Investopedia Markets News (all except PF)

Gas prices are displayed at a Mobil gas station on June 22, 2026 in Los Angeles, California.
Credit: Justin Sullivan / Getty Images

Key Takeaways

• The Federal Reserve's favorite measure of inflation likely rose to its highest in nearly three years in May.
• Accelerating price increases in consumer products could put pressure on the Fed to raise interest rates at its next meeting in July to combat inflation.

The Federal Reserve's preferred measure of inflation likely surged in May, putting the central bank's determination to keep prices stable to the test.

Forecasters expect Thursday's Personal Consumption Expenditures price index to show inflation rose 4.1% over 12 months ending in May, according to a survey of economists by Dow Jones Newswires and The Wall Street Journal. That would be up from a 3.8% in April and the highest since 2023.

The uptick would largely reflect rising gasoline prices due to the war in Iran that month, which have since begun to decline following the signing of a peace agreement.

However, core prices— which exclude volatile food and energy costs and are regarded by economists as a better indicator of persistent inflation trends—are expected to have risen 3.4% over the year, up from a 3.3% annual increase in April. That would make it the highest mark for the core index since October 2023.

What This Means For The Economy

Thursday's inflation report is highly anticipated in financial markets and could heavily influence whether the Federal Reserve raises interest rates or not at its next meeting in July.

The rise in core inflation is especially important for the Fed because the core PCE price index is the Fed's benchmark for whether inflation is running at its 2% annual target. That measure has been above the goal since 2021.

Rising core inflation could put more pressure on the Fed to use its main inflation-fighting tool: increasing the fed funds rate, which influences borrowing costs on all kinds of loans.

As of Wednesday, financial markets were pricing in a 34% chance the Fed would hike rates at its next meeting in July by a quarter- point, according to the CME Group's FedWatch tool, which forecasts rate movements based on fed funds futures trading data.

Thursday's report could shift those odds one way or the other if it comes in higher or lower than expected. In recent communications, a growing number of Fed officials have signaled concerns about rising inflation and warned that rate hikes could be on the way this year.

Before the Iran war, several price trends were more favorable.

In particular, housing inflation, which spiked during the pandemic, has been cooling, leading to a drop in core inflation toward the 2% target. Financial markets had widely expected the Fed's next move to be a rate cut to stabilize the shaky-looking job market. However, tariff-related price hikes last year, combined with the war in Iran's disruption of supply chains, have stoked concerns about a fresh round of high inflation.

"The pickup has been partly due to tariffs and other one-offs, but the Fed is losing patience after the latest round of supply shocks, while housing disinflation has mostly run its course," Aditya Bhave, U.S. economist at Bank of America Securities, wrote in a commentary.

To be sure, some of those pressures could abate now that more ships are moving through the crucial Strait of Hormuz between Iran and Oman. It drove the price of crude oil close to prewar levels on Wednesday.

However, other prices could signal a more stubborn inflation trend. Prices for durable goods (that is, items designed to last more than three years) were up 3.3% over 12 months in April, indicating price hikes have spread beyond just fuel. That's a stark contrast to the pre-pandemic era, when durable goods prices typically fell on average every year, helping keep overall inflation in check.

"Historically, durable goods prices have acted as a deflationary force within the economy," Michael Kramer, an investment advisor at Mott Capital Management, wrote in a commentary. "If that trend has truly shifted on a more permanent basis, it would represent a meaningful change in the inflation backdrop. In that scenario, the Fed’s current policy stance may not be restrictive enough to return inflation to its target."

Update, June 24, 2026: This article has been updated to include additional commentary from economists.

JPMorgan and BCA Research both raised their year-end S&P 500 targets on Wednesday.
Credit: Spencer Platt / Getty Images

Key Takeaways

• Analysts at JPMorgan and BCA Research raised their year-end S&P 500 targets on Wednesday, citing their expectation that earnings growth will offset valuation pressures from higher rates and growing equity supply.
• JPMorgan warned the recent run-up in momentum stocks, especially those without strong balance sheets and earnings, creates the risk of a pullback that could disrupt the market's ascent.

