Semiconductor stocks and sector-related ETFs continued to strengthen Monday, pushing the broader technology segment to new intraday highs, as traders jumped on a potential $130-billion deal in the chip sector.
The iShares PHLX Semiconductor ETF (NasdaqGM: SOXX) rose 0.9% and the VanEck Vectors Semiconductor ETF (NYSEArca: SMH) gained 0.7% on Monday.
More risk-tolerant traders betting on quick near-term gains for semiconductor stocks also capitalized on the Direxion Daily Semiconductors Bull 3x Shares (NYSEArca: SOXL), which takes the leveraged 300% daily exposure of the PHLX Semiconductor Sector Index, and the ProShares Ultra Semiconductors (NYSEArca: USD), which follows the 200% daily performance of the Dow Jones U.S. Semiconductors Index. On Monday, SOXL increased 2.5% and USD advanced 1.3%.
Semiconductor companies rallied Monday after Broadcom (NasdaqGS: AVGO) proposed to acquire Qualcomm (NasdaqGS: QCOM) in what could be the biggest merger in the tech sector, Reuters reported.
“The fact that the deal is on the table is huge,” Paul Nolte, portfolio manager at Kingsview Asset Management, told Reuters. “We have not seen much in the way of dealmaking this year. So this might jumpstart some of the dealmaking ahead of the tax policy changes.”