Tech Stress Test: Chips Slammed in Early Plunge

Published as of: June 24, 2026, 9:13 a.m. ET

(Wednesday market open) Wall Street sailed into calmer waters after Tuesday's sell off, with major indexes solidly green to start the day as yields and crude oil fell. Where the market tacks next could depend on earnings from memory chip giant Micron (MU) after the close and May's Personal Consumption Expenditures (PCE) price reading tomorrow morning.

Tuesday's meltdown in technology shares, particularly chips, looks less like a broad deterioration in fundamentals and more like froth coming out of crowded AI and semiconductor positioning. The S&P 500 tech sector was up 27% over the last three months, making it the only sector to surpass S&P 500 Index growth of 9.8% over that stretch. Seen in that light, recent pullbacks in tech seem unsurprising, as it's hard for any one sector to maintain that kind of premium to the broader market over a long period.

On Tuesday, both the Nasdaq and S&P 500 Index closed sharply lower while the Dow Jones Industrial Average fell just slightly. Looking ahead to other events besides Micron and PCE, the annual release of Federal Reserve stress tests for U.S. banks is due after the close. Last year saw major banks pass the tests with flying colors, though the tests became harder this year. There's also a 5-year Treasury note auction, with results due before the closing bell.

1. Micron earnings preview: A strong report for Micron's fiscal third quarter could stabilize sentiment across semiconductors and AI infrastructure, but a weak report could reinforce concerns that AI expectations have run too far ahead of fundamentals. Micron guided for revenue of $33.5 billion, up from $9.3 billion the same period a year earlier. It expected earnings per share of $19.15. Analysts have now raised their projection to $20.72, though there may be "whisper numbers" above that. Revenue is expected to rise 282.65% from a year ago to $35.6 billion. Gross margin is another key indicator, seen near 81%. Any sign of gross margin peaking might be negative for shares. The ultimate arbiter could be guidance. If Micron sounds conservative about the AI build-out, it could hurt the entire tech sector. However, analysts have been raising their price targets for Micron shares, citing signs of memory market strength and stronger long-term fundamentals. Micron's breathtaking rally was triggered by a shortage of memory chips and heavy data center demand that caused soaring prices for its products, and guidance confirming supply constraints might be viewed as positive.
    
2. Inflation, GDP data loom as credit markets perform well: Data accelerates later this week, starting at 8:30 a.m. ET tomorrow with readings on first quarter gross domestic product (GDP) and May PCE prices.  Components of last month's Producer Price Index (PPI) that map over to PCE—the Fed's favored inflation meter—suggest a firm print. Only the air transport component declined. For PCE, analysts see headline monthly growth of 0.5% and annual growth of 4%. Monthly core PCE, which excludes volatile food and energy, is expected to rise 0.3%, with annual core up 3.4%. Tomorrow also brings weekly initial jobless claims at 8:30 a.m. ET, expected to be 225,000, in line with recent readings. The final government estimate of first quarter GDP is seen at 1.6% on an annualized basis, the same as the second estimate.
    
3. Challenges seen for wider rally: Market breadth is moderate but may face challenges improving. Recently, narrower breadth often coincided with higher Treasury yields. When yields fell, investors have embraced more cyclical sectors like financials and industrials, while yields at 4.5% or above for the 10-year Treasury note often send investors back toward tech. Rotation out of tech has been a bumpy affair, with spurts of selling followed by fresh rallies as retail investors remain bullish about AI. If Micron disappoints and tech falls further, investors might want to check breadth to see if the rest of the market holds up, as it did yesterday, perhaps signaling a renewal of the broadening seen earlier this year. However, Treasury yields and crude oil were lower back then, as was the U.S. dollar. Current elevated levels could pose a barrier to a wider rally in sectors like industrials and discretionary, and a robust dollar can also hurt the tech sector.

• FedEx (FDX) fell 6% despite reporting earnings that beat estimates. Guidance appeared to disappoint as FedEx predicted annual revenue growth of 11% and adjusted full-year earnings per share of between $16.90 and $18.10. That's below the $20.24 annual earnings per share of the company's just-completed fiscal year that ended in May and could reflect margin pressure seen in its core delivery segment.
   
• Micron rebounded about 4% early Wednesday after yesterday's crushing 13% losses. Though past isn't precedent, shares have fallen the day after earnings in five of the last six quarters. If Micron's guidance disappoints, it could also hurt shares of competitors like Western Digital (WDC) and SanDisk (SNDK).
   
