Under the joint sniping of Trump and Biden, chip stocks have exploded.On Wednesday, the stock price of European lithography giant ASML fell by 10%, followed by Nvidia in the US plummeting by 6%, and AMD dropping by 10%. The collapse of chip stocks dragged the Nasdaq index down by 2.7%, marking the largest single-day decline since December 2022. Only Intel and GlobalFoundries saw their stock prices rise against the trend.<img src="https://imageproxy.pbkrs.com/https://wpimg-wscn.awtmt.com/8647b570-7580-4ccd-9be9-06f7824468f4.png?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" alt="" original-src="https://imageproxy.pbkrs.com/https://wpimg-wscn.awtmt.com/8647b570-7580-4ccd-9be9-06f7824468f4.png"/>The collective plunge of chip stocks this time also caused the Philadelphia Semiconductor Index, which tracks Nvidia, TSMC, and other chip stocks, to plummet, shrinking the market value of chip stocks by $496 billion.<img src="https://imageproxy.pbkrs.com/https://wpimg-wscn.awtmt.com/ce36d00b-a3fc-4842-813a-7cf27c11ddd1.png?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" alt="" original-src="https://imageproxy.pbkrs.com/https://wpimg-wscn.awtmt.com/ce36d00b-a3fc-4842-813a-7cf27c11ddd1.png"/><h2>Style rotation continues, large-cap tech stocks -&gt; small-cap stocks</h2>Steve Sosnick, Chief Market Strategist at Interactive Brokers, pointed out that chip stocks have been impacted by both Biden and Trump. If high-quality large-cap stocks other than large-cap tech stocks also experience a sharp decline, investors will truly have nowhere to hide.Ajay Rajadhyaksha, Global Research Director at Barclays Bank, stated that Wednesday's decline in chip stocks reflects investors' high attention to geopolitical risks, with Trump's chances of winning the US election significantly increasing. Moreover, the style rotation in the US stock market is very aggressive, continuing to shift from large-cap tech stocks to small-cap stocks.Some analysts pointed out that chip stocks with strong manufacturing capabilities like Intel and GlobalFoundries can rise against the trend mainly because they are sectors that align with Trump's &#34;Make America Great Again&#34; rhetoric - possessing certain industrial manufacturing capabilities.Ted Mortonson, a technology strategist at Baird, pointed out that hot money around artificial intelligence has driven significant increases in the stock prices of companies like Microsoft and Nvidia this year. However, in recent weeks, Wall Street has begun to worry about how long it will take for the hundreds of billions of dollars that big tech companies have invested in AI infrastructure to pay off.Christophe Fouquet, CEO of ASML, stated on Wednesday that he believes the chip industry will recover next year driven by artificial intelligence. However, he also admitted that there is still &#34;a lot of uncertainty&#34; about the speed and form of the chip industry's recovery.<h2>What will be the future trend of the US stock market?</h2>In the first half of the year, the seven tech giants of the US stock market drove the market higher, and their own valuations soared. Now, as they are all pulling back, can the US stock market continue to rise without their impetus?Scott Rubner, a strategist at Goldman Sachs, stated that it is not the time to bottom fish in the US stock market. The correction in the US stock market has just begun, and the S&amp;P 500 index will continue to decline 。 Because according to data since 1928,The market changes on July 17 imply a turning point in stock index returns, especially as August is typically the month with the most severe outflows of passive management funds and mutual funds.Rubner stated that after a series of increases, the US stock market faces the risk of weak fund inflows and is vulnerable to negative news:<blockquote>As the relevant funds have been deployed to the third quarter, it is expected that there will be no inflows from passive funds or mutual funds in August. The massive family fund sector has just experienced the second largest inflow of passive funds in history, second only to 2021. Regarding the argument of slowing down passive fund inflows, Rubner observed that in the past three days, the imbalance of sell orders at market close reached $8 billion.As for trend-following CTA systematic funds, their positions have reached the maximum limit, indicating no further buying space.</blockquote>BTIG analyst Jonathan Krinsky also expressed a similar view, believing that the US stock market is approaching the typical end of a bull market. From surveys and trading indicators, the current market sentiment remains very high.<img src="https://imageproxy.pbkrs.com/https://wpimg-wscn.awtmt.com/d25bd875-a1a3-40ba-bc94-1a6a19008ee5.png?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" alt="" original-src="https://imageproxy.pbkrs.com/https://wpimg-wscn.awtmt.com/d25bd875-a1a3-40ba-bc94-1a6a19008ee5.png"/>Krinsky added: &#34;Although the style shift from large-cap tech stocks to cyclical stocks and small-cap stocks is encouraging, such a shift in such a short period of time seems somewhat strained. Even if this style shift can last longer, new leaders may not emerge until further deep corrections in the US stock market.&#34;

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Goldman Sachs pointed out that the pullback in US stocks has just begun, so do not try to bottom fish at this time

Chips "collapsed", can the US stock market still stand?