Wall Street firms are getting more bullish on earnings—and stocks—heading into the second half of 2026.

JPMorgan on Wednesday lifted its year-end S&P 500 target to 7,800, about a 6% premium to yesterday's close, citing the index's “unprecedented” earnings strength and progress toward a U.S./Iran peace deal.

The bank's analysts see earnings driving stocks higher: Wall Street analysts have raised their S&P 500 earnings estimates for 2026 and 2027 by about 10% since the start of the year, according to JPMorgan. “This type of positive revision is unprecedented and is typically seen only after a shock or post-recession,” the analysts wrote. 

BCA Research on Wednesday raised its S&P 500 target to 8,100 from 7,700, citing the same forces as JPMorgan. Earnings growth in the first quarter was stronger and broader than BCA expected, and the firm expects growth to remain strong “as the economy has shifted into expansion.” BCA's 8,100 target represents 10% upside from Tuesday's close.

Why This Matters to Investors

Market watchers continue to believe strong corporate earnings, driven by the AI buildout, can keep stocks moving higher. But they think those gains could come with bumps along the way.

The tech sector, specifically the parts of it most exposed to the AI data center buildout, has been the main source of growth this year. Hyperscalers—Alphabet (GOOG), Microsoft (MSFT), Amazon (AMZN), Meta (META) and Oracle (ORCL)—started 2026 forecasting a 40% year-over-year increase in capital expenditures. But after a strong first quarter, spending is now expected to increase more than 75%.

That investment is juicing the revenue and earnings growth of data center suppliers across sectors, including memory chip maker Micron (MU) and construction equipment company Caterpillar (CAT). 

Consumer and labor market resilience, as well as the relatively contained impact of higher oil prices on corporate earnings, add to JPMorgan's confidence that the U.S. economy is likely to continue growing at a healthy clip. 

But the path to JPMorgan's target will likely be a bumpy one, analysts warn. After the first quarter's exceptionally strong earnings, expectations are high heading into the next round of reports beginning in July. 

JPMorgan notes extreme crowding in shares with momentum, like chip and memory stocks, amplifies risk of a reversal or flash crash. Investors got a reminder of that on Tuesday, when chip stocks tumbled from record highs. 

Investors also shouldn't bank on any multiple expansion this year, according to JPMorgan. Multiples are likely to be pressured by elevated interest rates, which are unlikely to fall after oil prices pushed inflation to a three-year high last month. And with the impending IPOs of OpenAI and Anthropic, as well as the end of SpaceX (SPCX) IPO lock-ups, valuations are likely to be pressured by a deluge of new shares hitting the market. 

Gold prices fell below $4,000 an ounce on Wednesday.
Credit: Photo by GEORG HOCHMUTH / APA / AFP via Getty Images) / Austria

Key Takeaways

• Spot gold prices fell below $4,000 on Wednesday, a level not touched since November; silver tumbled to under $60.
• Growing concerns that the Federal Reserve could raise benchmark rates this year likely triggered the slide.

Gold has less glitter these days.

Precious metals prices have hit a new low for the year, with spot gold on Wednesday falling 3% to below $4,000 per ounce, a level it hasn't touched since November. Silver, meanwhile, declined more than 4% to under $60. This recent slide leaves gold down almost 30% from a January peak of around $5,600, while silver is down more than 50% from a high of roughly $122.

Gold and silver have been going nowhere for most of the year, with recent tumbles arriving after the Federal Reserve's first policy meeting under new Chair Kevin Warsh. Though the U.S. central bank left rates unchanged, investors have become increasingly concerned that it could raise rates; CME Group's FedWatch currently shows traders pricing in at least one hike by the end of the year.

Why It Matters to You

Gold and silver were among the best-performing asset classes of last year. But both are underperforming equities year to date and have ticked down after trading sideways for most of the first half of 2026.

Higher rates are generally seen as bad for gold prices, since they can make dividend-paying assets look more attractive, and they can also strengthen the dollar, which can make gold more expensive for international buyers.

