The AI and semiconductor-related stock index SOX is believed to have formed a head-and-shoulders top and entered a downtrend in the U.S. stock market. Multiple related developments were reported, including movements in the Dow Jones Industrial Average, trends in cryptocurrency markets, and the status of SpaceX's IPO.
In the U.S. stock market, the Dow Jones Industrial Average fell 703 points from the previous day on 20 August, as rising long-term interest rates and declines in major stocks stood out, but rebounded on 21 August to finish 517 points higher. The Nasdaq posted a modest gain from the previous day, while movements in selected semiconductor stocks and technology stocks became a focus for the market. Reports indicated that the AI and semiconductor-related stock index SOX has been in a downtrend since forming a head-and-shoulders top in mid-June.
SOX formed a head-and-shoulders top between 15 June and 30 June, then fell sharply through 29 July, reaching 11,740 as of 21 August. Although it had rebounded by 14 August, the recovery amounted to only about half of the preceding decline, suggesting that the market correction is likely to continue. Reports also indicated that SpaceX's share price fluctuated significantly after its IPO, with its market capitalization falling to approximately two-thirds of its peak.
In the Chinese market, the Shanghai Composite Index extended its modest gains, rising 0.24% from the previous day on 20 August and 0.04% on 21 August. Policy expectations ahead of the opening of the Standing Committee session of the National People's Congress, along with movements in U.S. interest rates, influenced the market. In Japan, the Nikkei 225 fluctuated, rising 890 points to 66,216 yen on 20 August before falling 200 points to 66,016 yen on 21 August. The market alternated between periods when AI and semiconductor-related stocks weighed on performance and periods of buying-back activity.
Among individual Japanese stocks, SoftBank Group, Recruit and Shin-Etsu Chemical rose, while Murata Manufacturing and Kyocera declined. AI and semiconductor-related stocks accounted for only a limited share of the top contributors to the Nikkei 225, pointing to a weakening of their overall ability to drive the market.