NEW YORK: The S&P 500 and the Nasdaq slipped on Thursday as renewed weakness in chip stocks over shadowed an upbeat start to second-quarter earnings, while investors parsed fresh economic data for clues on the health of the economy.
Semiconductor stocks extended losses from the previous session, with the Philadelphia SE Semiconductor index down 3.5 percent. US-listed shares of TSMC fell 2.1 percent, even after the advanced AI chipmaker reported stellar results.
Memory-chip makers were among the biggest laggards. Sandisk fell about 10 percent, while Western Digital and Seagate Technology were down 8 percent and 7.5 percent, respectively.
Chip stocks were earlier among the biggest beneficiaries of this year’s rally, as optimism around AI spending by hyperscalers helped drive Wall Street to record highs.
Shiraz Ahmed, founder and CEO at Sartorial Wealth Inc, said the chip rally is cooling off, but not because AI is losing steam, but because AI adoption still isn’t fully widespread yet. As a result, heavy capex spending continues across the AI ecosystem, from energy to semiconductors.
The S&P 500 has risen more than 10 percent this year and remains close to its June record closing high, leaving the rally vulnerable to any disappointment.
The tech-led selloff pulled the benchmark lower, even as every other sector except technology traded higher.
Healthcare shares helped cushion the broader market, with gains of 2.2 percent.
UnitedHealth raised its 2026 profit forecast, sending shares of the healthcare giant up 4.3 percent and keeping the Dow afloat.
Abbott jumped 12 percent after beating quarterly estimates and lifting its annual profit outlook.
Defensive groups, including consumer staples and real estate, also helped limit losses, rising about 2 percent each.
At 11:51 a.m. ET, the Dow Jones Industrial Average rose 133.94 points, or 0.25 percent, to 52,792.58, the S&P 500 lost 5.77 points, or 0.08 percent, to 7,566.63 and the Nasdaq Composite lost 156.53 points, or 0.60 percent, to 26,111.19.
Investors parsed June retail sales data that showed only a marginal rise as lower gasoline prices weighed on receipts at service stations. Still, bargain-hunting consumers continued to support underlying spending.
Separately, the number of Americans filing claims for unemployment benefits fell last week, pointing to continued labor market stability.
Markets are pricing in an 88 percent chance the Fed will hold rates steady at this month’s meeting and about a 50 percent chance of a quarter-point hike in September, according to CME’s FedWatch tool.
Geopolitical risks also loomed large as Iran has asked Yemen’s Houthi movement to prepare to close the Red Sea oil route if the US strikes Iranian power infrastructure, sources told Reuters.
United Airlines fell 1.4 percent as a renewed surge in oil prices weighed on its third-quarter and full-year profit outlooks.
GE Aerospace dipped 4.7 percent, despite the jet-engine maker lifting its 2026 profit forecast.
Advancing issues outnumbered decliners by a 1.12-to-1 ratio on the NYSE, while declining issues outnumbered advancers by a 1.38-to-1 ratio on the Nasdaq.