Stocks appear to have shrugged off interest-rate concerns, with both the S&P 500 and the tech-heavy Nasdaq 100 recovering lost ground from earlier in the week. That hasn't been the case for gold.

"If precious metals traders are right about how aggressive the Fed will get to crush inflation, the stock market should be crashing," Peter Schiff, an economist who is often bullish on gold, said in a social media post Wednesday morning. "If stock traders are right that the Fed is more bark than bite when it comes to rate hikes, gold prices should be soaring."

To be sure, gold hasn't behaved as expected—neither proving to be much of a hedge amid geopolitical tensions nor the risk asset it became when traders last year started buying up hard assets on concerns about currency debasement.

Perhaps investors have only themselves to blame. "The popularity of the debasement trade has been its own undoing," Robin Brooks, a senior fellow at the Brookings Institution, said in a social media post today, adding that though the U.S.-Iran peace deal should've helped gold rally, it's now "getting crushed by the hawkish Fed and strong Dollar."

Alphabet is set to join the Dow Jones Industrial Average next week.
Credit: Beata Zawrzel / NurPhoto / Getty Images

Key Takeaways

• Alphabet will take Verizon's place in the Dow Jones Industrial Average ahead of next week's open, S&P Global announced Wednesday.
• Honeywell will retain its spot in the Dow after spinning off Honeywell Aerospace, which will be added to the S&P 500 on Monday and take the place of Conagra Brands.

While investors watch to see if and when SpaceX will be added to major stock indexes, other changes to some key market benchmarks are already on the way.

S&P Global said after Tuesday's closing bell that Google parent Alphabet (GOOGL) will be added to the blue-chip Dow Jones Industrial Average ahead of Monday's open, taking the place of Verizon Communications (VZ). The index provider said that adding Alphabet will "broaden and strengthen" the measure's exposure to industries including AI, autonomous vehicles, and media.

Why This Matters to Investors

Inclusion in a major index can benefit stocks in a number of ways, introducing them to new investors and spurring buying by funds that track a particular index.

S&P Global also said Honeywell (HON) will remain a Dow component following the spin-off of one of its divisions, also expected to take place by next week, and will be called Honeywell Technologies. The spin-off, Honeywell Aerospace, will trade under the "HONA" ticker and be added to the S&P 500 on Monday.

Honeywell Technologies will retain its place in the S&P 500, but will be replaced in the S&P 100 by Honeywell Aerospace. Honeywell Aerospace will take the S&P 500 spot held by Conagra Brands (CAG), which will move to the S&P SmallCap 600.

Toast (TOST) and IES Holdings (IESC) will join the S&P MidCap 400, replacing TopBuild (BLD) and Janus Henderson Group (JHG).

Alphabet shares were up 1% in recent trading, while Verizon shares fell 2%. Honeywell shares gained 1%, while Toast and IES rallied 4% and 7%, respectively.

Wednesday's move leaves Cerebras shares down nearly 40% from where they closed on their first day of trading.
Credit: Michael Nagle / Bloomberg / Getty Images

Key Takeaways

• Cerebras shares plunged Wednesday following the AI chipmaker's first quarterly results as a public company.
• Worries about Cerebras' margins could be weighing on shares, but analysts are staying bullish on the company's outlook.

Cerebras beat Wall Street's estimates with its first report as a public company, but investors aren't cheering the results.

Shares of Cerebras (CBRS) plunged 15% to around $192 in early trading Wednesday, hitting their lowest point since the stock began trading last month, despite posting quarterly sales that topped expectations and a narrower-than-expected loss.

Worries about costs squeezing Cerebras' margins could be weighing on shares, as the chipmaker said after the bell yesterday that it expects adjusted gross margins of 36% to 38% in the current quarter, down from the 47% margins Cerebras posted in the first quarter.

Why This Matters to Investors

Wednesday's slump comes after a volatile few weeks for Cerebras shares since debuting last month.

Morgan Stanley analysts told clients in a note Wednesday they remain bullish on the stock, however, and raised their lifted their price target to $273 from $250, citing strong demand for the company's chips. "Nothing in these numbers was disappointing," they wrote, and suggested the Cerebras could be conservative with its outlook as it navigates its first few quarters as a public company.

