Chip stocks plunge sharply; historical data shows a 70% probability of rebound

Huoxing Finance reports that on Thursday, November 7, the Philadelphia Semiconductor Index (SOX) fell 12%, while the S&P 500 dropped 4%, marking the second-worst single-day performance in SOX’s history since its inception (the worst occurring in March 2020 at the onset of the COVID-19 pandemic, and the third-worst during the dot-com bubble). However, the selling pressure did not persist on Friday, as the index strongly rebounded by over 4%. Market sentiment is expected to further recover over the weekend. Historical data from Deutsche Bank shows that in the three and twelve months following the nine worst SOX trading days, average returns were +23.3% and +48.8%, respectively, with positive returns recorded in six out of the nine instances, indicating that such extreme sell-offs are often followed by significant rebounds.