Nasdaq Composite Treads Water While SK Hynix Makes a $26 Billion Splash
Key Points
SK Hynix raised $26.5 billion in the largest-ever U.S. IPO by a foreign company, with shares jumping 17% above the offering price.
Meta climbed 6% after Bank of America flagged AI infrastructure costs at potentially half of what Wall Street expected.
Oil prices fell despite Strait of Hormuz traffic running at just 13% of normal levels, as U.S.-Iran talks continue.
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The major U.S. stock indexes traded in a narrow range Friday morning as investors digested a historic IPO debut and mixed signals from the technology sector.
The Dow Jones Industrial Average (DJINDICES: ^DJI) rose 0.2% by 12:09 p.m. ET, while the S&P 500 (SNPINDEX: ^GSPC) added 0.1%. The Nasdaq Composite (NASDAQINDEX: ^IXIC) traded flat, held back by weakness in Alphabet (NASDAQ: GOOGL) and Space Exploration Technologies (NASDAQ: SPCX).
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^DJI data by YCharts
The three indexes diverged significantly this week. From last Friday's close to today's early afternoon, the Dow is down 0.6% while the S&P 500 gained 1% and the Nasdaq Composite jumped 1.5% higher.
Meta's big day, SK Hynix's massive launch
The main event arrived at noon when South Korean company SK Hynix began trading on the Nasdaq.
The memory chip maker priced its American Depositary Receipts at $149 each, opened at $170, and quickly climbed to $175. That's a 17% pop, though retail investors rarely get access to IPO pricing anyway.
SK Hynix supplies high-bandwidth memory chips to Nvidia (NASDAQ: NVDA) and other AI hardware makers, positioning it as a direct competitor to all-American rival Micron Technology (NASDAQ: MU). Micron shares fell 1.4% as investors weighed the competitive implications. U.S. investors now have more than one pure-play option in the memory-chip space.
Speaking of AI, Meta Platforms (NASDAQ: META) jumped 6% after Bank of America (NYSE: BAC) flagged a pleasant surprise buried in an internal company memo. Meta apparently expects to build out AI computing capacity at roughly half the cost Wall Street had modeled. In-house hardware is an important part of the cost-saving program. Meta is ramping up the production of its own custom AI chips with design assistance from Broadcom (NASDAQ: AVGO) and manufacturing services by Taiwan Semiconductor Manufacturing (NYSE: TSM) later this year.
European regulators also chose Friday to accuse Meta of using "addictive design" on Instagram and Facebook, but investors collectively shrugged. The AI budget efficiency was Meta's biggest news today.
China successfully landed a reusable rocket for the first time on Friday, which didn't improve market sentiment toward Space Exploration Technologies (NASDAQ: SPCX). The rocketry-and-AI stock dropped 2.3%, now sitting more than 25% below its June IPO peak.
Over on the Dow, there's not much to report. All of the top 19 heaviest-weighted stocks moved by less than 2%, followed by Nvidia's 3.5% gain. But Nvidia is a relative lightweight on this price-weighted index, so it only added 31 Dow points this morning. The high-priced Caterpillar (NYSE: CAT) stock contributed 55 points to the index with a modest 1% price increase.
Oil prices slipped, with the United States Oil Fund (NYSEMKT: USO) down 0.9%, after President Trump confirmed that Iranian peace talks will continue despite the ceasefire being declared "over." The Strait of Hormuz is still running at about 13% of normal traffic, but that's yesterday's worry -- and perhaps next week's.
Image source: Getty Images.
Steady as she goes
Flat indexes can hide a lot of action, and Friday delivered plenty of it.
The SK Hynix debut adds another major chip stock to U.S. markets. The company will join the Nasdaq Composite on Monday after recording its first closing price today.
The semiconductor sector is splitting into winners and losers based on AI proximity, with SK Hynix and Nvidia on one side and Micron feeling the pressure on the other. Meta proved once again that strong AI economics can override regulatory headaches, at least in the short term.
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Bank of America is an advertising partner of Motley Fool Money. Anders Bylund has positions in Alphabet, Micron Technology, and Nvidia. The Motley Fool has positions in and recommends Alphabet, Broadcom, Caterpillar, Meta Platforms, Micron Technology, Nvidia, and Taiwan Semiconductor Manufacturing. The Motley Fool has a disclosure policy.
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