The US stock market demonstrated resilience last week despite a sharp decline in semiconductor stocks, with the S&P 500 slipping below its 50-day moving average while maintaining positions above 100-day and 200-day moving averages, according to Yahoo Finance on May 29. Charles Schwab strategist Kevin Gordon attributed this stability to sector rotation, noting that two-thirds of S&P 500 stocks continue trading above their 200-day moving averages. The semiconductor sector faced concentrated pressure following concerns about overheated AI spending and intensified competition from China, with South Korea's KOSPI index dropping nearly 11% on May 28 as Samsung Electronics and SK Hynix both posted double-digit declines.
S&P 500 Maintains Support Above Key Moving Averages
The Dow Jones Industrial Average traded near all-time highs, while the S&P 500 slipped below its 50-day moving average last week but remained above both 100-day and 200-day moving averages. Two-thirds of S&P 500 stocks continued trading above their 200-day moving averages, indicating relatively healthy market conditions.
Equal-weight indices and cyclical stocks both signaled economic strength. Market reactions to earnings reports showed that most pressure and poor performance concentrated in technology stocks, while financial, industrial, and consumer discretionary sectors demonstrated positive responses.
Kevin Gordon Identifies Sector Rotation as Market Protection Factor
Kevin Gordon, strategist at Charles Schwab, identified several factors protecting the broader market from semiconductor stock corrections. Gordon stated that the current market structure aligns with a naturally cyclical market rather than a correction phase.
Gordon explained that both equal-weight indices and cyclical stocks signaled economic prosperity. He noted that excluding technology stocks, market reactions to financial, industrial, and consumer discretionary sectors remained positive. Gordon acknowledged concerns about the semiconductor sector but emphasized understanding market structure and recognizing how extreme movements can be when entering large-cap stocks.
Semiconductor Stocks Decline on AI Spending and China Competition Concerns
Semiconductor stocks faced concentrated pressure as investors questioned whether artificial intelligence spending had overheated and expressed increased concerns about intensified competition with China. South Korea's KOSPI index fell nearly 11% on May 28, marking one of the largest declines in months.
Memory chip giants Samsung Electronics and SK Hynix both posted double-digit percentage declines. Reports that China achieved progress in memory semiconductors through Changxin Memory Technologies (CXMT) and made advances in lithography equipment heightened concerns. US companies Micron and SanDisk also suffered significant impacts from these developments.
FAQ
What happened to the S&P 500 last week despite semiconductor stock declines?
The S&P 500 slipped below its 50-day moving average last week but remained above both 100-day and 200-day moving averages, with two-thirds of S&P 500 stocks continuing to trade above their 200-day moving averages, according to Yahoo Finance on May 29.
Why did South Korean semiconductor stocks decline sharply on May 28?
South Korea's KOSPI index fell nearly 11% on May 28, with Samsung Electronics and SK Hynix both posting double-digit declines, driven by investor concerns about overheated AI spending and reports that China's Changxin Memory Technologies achieved progress in memory semiconductors and lithography equipment.
