Semiconductor bear ETFs lost steam in the first hour of trading on Tuesday after a sharp Monday rally, as chip stocks staged a quick rebound.

Direxion Daily Semiconductor Bear 3X Shares (SOXS  ) pared most of its double-digit gains within the first hour of trading, tracking a strong recovery in the Philadelphia Semiconductor Index (SOX), which rose about 3% as of 10.30 a.m. ET.

The turnaround was broad-based across the sector. Memory and storage names bounced back, with Micron Technology Inc (MU  ) up 2%, ON Semiconductor Corp (ON  ) up more than 6%, Seagate Technology Holdings Plc (STX  ) gaining 5%, Western Digital Corp (WDC  ) climbing nearly 5%, and SanDisk Corp (STX  ) jumping almost 6%. Semiconductor equipment makers also advanced, led by Lam Research Corp (LRCX  ), which rose 4%.

Semiconductor ETFs mirrored the sharp swings in the underlying chip sector. Broad funds like the iShares Semiconductor ETF (SOXX  ) and VanEck Semiconductor ETF (SMH  ) spiked almost 3% on Tuesday.

What Changed Overnight?

  • Dip-buying kicks in
  • After Monday's sharp sell-off, investors stepped in to buy beaten-down chip stocks, especially in cyclical segments like memory and storage.
  • Relief in broader sentiment
  • Easing fears around geopolitical escalation and a stabilization in yields helped restore risk appetite, particularly in high-beta tech.
  • Short covering accelerates gains
  • Traders who had bet against semiconductors rushed to cover positions, amplifying the rebound and pressuring inverse ETFs like SOXS.
  • Technical bounce from oversold levels
  • The SOX index rebounded after hitting short-term support, triggering a classic relief rally.
The Bottom Line

Monday's surge in semiconductor bear ETFs proved short-lived. As chip stocks bounced back Tuesday, leveraged inverse funds like SOXS quickly gave up gains - highlighting how fast sentiment can swing in one of the market's most volatile sectors.