Nasdaq drops as tech megacap declines outweigh upbeat chip outlook

NEW YORK: The Nasdaq dropped on Thursday, dragged down by losses in Big Tech shares, while a shift into other sectors lifted the S&P 500 and the Dow.

Technology shares reversed early gains to move lower, weighing on the Nasdaq, as worries over hyperscaler spending and expectations of higher interest rates outweighed upbeat signals from Micron and Qualcomm on AI demand.

Apple slid nearly 5 percent after hiking prices for iPads and MacBooks to counter surging memory and storage chip costs. Shares of Nvidia, Microsoft and Alphabet were also down between 1.2 percent and 2.7 percent.

Concerns over debt-backed spending by hyperscalers and fears of a more hawkish Federal Reserve have fueled a market downturn this week, with tech shares leading the selloff.

“When you have companies coming off really strong runs, even on a yearly basis, at some point, you start to say, trees don’t grow to the sky, they eventually do stop. And stocks don’t forever keep going up and I think that’s what happened,” said Robert Conzo, CEO at the Wealth Alliance.

Micron soared 14 percent, while Qualcomm rose 5 percent. Other memory chips also moved higher with Sandisk soaring 16.3 percent, while Western Digital and Seagate Technology rose 6.3 percent and 3 percent, respectively. Caterpillar and Goldman Sachs, which were up 4 percent and 1.2 percent, respectively, aided the blue-chip Dow to an intraday high. The S&P 500 industrial sector led gains with a 2 percent rise.

Six out of 11 major S&P 500 sectors moved higher, with healthcare shares adding 2 percent.

At 11:49 a.m. ET, the Dow Jones Industrial Average rose 436.45 points, or 0.82 percent, to 52,275.98, the S&P 500 gained 19.14 points, or 0.26 percent, to 7,377.36 and the Nasdaq Composite lost 79.31 points, or 0.31 percent, to 25,397.33.

The Philadelphia SE Semiconductor index rose 2.5 percent and was on track for its strongest quarter on record, according to LSEG data. The tech sector dipped 0.3 percent.

Software shares came under pressure, with Atlassian and Applovin dropping over 4 percent each.

The Nasdaq was on track for its biggest monthly decline since March 2025, while the chip index was headed for its worst week since the start of the Middle East conflict earlier this year.

Meanwhile, data showed US inflation increased further in May, breaking above 4.0 percent for the first time in three years on higher energy prices, and potentially drawing the Federal Reserve closer to raising interest rates this year.

In response to rising price pressures, traders anticipate the Fed to lift interest rates by at least 25 basis points before the year-end, according to LSEG data.

“There is still a risk that the Federal Reserve delivers a rate hike later this year. Even so, US equities appear capable of absorbing both this environment and a somewhat more hawkish Fed,” said Michele Morganti, senior equity strategist at Generali Investments.