For the first quarter, Cerebras said it generated $193.4 million, about $10 million above the analyst consensus compiled by Visible Alpha, along with an adjusted loss of $2.48 million, smaller than analysts had forecast.

With Wednesday's slump, Cerebras shares are down nearly 40% from where they closed on their first day of trading. They're about 4% above their IPO price of $185.

News of the day for June 24, 2026

The S&P 500 and Nasdaq Composite closed sharply on Tuesday.
Credit: Michael M. Santiago / Getty Images

Stock futures are pointing higher Wednesday after two days of losses fueled by tech sector weakness; FedEx shares are losing ground despite a solid earnings report; shares of chipmaker Cerebras are down after the company released its first quarterly report since going public last month; memory chip maker Micron is scheduled to release its results this afternoon; and Google parent Alphabet will take Verizon's spot in the Dow Jones Industrial Average next week. Here's what you need to know today.

Stock Futures Rise After Steep Losses

Stock futures are rising this morning as tech stocks look to recover from a two-day sell-off that weighed on the major indexes. Futures tied to the S&P 500 and the tech-heavy Nasdaq were recently up 0.3% and 0.6%, respectively, while Dow Jones Industrial Average futures added 0.1%. The Dow closed slightly lower yesterday while the S&P 500 and Nasdaq tumbled as chip and memory stocks plunged.

WTI crude oil futures were down 3% to below $71 per barrel, as optimism over a potential long-term deal to end the Iran war has sent prices back down to levels not seen since the early days of the conflict. Gold futures were down about 2% to $4,060 an ounce, while bitcoin traded at $62,700, little-changed from yesterday afternoon. The yield on the 10-year Treasury note, which affects rates on all sorts of consumer loans, fell to 4.46% from 4.50% on Tuesday.

FedEx Stock Slips Despite Solid Earnings Report

FedEx (FDX) shares are losing ground after the company released its first earnings report since spinning off its FedEx Freight business. The company said it earned $6.31 per share on $25.0 billion in revenue, each better than what analysts had forecast, per Visible Alpha estimates. FedEx, which is making a switch to align its fiscal year with the calendar rather than having it end in May, said it expects adjusted EPS of $16.90 to $18.10 in 2026, which is down from the $20.24 per share it posted in the fiscal year that just ended. The company is losing some profits due to the recent spin-off of its freight business, and investors are likely still working out how to properly value FedEx without that segment. FedEx shares were down 7% in recent premarket trading. FedEx Freight (FDXF) is due to release its results tomorrow afternoon.

Cerebras Stock Tumbles After First Earnings Report Since IPO

Shares of Cerebras (CBRS) are sliding after the company released its first quarterly results since last month's IPO. The chipmaker said after the bell yesterday that it generated $193.4 million in revenue in its fiscal first quarter, about $10 million above what analysts were projecting, along with a smaller-than-expected adjusted loss of $2.48 million. Investors may be concerned about Cerebras's path to profitability, as the company said it expects "core," or adjusted, operating margins of negative 28% to negative 32% over the full year. Cerebras shares were down 8% ahead of the opening bell. The stock, which through yesterday's close was down 35% from the opening price of $350 on its first day of trading on May 14, has endured a volatile ride since then.

Micron Earnings Due After Closing Bell

Micron Technology (MU), one of the hottest stocks in the S&P 500 this year, is due to release its earnings report after the closing bell. The memory chip maker is expected to report revenue of $36.15 billion, nearly quadrupling year-over-year, with adjusted EPS of $20.95, up from $1.91 last year. Micron and other memory stocks have soared in the last 18 months as a shortage of the key hardware components due to AI-related demand has allowed the industry to raise prices to record highs. Analysts have said recently that the shortage isn't likely to end any time soon. Micron shares, which have gained roughly 270% since the start of the year, were up 5% in recent premarket trading,

Alphabet Is Replacing Verizon In The Dow

The Dow is about to get a bit more tech-centric, with Alphabet (GOOGL) set to join the index next week. The Google and YouTube parent will replace Verizon (VZ), S&P Global announced yesterday afternoon. The change will take place before the opening bell Monday. The index provider also said that Honeywell (HON) will remain in the Dow as Honeywell Technologies after the spin-off of its Honeywell Aerospace business is completed, which is also expected to take place on Monday. Alphabet and Verizon shares were each up less than 1% recently.

