If this scenario occurs, the semiconductor sector may continue to weaken, and large tech stocks could end their leading performance, dragging down overall market performance. Currently, the sell-off lacks a clear catalyst, despite concerns about the rapid gains in the chip sector, increased borrowing due to large tech companies' massive capital expenditure plans, and the uncertainty of the economic backdrop under the Federal Reserve's new policies. These factors explain the market rotation, but the stock market's ability to withstand pressure from the largest and hottest stocks is limited, making it difficult to sustain.

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