The chip stock rout hasn't crushed the broader market, but investors should look out for these trends

Those beginning to worry about the renewed chip stock rout may find comfort in the fact that the broader markets are holding up very well. The Dow Jones Industrial Average (^DJI) is still trading near record highs and above all key moving averages, per Yahoo Finance AlphaSpace data. The S&P 500 (^GSPC) is holding above its 100-day and 200-day moving averages, but late last week it slipped below the 50-day.

A few factors are preventing the chip stock pullback from harming the broader market, according to Charles Schwab strategist Kevin Gordon. However, investors should be on the lookout for whether these trends reverse. 'You've got essentially two-thirds of S&P 500 companies that are trading above their 200-day moving average.

That's relatively healthy and still consistent with the market that is more rotational in nature and not necessarily one that is correctional," Gordon said on Yahoo Finance's Opening Bid. Major indexes hold near records. · Yahoo Finance AlphaSpace The equal-weighted index and cyclical stocks have all signaled a strong economy, he explained.

"And when you do look at the reaction of the market to some of these earnings beats, most of the pressure and most of the underperformance has been concentrated in the tech sector. Outside of that, when you look at financials or industrials or consumer discretionary, the reaction in the market has actually been positive." That's not to say what we are witnessing in chip stocks is any less worrying.

The illuminated white Samsung logo glows on the upper floors of a skyscraper at night in Warsaw, Poland, on Feb. 26, 2026. (Artur Widak/NurPhoto via Getty Images) · NurPhoto via Getty Images Semiconductor stocks are under intense pressure as investors have begun questioning whether the artificial intelligence spending boom has become overheated and have grown more concerned about rising competition from China.

The fears intensified on Tuesday after the KOSPI (^KS11) plunged nearly 11%, its worst session in months. Memory chip giants Samsung Electronics (005930.KS) and SK Hynix (SKHY) both suffered double-digit declines that rippled through the global semiconductor sector.

Adding to the anxiety were reports that China has made significant progress in memory chips through ChangXin Memory Technologies and in domestic lithography equipment. That's raising concerns that Chinese companies could become stronger competitors to established chipmakers. Hot names in the US, such as Micron (MU) and Sandisk (SNDK), have been crushed to start the week.

Sandisk lost 11.8% in Monday's session and is likely to see its declines extend today. Micron shed 3.

25% on Monday and is also under pressure in trading today. "I'm not saying that there's nothing to worry about with this, but I think that you go through these more significant rotations at times … So I think it is a reminder to just understand the mechanics of this market and how extreme some of the moves can be, especially when you get into the megacaps," Gordon says.

Story Continues Brian Sozzi is Yahoo Finance's Executive Editor, host of the 'Power Players With Brian Sozzi' podcast and a member of Yahoo Finance's editorial leadership team. Follow Sozzi on X @BrianSozzi, Instagram, and LinkedIn. Tips on stories?

Email brian.sozzi@yahoofinance.com.

Click here for in-depth analysis of the latest stock market news and events moving stock prices Read the latest financial and business news from Yahoo Finance Those beginning to worry about the renewed chip stock rout may find comfort in the fact that the broader markets are holding up very well. The Dow Jones Industrial Average (^DJI) is still trading near record highs and above all key moving averages, per Yahoo Finance AlphaSpace data. The S&P 500 (^GSPC) is holding above its 100-day and 200-day moving averages, but late last week it slipped below the 50-day.

A few factors are preventing the chip stock pullback from harming the broader market, according to Charles Schwab strategist Kevin Gordon. However, investors should be on the lookout for whether these trends reverse. 'You've got essentially two-thirds of S&P 500 companies that are trading above their 200-day moving average.

That's relatively healthy and still consistent with the market that is more rotational in nature and not necessarily one that is correctional," Gordon said on Yahoo Finance's Opening Bid. Major indexes hold near records. · Yahoo Finance AlphaSpace The equal-weighted index and cyclical stocks have all signaled a strong economy, he explained.

"And when you do look at the reaction of the market to some of these earnings beats, most of the pressure and most of the underperformance has been concentrated in the tech sector. Outside of that, when you look at financials or industrials or consumer discretionary, the reaction in the market has actually been positive." That's not to say what we are witnessing in chip stocks is any less worrying.

The illuminated white Samsung logo glows on the upper floors of