Inflation has continued to rise, yet Americans have not stopped shopping.
Credit: David Paul Morris/Bloomberg via Getty Images

KEY TAKEAWAYS

• Gasoline prices have risen sharply in 2026 due to the conflict in Iran, driving inflation to levels last seen in 2022.
• Consumers are cutting back on services like dining and travel, but continue to spend on retail, supported by higher tax refunds.
• Persistent inflation could weaken consumer spending later in 2026, especially for lower-income households.

Consumers have been the fuel powering the U.S. economy recently. Can they keep it up?

In May, inflation rose to its highest level since April 2023, largely due to higher gas and grocery prices amid the war in Iran. While gas prices have fallen in recent weeks, they're still far above levels at the onset of the war. Consumer sentiment about the economy and their finances has grown more pessimistic; however, spending has remained strong.

Gas Is Back Below $4, But Still Far Above Winter Lows

Historically, low consumer sentiment has led to lower consumer spending. Since the COVID-19 pandemic, that correlation has weakened.

Why This Matters

Consumer spending has been the driver for U.S. economic growth. If it slows, it could trigger a recession, leading to a sluggish stock market and higher unemployment.

While many Americans are not halting their spending, they are seeking deals and ways to spend less, such as filling up at wholesale clubs, using public transportation or adjusting their summer plans.

Investopedia spoke with John Mercer, head of global research at Coresight Research, about how consumers have managed to maintain their spending. This interview has been edited for brevity and clarity.

INVESTOPEDIA: How could high oil prices impact consumers besides at the gas pump?

JOHN MERCER: The big risk is that if oil prices stay elevated because of ongoing disruption, we will see tertiary effects from higher oil prices. We've already seen a primary and secondary effect.

The primary effects are the immediate flow to gasoline prices. That's very quick; it takes roughly a week. The secondary effects are where those higher oil and gasoline prices then cascade through the supply chain, and that impacts the prices of goods and services.

If you have persistent inflation, then the tertiary effects are in things like wages. As inflation proves persistent and sticky, wage demands get more aggressive, wages rise faster, and then you get this cycle of inflation, which is what we saw a few years ago. That's the real risk.

INVESTOPEDIA: How are high gas prices impacting consumers' spending habits?

MERCER: Consumers are highly attuned to inflation. They've had it on their mind all through 2025. They told us it's their top concern about tariffs. Then, of course, tariffs may not have been superseded, but in the near term, have been overtaken by oil prices amid global conflict.

About two-thirds now say they're cutting back spending because of higher gasoline prices. One of the things we do find from that is that services seem to be more exposed…The top three options for cutting back were restaurants, bars and travel.

It does suggest that discretionary services are more exposed than retail categories.

INVESTOPEDIA: Why are consumers more inclined to cut back on services over discretionary retail spending?

MERCER: It's easier to cut back [on services], because there will be a higher ticket price. You could make one cut and probably save more than you would by making one cut in a retail purchase.

The current context isn't all bad; consumers are continuing to spend at retail, and a big factor there is tax refunds. Tax refunds are up by about $50 billion compared to how they were last year. So, there's about $50 billion more swimming around in the consumer economy that can absorb a lot of those gasoline price rises, and as a result, we're seeing retail sales grow really quite strongly.

INVESTOPEDIA: How can we expect consumers to act during the last half of 2026?

MERCER: This is supposition, but what we're pointing to for the summer season and back-to-school shopping—which is a really big season for retail—is the recent performance of retail and the recent earnings season. The tax refunds all point to near-term resilience in retail, and we think that will support spending into the summer travel season and into the back-to-school season.

The risk is that if this gasoline inflation and overall inflation prove sticky and endure through the year, and consumers effectively erode those tax refunds, then later in the year, they're more exposed to that higher inflation.

