Semiconductor bear ETFs lost steam in the first hour of trading on Tuesday after a sharp Monday rally, as chip stocks staged a quick rebound.
• Why is SOXS stock falling?
Direxion Daily Semiconductor Bear 3X Shares (NYSE:SOXS) pared most of its double-digit gains within the first hour of trading, tracking a strong recovery in the Philadelphia Semiconductor Index (SOX), which rose about 3% as of 10.30 a.m. ET.
The turnaround was broad-based across the sector. Memory and storage names bounced back, with Micron Technology Inc (NASDAQ:MU) up 2%, ON Semiconductor Corp (NASDAQ:ON) up more than 6%, Seagate Technology Holdings Plc (NASDAQ:STX) gaining 5%, Western Digital Corp (NASDAQ:WDC) climbing nearly 5%, and SanDisk Corp (NASDAQ:STX) jumping almost 6%. Semiconductor equipment makers also advanced, led by Lam Research Corp (NASDAQ:LRCX), which rose 4%.
Semiconductor ETFs mirrored the sharp swings in the underlying chip sector. Broad funds like the iShares Semiconductor ETF (NASDAQ:SOXX) and VanEck Semiconductor ETF (NASDAQ:SMH) spiked almost 3% on Tuesday.
What Changed Overnight?
- Dip-buying kicks in
After Monday's sharp sell-off, investors stepped in to buy beaten-down chip stocks, especially in cyclical segments like memory and storage. - Relief in broader sentiment
Easing fears around geopolitical escalation and a stabilization in yields helped restore risk appetite, particularly in high-beta tech. - Short covering accelerates gains
Traders who had bet against semiconductors rushed to cover positions, amplifying the rebound and pressuring inverse ETFs like SOXS. - Technical bounce from oversold levels
The SOX index rebounded after hitting short-term support, triggering a classic relief rally.
The Bottom Line
Monday's surge in semiconductor bear ETFs proved short-lived. As chip stocks bounced back Tuesday, leveraged inverse funds like SOXS quickly gave up gains — highlighting how fast sentiment can swing in one of the market's most volatile sectors.
Photo: Shutterstock