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

A midday rout in the “Parabolic 7” chipmakers reversed by the close as money fled into the market’s dullest corners.

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 real reasons to want out of chips, diversifying away from the AI trade. Wall Street has to make room for SpaceX, set to be the largest IPO ever, on Friday, with OpenAI and Anthropic—both now confidentially filed—close behind. Annex Wealth Management’s Brian Jacobsen called the tech run an Icarus trade with the wings melting: Alphabet’s rare capital raise was the first warning, and SpaceX the “shiny new toys” pulling money out. Though even that story has a wrinkle: SpaceX is already oversubscribed, with multiple $10 billion orders in.

Also this week, inflation data lands Wednesday and Thursday, and a strong May jobs report last week has already pushed expectations for rate cuts further out. Funds tend not to sit in their most crowded, highest-beta positions going into an inflation reading that could move the Fed’s path, which could be why some froth got cut off now. 

The selling may also be less about selling than an absence of buyers. Founder ETFs’ Michael Monaghan described it as buyers stepping back rather than a rush for the exits, dropping the price faster than the volume would suggest. 

Oil went the other way. Even after President Donald Trump said the U.S. would have to respond to Iran’s downing of a U.S. Army Apache helicopter near the Strait of Hormuz, crude fell about 3% to roughly $88, as the energy secretary said traffic through the Strait was picking up meaningfully. 

Certainly investors are now wondering if this is the start of a longer “pop” or just a one-time correction. For them, the best information will come as SpaceX debuts, and public capital gets to decide if they believe in the AI story or not.

This story was originally featured on Fortune.com