The inflationary effects of the Middle East conflict are likely to amplify the so-called "K-shaped" economy, where higher-income consumers continue spending, and lower-income consumers tend to be more cautious or cut back.

The S&P and the Nasdaq extended their losses on Tuesday amid an ongoing tech sector rout.
Credit: Michael M. Santiago / Getty Images

Key Takeaways

• A recent sell-off in U.S. tech stocks is being viewed as a healthy correction after a strong rally.
• Changing expectations around Federal Reserve interest rate policy have contributed to market volatility.
• Investors may be taking profits, leading to a "moment of pause" in the markets.

The record may be scratched, but the party in the U.S. stock market isn't over, according to several experts.

Analysts are sizing up this slump in the S&P 500 and the Nasdaq 100 and calling it "healthy" and a necessary "gut check" that will keep things moving along. After a torrid rally that drove benchmark indexes to a series of records, a momentary break helps stocks avoid getting overheated, they say. To be sure much of the S&P's and the tech-heavy Nasdaq's 2026 gains have come just in the last couple of months after the pair of indexes spent the early part of the year doing nothing.

This week's sharp sell-off—taking down high-flying chip stocks and hyperscalers alike—was to be expected, because the tech trade had gotten "crowded", according to Morgan Stanley Investment Management senior portfolio manager Andrew Slimmon, who describes the recent action as "good for the markets."

"Ultimately what you don't want to see is so much euphoria that it ends badly," he said in an interview with CNBC on Tuesday morning.

WHY THIS MATTERS TO YOU

The tech stock rout is stoking fears about an AI bubble, but experts say that the pause here will help the market avoid getting overheated.

Experts point to a variety of factors recently tempering what has mostly been a festive atmosphere for the market.

Slimmon said changing expectations around the Federal Reserve's monetary policy—from "for sure cutting to maybe raising" interest rates—likely caused the recent rout.

The Federal Reserve last week, as expected, left its benchmark interest rate unchanged, but new Fed Chair Kevin Warsh delivered an unambiguously hawkish stance following the meeting, vowing to tame inflation. That has led market participants to pencil in the likelihood of higher interest rates and all but eliminate expectations of a cut. Traders are pricing in at least one interest rate hike by year's end from the Fed, according to CME Group's FedWatch tool.

Higher rates are generally considered a headwind for growth stocks, because they increase borrowing costs for companies investing heavily to create future lines of business.

Wedbush tech analysts led by Dan Ives said the sell-off in the KOSPI, the benchmark index for stocks in South Korea, was spilling over to the U.S. tech sector. The country's stock market, even after its big tumble, is still up about 90% year to date on the back of big chip stock gains.

"Taking a step back we continue to believe that in this market we will continue to go through a number of 'gut check moments' in the tech trade," Ives wrote in a report published early Tuesday morning.

The other possibility: Investors are taking profits, Giuseppe Sette, co-founder of investment startup Reflexivity, said in an emailed statement on Monday, adding that this "moment of pause" in markets might not immediately turn into a recovery.

"It's entirely possible that large drawdowns, like the one we've seen, could attract buyers," he said, but that investors might be "more cautious" about jumping back into roiling markets.

The S&P 500 finished Tuesday's session down 1.4%, while the Nasdaq 100 dropped 3.3%. Even with two straight days of big declines this week, the S&P 500 and Nasdaq have gained 8% and 16%, respectively, since the start of 2026.

Meanwhile, the VIX, also known as the fear gauge, climbed 13% on Tuesday to just under 20, a level that is typically considered the dividing line between a market that's stable and one that's expected to remain volatile.

Even with Tuesday's gains, IBM shares are down about 12% from where they started the year after a pullback in recent weeks.
Credit: Sean Gallup / Getty Images

Key Takeaways

• IBM shares gained Tuesday, bucking the trend as the broader tech sector came under pressure.
• The tech giant's stock got an upgrade from JPMorgan analysts Tuesday, and the Trump administration laid out new plans to support the quantum computing industry.

International Business Machines weathered Tuesday's tech pullback better than most, thanks to a fresh vote of confidence on Wall Street, and a boost from the federal government.

