Chips Drive a Rebound After the Fed Sell-Off
The market bounced back from a Fed-induced sell-off on Thursday, but it was news about an Apple price hike that drove most of the strength.
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The market bounced back from a Fed-induced sell-off on Thursday, but it was news about an Apple (AAPL) price hike that drove most of the strength.
Apple announced on Wednesday night that it would be raising prices due to memory and storage chip supply costs. In addition, President Trump commented that Apple will be working with Intel (INTC) to design and manufacture chips in the U.S. The deal builds on a preliminary agreement Apple and Intel reached in May after a year of talks.
Intel has surged fourfold since the federal government took a 10% stake in August 2025, and the Apple deal is being treated as commercial validation for Intel’s foundry business. The initial scope is likely legacy chips, with the cutting-edge silicon staying at TSMC (TSM) for now.
The chip sector (SMH) exploded over 6% to a new all-time high on this combination of news. That also boosted both the Nasdaq 100 (QQQ) and the Magnificent Seven (MAGS) as well.
Overall market breadth was only about 55% positive with retailers, drugs, banks and oil lagging. Small caps (IWM) moved up 1.7%, with pockets of strong momentum. Stock pickers continue to do well.
The big question at this point is whether the chip sector and AI infrastructure can keep running hot. There was some nervousness about a top in chips on Tuesday, and it looks like overanxious skeptics were surprised by the strength on Thursday and forced to reposition.
The indices are hovering near the highs, and as is usual, the Wall Street pundits are obsessed with index direction rather than the opportunities in various sectors and rotational action.
Strategy
My best advice right now is to ignore the indices and focus on individual stocks. The indices are misleading and do not reflect what is actually happening. There is some good action in stocks that are not expensive, and there is also some anticipation building in front of the second-quarter earnings reports, which start in about three weeks. Focus on stock picking, not market timing, because that is where the money is.
Have a great long weekend. I’ll see you on Monday.
At the time of publication, DePorre had no positions in any securities mentioned.
