Software stocks are experiencing a downturn, a stark contrast to the booming performance seen in the semiconductor sector. The iShares Semiconductor ETF (SOXX) has gained nearly 25% since hitting its low on March 30, achieving record intraday highs for three consecutive sessions. Meanwhile, the iShares Expanded Tech-Software ETF (IGV) has seen a decline of 4% over the same period, poised for a third successive loss, bringing it close to levels seen in late 2023.
Over the past week, notable names in the software sector have taken a significant hit. Snowflake (SNOW) and HubSpot (HUBS) both experienced declines exceeding 20%, marking their worst weeks in over four years. Other major players such as Cloudflare (NET), Intuit (INTU), and Atlassian (TEAM) also suffered setbacks of 10% or more, contributing to the prevailing bearish sentiment in the software domain.
On Wednesday, I sought insights from TrendLabs’ J.C. Parets, who indicated that a significant warning sign for potential market rollover could be software stocks reaching new lows. That alarming signal has, in fact, just been triggered, raising concerns among market watchers.
In addition to software stocks, another critical marker is the US Dollar Index (DX-Y.NYB), which needs to push back above 101 to indicate stability. Currently, the dollar is on a downward trend, having fallen for five consecutive days and trading in the 98 range, further complicating market dynamics.
Jared Blikre is the global markets and data editor for Yahoo Finance. Follow him on X at @SPYJared or contact him at jaredblikre@yahooinc.com.
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