Last time it happened, these stocks fell 10% over the next month, Dow Jones data show

Semiconductor stocks tallied a “death cross” on Tuesday, their first since 2022.

A key corner of the U.S. stock market has flashed an ominous signal just ahead of the new year.

The PHLX Semiconductor Index (SOX), a key gauge of the strength of U.S.-listed semiconductor stocks, tallied a “death cross” on Tuesday, according to Dow Jones Market Data, its first since 2022.

A “death cross” occurs when the 50-day moving average of a security, currency or index crosses below its 200-day moving average. It hints at a bearish shift in the underlying trend.

U.S. semiconductor stocks have become increasingly important to the health of the overall market. According to Dow Jones Market Data, the semiconductor and semiconductor-equipment industry group was the largest in the S&P 500 by market capitalization as of Monday’s close. The semiconductor subindustry portion of that group was the largest subindustry, as well.

Highflying semiconductor names like Nvidia Corp. have made an outsize contribution to the S&P 500 since the start of the current bull market in October 2022, as hopes for artificial-intelligence technology attracted more investors to their shares.

But the sector as a whole has mostly seesawed during the second half of 2024. The iShares Semiconductor ETF (SOXX), which aims to track the PHLX index, was trading well below its record high from July on Tuesday, according to FactSet data.

The biggest U.S. semiconductor stocks were broadly lower on Tuesday, with Nvidia finishing 2.3% lower at $134.29 a share. The company has been catapulted into the ranks of the world’s most valuable due to its sales of chips seen as essential for the functioning of high-powered generative AI models.

The last time the PHLX index experienced a “death cross” was on March 17, 2022. It went on to decline 10% over the next month, and 23.4% over the next three months, according to Dow Jones data.