• The tech sector generally moved higher in early trading, led by firm gains for Arm Holdings (ARM), SanDisk, and Super Micro Computer (SMCI). This follows yesterday's nearly 8% tumble in the PHLX Semiconductor Index (SOX), though the index stayed above key support at the 21-day moving average.
   
• Mining names came under pressure early today as gold fell 2% and silver dropped 4%. Newmont (NEM) slid 3%. Gold is down due partly to the stronger dollar and growing chances of a Fed rate hike at some point this year. A hot PCE report tomorrow might raise hike chances, putting more pressure on gold.
   
• Crude oil fell below $72 per barrel for U.S. futures, the lowest since February 27, as Bloomberg reported more ships sailing through the Strait of Hormuz. Vessels have their satellite signals on, which may indicate growing confidence in their safety, Bloomberg noted.
   
• Alphabet (GOOGL) rose 0.5% on news it will replace Verizon (VZ) in the DJIA effective next Monday. Alphabet gives the DJIA greater exposure to digital advertising, cloud infrastructure, AI, hardware, autonomous mobility, healthcare technology, and media distribution. Its higher share price also gives it more influence on the index than Verizon had.
   
• Carnival (CCL) sank nearly 5% Tuesday after reporting revenue that missed expectations and lowering its guidance.
   
• SpaceX (SPCX) inched up yesterday and managed to close above its IPO price of near $150. It's down more than 1.5% this morning. The wild swings so far partially reflect news of a $25 billion debt sale that, according to Bloomberg, met a "skeptical audience" in the bond market, judging by its premium pricing.
   
• The Cboe Volatility Index (VIX) jumped nearly 13% to 19.49 on Tuesday, while tech volatility has risen more sharply than broad-market volatility, suggesting investors are specifically hedging against a technology-led shakeout.
   
• Only five of 11 S&P 500 sectors closed lower Tuesday despite the heavy tech selling. Consumer staples led gainers, rising nearly 2%. Advancing shares led declining ones on the New York Stock Exchange in high-volume trading. The 50-day moving average of the SPX at 7,339 could represent support on any drops ahead, as could the 61.8% Fibonacci level at 7,120 below that.
   
• JPMorgan Chase raised its year-end S&P 500 Index target to 7,800 from 7,600, Reuters reported.

Midyear outlook takeaways: A bull market remains in place, supported by strong earnings and a resilient economy, though there are still underlying vulnerabilities beneath the surface, said Liz Ann Sonders, chief investment strategist at the Schwab Center for Financial Research (SCFR), in Schwab's newest look at the market.

What technical indicators should traders use? With hundreds of technical indicators available, it can be difficult for traders to select ones that align with their trading strategy. Schwab's article identifies a few particularly helpful ones to consider.

The latest from Washington: The new Fed chair, a bipartisan affordable housing bill in Congress, and a BLS nominee are among the details discussed by Michael Townsend, managing director, legislative and regulatory affairs at SCFR, in Washington: What to Watch Now.

Inflation crossroads: On the one hand, commodity prices have rolled over since mid-May, which could provide a welcome dose of inflation relief moving forward. On the other, sticky price categories—which tend to adjust more slowly—remain well above the Fed's 2% target, perhaps giving policymakers a harder job to secure price stability. Learn more about what's moving prices in Schwab's look at markets and the economy.

Checking the Fibonaccis: Learn all about Fibonacci retracement and extension levels in Schwab's technical analysis piece explaining how these can identify potential support and resistance for stocks.

Market breadth remains relatively solid and actually improved yesterday in the S&P 500 Index despite the selloff that was concentrated among the highest-capitalized stocks. The percentage of stocks above their 50-day moving average ($SPXA50R—candlesticks) rose to 58% yesterday from recent lows near 50%, and is now above the 50-day moving average (blue line) for this indicator. This could signal rotation out of mega caps and into a broader collection of stocks, but the indicator remains well below recent highs above 60%.

June 25: May PCE prices, Q1 GDP final estimate, May durable orders, and expected earnings from Darden Restaurants (DRI).
June 26: University of Michigan final June consumer sentiment.
June 29: No major earnings or data expected.
June 30: June consumer confidence and expected earnings from Nike (NKE) and Constellation Brands (STZ).
July 1: ADP June employment change, June construction spending, June ISM Manufacturing PMI^®, and expected earnings from General Mills (GIS).