Shares of IBM (IBM) climbed over 5% to close just under $265, making it one of the best-performing stocks in the S&P 500 on a day when the index declined, after JPMorgan analysts upgraded the stock to "overweight" from neutral, and lifted their price target to $291 from $270. Five of the six analysts with current ratings tracked by Visible Alpha have issued "buy" or equivalent ratings for the stock, with a mean target of $322.

The JPMorgan analysts said they think investors could be underappreciating the potential of IBM's software business, and that they have greater confidence in the segment's growth over the second half of this year, thanks in part to signs of growing AI adoption. "AI is a direct tailwind for software," they wrote.

Why This Matters to Investors

JPMorgan's upgrade and more federal support for the quantum computing industry could help boost confidence in IBM's stock, which has pulled back recently from its highs at the start of the month.

IBM could also stand to benefit from the U.S. government's moves to grow America's quantum computing industry. The Trump administration earlier today announced a pair of executive orders aimed at fast-tracking developments in quantum computing. Fellow quantum firm D-Wave Quantum (QBTS) also gained alongside IBM Tuesday, with shares adding 2%.

The expanded federal support efforts also come just a month after the Trump administration announced plans to take stakes in a number of public and private quantum firms in exchange for CHIPS Act funding, with $1 billion set to go to IBM.

Even with Tuesday's gains, IBM shares are down about 11% from where they started the year, and have dropped about a fifth from their highs in early June.

This article has been updated since it was first published to reflect more recent prices.

The Fund Is Heavily Exposed to Korean Stocks That Plunged Tuesday

Prior to Tuesday, DRAM was up 190% since it began trading in early April.
Credit: Michael M. Santiago / Getty Images

Key Takeaways

• The Roundhill Memory ETF (DRAM) was down 14% in afternoon trading Tuesday, erasing two days of big gains.
• The fund invests exclusively in companies that design, make and sell memory chips and data storage devices. Its largest holdings—Korean companies SK Hynix and Samsung, and U.S.-based Micron—account for nearly 75% of the fund.
• Due to its concentration, DRAM is a uniquely volatile fund, delivering investors big daily gains and big daily losses.

The memory stock rally skidded to a halt on Tuesday as yesterday’s tech sell-off expanded to new industries and countries. 

The Roundhill Memory ETF (DRAM) was down about 14% in recent trading after climbing to a record high on Monday. Tuesday’s sell-off erased two days of big gains for the fund. 

One of the selling points of an ETF is its diversification. By investing across sectors or buying several stocks within a given industry or theme, investors should enjoy some protection from double-digit losses during sell-offs. But DRAM invests exclusively in companies that design, make and sell memory chips and data storage devices, “the bottleneck of the AI revolution.” Those stocks often move in tandem as Wall Street’s appetite for AI investments ebbs and flows.

That was the case on Tuesday, when Sandisk (SNDK) tumbled 14% to lead the S&P 500 lower. It was followed closely by Micron (MU), down 13%. Western Digital (WDC) and Seagate Technology (STX), two other holdings, were down 9% and 6%, respectively. 

DRAM was underperforming most of its largest U.S. components on Tuesday in part because of its massive exposure to tech stocks abroad. SK Hynix and Samsung, which together account for 44% of the ETF, each plummeted 12.5% in Korean trading on Tuesday. Those two stocks and Micron—DRAM’s largest component—cumulatively make up nearly three-quarters of the fund. 

Due to its concentration, DRAM is a uniquely volatile fund, delivering investors big daily gains and big daily losses. Shares tumbled more than 15% in a day earlier this month after a surprisingly strong jobs report all but dashed Wall Street's hopes for more interest rate cuts this year. The ETF jumped 8% the following session, and 13% days after that.

Prior to Tuesday, DRAM was up 190% since it began trading in early April, right around the time that memory stocks shook off pressure from the Iran war and went parabolic. The ETF’s huge gains in its first few months made it one of the fastest-growing funds in history. It took just 43 days to reach $10 billion in assets under management. As of Monday, the fund was worth $23.4 billion.