The S&P 500 and Nasdaq 100 indices suffered a sharp reversal today, June 23, marking their worst day in two weeks. The tech-heavy index retreated by 580 points to 25,587, while the S&P 500 dropped by 107 points to 7,365.
This decline coincided with that of South Korea’s Kospi Index, which dropped by 10% earlier during the day. Japan’s Nikkei 225 Index also fell by 4%, with Kioxia being the top laggard.
These indices dropped as investors positioned themselves ahead of Micron’s earnings, which will be reported after the market closes on Wednesday.
For a long time, Micron’s earnings were not as important to the market. Today, however, they are crucial because of their $1.18 trillion market capitalization and their status as a major player in the memory industry. Micron is in the memory chip industry, where it competes with top names like SK Hynix and Samsung.
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Memory stocks have led the gains in the US, Japan, and South Korea. Indeed, the three top names in the high-bandwidth memory (HBM) industry, such as Samsung, SK Hynix, and Micron, have all surpassed $1 trillion in market capitalization.
Therefore, there is a likelihood that these earnings will move the market, as we observed with Broadcom a few weeks ago. While AVGO’s earnings were strong, its guidance was weaker than expected, pushing top AI companies in the US and other countries lower.
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Analysts have high expectations for Micron’s earnings, with the average estimate that its revenue rose 279% last quarter to $35.2 billion. Its guidance for the current quarter is that its revenue will jump by 275% to $42.5 billion.
Fears of Micron’s earnings explain why its stock plunged by over 12% today. Other memory stocks were also in the red, with Sandisk falling by 14%, and Western Digital and Seagate falling by over 7%. Other AI-adjacent stocks, such as Vertiv, ON Semiconductor, and Marvell, were also among the top laggards, falling by over 10%.
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