Reversals wreak havoc as US stocks turn big gains to losses

Turnaround Tuesday gave way to Whiplash Wednesday.

The S&P 500 was up as much as 1.5% in early trading, but gave all that back and then some to end down 0.8%. For the Nasdaq 100 and Russell 2000, it was a similar pattern with even worse results: those indexes finished off 1.2% and 1.4%, respectively. 

Markets are still jittery and confused amid a selloff that’s increasingly more technical – and tech-centric – than economic in nature.

Reversals were the hot trend on Wednesday: the VanEck Semiconductor ETF was up nearly 4% in the morning before sinking 2.8%. That’s the first time on record (back to 2011) that this product was up at least 3% intraday only to close down more than 2%. All of its constituents were negative, with more than 5% losses for Nvidia and Broadcom.

Super Micro Computer, an AI darling, was up nearly 18% after hours on Tuesday after posting quarterly results that included a sales forecast that topped estimates – only to end 20% lower by the time the dust settled on Wednesday. Poor margins were blamed for the reversal, but the chart gives the appearance of a momentum trade that is broken. The stock was the worst performer in the S&P 500.

Airbnb was right behind it after posting underwhelming earnings, which included the tidbit that the revenge travel backlog looks to have cleared. 

Consumer discretionary and tech were the worst-performing S&P sector ETFs; utilities, energy, financials, and consumer staples advanced on the day.