Key facts
- Broadcom missed forward AI chip guidance, causing its stock to fall 14%.
- The semiconductor complex declined following Broadcom's outlook.
- Capital rotated into financials, healthcare, and value stocks.
- The Dow Jones Industrial Average reached a record high.
- The Nasdaq 100 underperformed due to tech weakness.
- Institutional investors sought downside protection in semiconductors, tech, and crypto-related equities.
Broadcom's fiscal second-quarter report revealed revenue of $22.19 billion, surpassing the $22.13 billion consensus. However, the company's forward guidance for AI chip sales in the third quarter was projected at $16 billion, falling below analyst estimates of approximately $17.2 billion. This disappointment sent Broadcom's stock down approximately 14% and triggered a broad sell-off across the semiconductor sector. In response, capital flowed into financials, healthcare, and value-oriented stocks. This rotation propelled the Dow Jones Industrial Average to a record close of 51,567.17, an increase of 1.73%. Conversely, the Nasdaq 100 index slipped 0.53% to 30,407.81, while the Russell 2000 added 1.45% to 2,935.33, indicating a broader appetite for cyclical assets. US 10-year Treasury yields eased 2.2 basis points to 4.465%. Options market data from the previous day showed confirmed opening flow leaning defensively, with put premium outweighing call interest in semiconductors, large-cap tech, and crypto-linked equities, suggesting a broad hedging or repositioning bias. Substantial put structures were noted in the Russell 2000 (IWM), indicating institutional demand for small-cap downside protection. The VIX closed at 15.74, a mild increase, while the SKEW index remained elevated at 142.15, signaling continued demand for out-of-the-money downside protection. The market is now anticipating the May Non-Farm Payrolls report.