Wall Street dumped nearly $1 trillion in tech stocks by midday—then clawed it back and bought peanut butter and paint

Today, the Nasdaq Composite looked like a V: down more than 4% by lunchtime, closing off just 1%. 

Nobody knows exactly why.

Around noon, the AI jitters came back, and traders dumped the highest-beta names—the frothiest, most volatile stuff—like Strategy (MSTR), the leveraged Bitcoin vehicle that had popped Monday; AppLovin (APP); and photonics maker Lumentum (LITE). 

But the densest cluster was the chipmakers: Marvell, which dropped 10% in a day after jumping 10% on news it’s joining the S&P 500, and the rest of what strategist Ben Emons has dubbed the “Parabolic 7,” after a chip index that ran up nearly 100% in a matter of weeks. 

Rather than fleeing equities altogether—Treasuries barely moved—the market rotated into peanut butter and paint: Smucker jumped double digits; Home Depot and Sherwin-Williams led. Real estate, staples, and utilities finished up: the classic ballast against tech froth.

“You’re seeing money flow into consumer names that have been unwanted and unloved,” Richard Steinberg, senior global market strategist at Focus Partners Wealth, told the Wall Street Journal.

The trigger wasn’t clear, but there are rea...