Stock Market Insights: Why U.S. Stock Markets weathered the global sell-off
Dr. Richard Baker, AIF®, is the CEO and executive wealth advisor at Fervent Wealth Management.
When we were kids cutting wood, my brother and I had to roll the big pieces down the hill so we could split them on level ground. Once we had a large one rolling fast, it looked like it would go all the way to the bottom until it hit a cedar tree and stopped dead in its tracks. That’s kind of what happened last Tuesday when the South Korean market crashed, then European markets started falling, but the tech-stock slide stopped when it slammed into the strong U.S. stock market.
One of the first things I do when I wake up is check the overnight stock exchanges. This past Tuesday, October 13, 2026, I saw South Korea's stock market fall so quickly that the exchange activated its Sell‑Side Sidecar mechanism, which temporarily suspends trading. Then I saw that the European markets, halfway through their trading day, were down as well. I started preparing myself for a difficult market day…but it never came.
On Tuesday not only was the South Korea Stock Exchange negative, but so were the Japanese exchange, the Hong Kong exchange, the German exchange, and the European Union exchange. The U.S. Nasdaq Composite ended the day negative 0.2%, which is considered flat. So why did the chaos stop when it hit the U.S. markets? The answer: We have a more spread-out index.
Half of the South Korean index is made up of two stocks, Samsung Electronics and SK Hynix, both under heavy pressure from China’s chipmaker ChangXin Memory Technologies (CXMT). Over the weekend, CXMT announced it had developed a new smaller chip that could hold even more memory than its competition. When competition threatens half of your stock exchange, the whole system feels it.
In comparison, the Nasdaq Composite has over 3,300 stocks. While 2/3 of the Nasdaq is in the Information Technology sector, it includes 424 stocks, not just a handful like many foreign exchanges. When two semiconductor chip stocks make up nearly half your index, regional news about memory chip pricing and Chinese competition can severely rock the boat. U.S. indexes aren’t just bigger; they are stronger because they are more diversified across technology, finance and health, making them less susceptible to a single competitor stock in one sector.
It is worth watching the Chinese memory makers to see whether they become a bigger threat to the global supply-demand balance over time, but in the short run, they are just rattling their competition's cages.
The U.S. markets are a lot like that tree on Poppy’s farm. It’ll withstand most things thrown at it. That cedar tree frustrated me that day because I had to walk halfway down the hillside to roll it the rest of the way down the hill. The strength of the U.S. stock exchanges, which can also withstand most things thrown at them, gives me peace. I am also glad someone eventually invented a wood splitter, but that’s another story.
Have a blessed week.
This article was written by humans for humans because AI doesn’t have this quality of sarcasm.
Securities and advisory services offered through LPL Financial, a registered investment advisor, Member FINRA/SIPC.
Opinions voiced above are for general information only and not intended as specific advice or recommendations for any person. There is no guarantee that a diversified portfolio will enhance overall returns or outperform a non-diversified portfolio. Diversification does not protect against market risk.
The economic forecast outlined in this material may not develop as predicted and there can be no guarantee that strategies promoted will be successful.
Fervent Wealth Management is a financial management and services entity in Springfield, Missouri.
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