Semiconductor shares reversed recent gains on Thursday as a stronger-than-expected producer price report cemented expectations of a Federal Reserve rate increase, outweighing the sector's momentum from earlier in the week. SK Hynix led the decline, falling 6 percent to $187 after hitting a post-ADR-debut high of $191 in the previous session. Micron Technology dropped 4.2 percent to $982, Advanced Micro Devices slipped 3 percent to $504, and Nvidia extended its losing streak to a third day with a 2.6 percent decline. Intel fell 6.5 percent to $99.34, a move the source described as ending a five-day losing streak despite the drop. SanDisk shares lost 4 percent but remain 8.5 percent higher for September.
The numbers
The selloff erased a three-day winning streak for SK Hynix and AMD and marked the third consecutive decline for Nvidia. Memory-chip makers had been among the market's recent leaders, with SK Hynix's ADR reaching a milestone since its July debut before Thursday's reversal. SanDisk's intraday decline contrasted with its monthly gain, illustrating the choppy rotation within the memory complex. Every major name in the group traded lower, with Intel's 6.5 percent drop the steepest of the session.
The macro backdrop
The downdraft coincided with two inflation surprises. The August producer price index rose 0.4 percent from July and 5.4 percent from a year earlier, exceeding forecasts and reinforcing the case for a Fed hike at the September 15-16 meeting. Core PPI, excluding food and energy, advanced 0.2 percent month-over-month and 4.6 percent year-over-year. Brent crude topped $105 a barrel as US-Iran tensions escalated, adding an energy-cost tailwind to the inflation narrative. The European Central Bank separately raised its deposit rate 25 basis points to 2.5 percent, underscoring a global tightening bias.
What to watch
Friday's consumer price index report will test whether the producer-price heat transmits to consumer-level inflation, with gasoline costs expected to push the headline higher. Fed officials have signaled the rate decision may hinge on this week's data. For chip stocks, the question is whether the AI-driven rally can withstand a higher-for-longer rate environment that discounts future cash flows more aggressively. The sector's ability to hold September gains, SanDisk's 8.5 percent monthly advance is a case in point, will indicate if Thursday's move was profit-taking or a regime shift.