Semiconductor bear ETFs lost steam in the first hour of trading on Tuesday after a sharp Monday rally, as chip stocks staged a quick rebound.

• Why is SOXS stock falling?

Direxion Daily Semiconductor Bear 3X Shares (NYSE:SOXS) pared most of its double-digit gains within the first hour of trading, tracking a strong recovery in the Philadelphia Semiconductor Index (SOX), which rose about 3% as of 10.30 a.m. ET.

The turnaround was broad-based across the sector. Memory and storage names bounced back, with Micron Technology Inc (NASDAQ:MU) up 2%, ON Semiconductor Corp (NASDAQ:ON) up more than 6%, Seagate Technology Holdings Plc (NASDAQ:STX) gaining 5%, Western Digital Corp (NASDAQ:WDC) climbing nearly 5%, and SanDisk Corp (NASDAQ:STX) jumping almost 6%. Semiconductor equipment makers also advanced, led by Lam Research Corp (NASDAQ:LRCX), which rose 4%.

Semiconductor ETFs mirrored the sharp swings in the underlying chip sector. Broad funds like the iShares Semiconductor ETF (NASDAQ:SOXX) and VanEck Semiconductor ETF (NASDAQ:SMH) spiked almost 3% on Tuesday.

What Changed Overnight?

• Dip-buying kicks in
  After Monday's sharp sell-off, investors stepped in to buy beaten-down chip stocks, especially in cyclical segments like memory and storage.
• Relief in broader sentiment
  Easing fears around geopolitical escalation and a stabilization in yields helped restore risk appetite, particularly in high-beta tech.
• Short covering accelerates gains
  Traders who had bet against semiconductors rushed to cover positions, amplifying the rebound and pressuring inverse ETFs like SOXS.
• Technical bounce from oversold levels
  The SOX index rebounded after hitting short-term support, triggering a classic relief rally.

The Bottom Line

Monday's surge in semiconductor bear ETFs proved short-lived. As chip stocks bounced back Tuesday, leveraged inverse funds like SOXS quickly gave up gains — highlighting how fast sentiment can swing in one of the market's most volatile sectors.

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