Dow Jones leads Wall Street higher as dip buyers strike, oil prices under pressure
2:30pm: Market movers
12:37pm: Onsemi (NASDAQ:ON) slides
Onsemi (Onsemi (NASDAQ:ON)) shares fell about 19% on Thursday after the semiconductor company announced an agreement to acquire Synaptics (NASDAQ: SYNA) in an all-stock transaction valued at approximately $7 billion.
Shares of Synaptics added about 3% to about $130 on the news.
Under the terms of the deal, Synaptics shareholders will receive 1.35 shares of Onsemi (Onsemi (NASDAQ:ON)) common stock for each Synaptics share they own, representing an approximately 19% premium to the companies’ respective 10-day volume-weighted average closing prices.
Synaptics shareholders are expected to own about 12% of the combined company on a fully diluted basis following the transaction.
Onsemi said the acquisition would expand its focus beyond power and sensing technologies into intelligent systems and edge artificial intelligence applications. The company expects the combination to increase its total addressable market by $30 billion to $243 billion by 2030 and strengthen its position in what it describes as “Physical AI” applications, including autonomous vehicles, robotics and augmented and virtual reality.
11:30am: Stocks bounce back
Dip buyers have made their move, sending US stocks higher after a wave of selling. The Dow was up 0.3%, the S&P 500 added 0.2% and the Nasdaq was up 0.1%.
“The recovery is a testament to the staying power of this rally, but holding on to gains has proved problematic throughout the week,” IG chief market analyst Chris Beauchamp said.
“Fortunately the sessions before US Independence Day tend to give bulls the upper hand, potentially shifting the tone next week.”
Meanwhile, oil prices fell back to multi-month lows. Crude prices fell more than 4.5% to below $69 per barrel.
“Dips in stocks get bought, while bounces in oil get sold, and heavily so. Both WTI and Brent teeter on the brink of new multi-month lows as Hormuz shipping continues without much interruption,” Beauchamp said.
10:05am: Tech under pressure
US stocks started Friday’s session lower as investors pulled back from tech stocks following the news that OpenAI would delay its IPO until next year.
The Nasdaq was down 0.2% at 25,306 points, the Dow Jones was down 0.1% at 51,880 points, S&P 500 was flat at 7,357 points.
“A rotation is going on in US stocks right now, the weakest performing companies on the S&P 500 include those most closely linked to AI, including Palantir and Oracle, which are down 18% and 16% respectively this week,” said Kathleen Brooks, research director at XTB.
“There are also chunky losses for some of the Magnificent 7, including Microsoft, Alphabet, Apple and Nvidia. The move away from tech heavy AI names is allowing value stocks to shine.”
8:15am: Difficult session in sight
US stocks are set for another difficult session on Friday, with the Nasdaq on course for a fifth straight day of losses as investors continue to rotate out of technology shares ahead of the quarter-end.
Nasdaq futures were down 1.2% ahead of the opening bell, while S&P 500 and Dow Jones futures fell 0.5% and 0.1%.
It comes after a mixed session yesterday, as a 6% drop in Apple shares weighed on the Nasdaq, which partially recovered from steep early losses to finish the day down 0.5% at 25,358 points, a collapse of over 1,000 points or 4.1% over the first four days of the week.
The S&P 500 closed almost completely flat at just under 7,358 points, while the Dow Jones added 0.1% at a little under 51,921 points.
This was followed by a bruising overnight session in Asia, where South Korea’s Kospi tumbled 5.8% and Japan’s Nikkei fell 4.2% as semiconductor and technology stocks sold off sharply.
European markets are also lower, with the technology rout spreading across the region.
The selloff comes despite strong results from memory chipmaker Micron earlier this week
“Concerns are growing over AI-related capital expenditure and just where all the money required for it is going to come from,” said market analyst David Morrison at Trade Nation.
“It is becoming clear that even the largest tech behemoths can no longer fund AI development out of their operating cash flow.”
Apple dropped 6% on Thursday after warning that higher memory costs would force it to raise prices, while Microsoft fell almost 4% after increasing Xbox prices because of rising component costs.
As we stand just three trading days from the end of the second quarter, Kenny Polcari at Slatestone Wealth said, “this is not what the beginning of a bear market looks like. This is what sector rotation looks like”, arguing that investors are taking profits in the biggest winners and reallocating money into industrials, healthcare and other overlooked sectors.
With the equal-weight S&P rising while the main weighted index struggled, Polcari added: “The generals took a hit… the troops kept marching.”
Investors were also digesting the latest US inflation data. Core PCE, the Federal Reserve’s preferred inflation gauge, rose to its highest level since October 2023, reinforcing expectations that interest rates could remain higher for longer.
Bitcoin staged a modest recovery above $60,000 after briefly falling below $59,000 on Thursday, while oil prices remained volatile amid renewed tensions in the Middle East and uncertainty surrounding OPEC+ production plans.