Why Direxion Daily Semiconductor Bull 3X ETF Jumped 20% Today

The Direxion Daily Semiconductor Bull 3X ETF (NYSEMKT: SOXL) is soaring today. What started as a milder 16% opening-bell increase evolved into gains around the 20% mark from 11 a.m. ET to noon ET. The 3x leveraged version of the classic iShares Semiconductor ETF (NASDAQ: SOXX) reflects a swell of enthusiasm in the chip sector, based on several bullish developments.

Washington drops a semiconductor bombshell

The biggest chip news of the day comes from Washington, D.C., not Silicon Valley. In a social media post, President Trump said that Apple (NASDAQ: AAPL) will set up an all-American semiconductor supply chain with Intel (NASDAQ: INTC) providing the manufacturing expertise.

Intel's stock surged more than 9% on the news, backed by broad gains across the chip sector. Some of the strongest jumps came from companies that make the equipment used in semiconductor manufacturing. The factories churning out Apple chips won't just build themselves, you know. For instance, Ichor Holdings (NASDAQ: ICHR) is up by 10.6% at 12:20 p.m. ET and Ultra Clean Holdings (NASDAQ: UCTT) gained 9.9%. The equipment makers are included in the SOXX and SOXL funds.

A word of caution for the less adventurous

Leveraged ETFs like SOXL amplify daily moves in both directions, making them popular tools for short-term traders but risky holdings for longer periods. The unlevered SOXX fund is up by 6.5%, approximately one-third of the SOXL jump. That should be enough volatility for most long-term investors.

As for the Intel-Apple partnership, the announcement came via social media post rather than a formal press release. The details remain fuzzy, and neither Intel nor Apple has confirmed Trump's social media post yet.

Still, chip investors are betting that American-made Apple silicon would be a big deal for Intel's foundry business and the entire domestic supply chain.

Anders Bylund has positions in Intel. The Motley Fool has positions in and recommends Apple, Intel, and iShares Semiconductor ETF. The Motley Fool has a disclosure policy.