Philadelphia Semiconductor Index to Form 'Death Cross' by Year-End

50-Day Moving Average Falls Below 200-Day Moving Average by Year-End

Historical 10% Drop Following Death Cross

An ominous signal has appeared for the Philadelphia Semiconductor Index, which has led the rally in U.S. stocks over the past two years.

According to MarketWatch on the 1st (local time), the Philadelphia Semiconductor Index (SOX) experienced a 'death cross' by year-end, where the 50-day moving average falls below the 200-day moving average. This suggests a bearish reversal of the basic trend.

Semiconductor stocks in the U.S. are crucial for the overall market direction. According to Dow Jones Market Data, the semiconductor and semiconductor equipment industry group is the largest within the S&P 500 group.

As of the closing price on the 30th of last month, the semiconductor industry sector had the largest weight among industry groups in the S&P 500 market capitalization.

With investor interest driven by expectations for AI technology, semiconductor companies have significantly contributed to the rise of the S&P 500 index since the current bull market began in October 2022. However, the entire sector has generally wavered since the second half of 2024.

The iShares Semiconductor ETF (ticker: SOXX), which tracks the Philadelphia Semiconductor Index, closed at $215.49 on the 31st of last month, down 19% from its all-time high of $267.24 recorded in July.

The Philadelphia Semiconductor Index includes rapidly growing semiconductor companies riding the AI revolution, like NVIDIA and Broadcom, as well as companies like Intel, which saw significant declines last year.

NVIDIA closed at $134.29 per share, down 2.3% on the 31st.

The Philadelphia Semiconductor Index last experienced a death cross on March 17, 2022. According to Dow Jones data, the Philadelphia Semiconductor Index fell 10% in the month following the death cross and dropped 23.4% over the next three months.

Guest Reporter Kim Jung-ah kja@hankyung.com