NEW YORK: The S&P 500 recouped most of its early losses to trade near flat on Thursday as a selloff in AI stocks eased and investors rotated into defensive sectors as fresh data pointed to building US price pressures.
The Nasdaq neared a one-month low earlier in the session as tech stocks lost ground after TSMC struck a cautious note on 2027. Reports of a 45 percent sequential jump in Anthropic’s quarterly revenue offered little reprieve.
By the afternoon, most stocks recovered from declines on Thursday. Cloud computing giant Oracle reversed course to gain 2.1 percent.
The S&P 500 information technology sector lost 1.1 percent, with gains in software stocks and tech heavyweights such as Microsoft cushioning the fall.
Chipmaker Nvidia was down 1.9 percent and Advanced Micro Devices lost 4 percent.
The broader Philadelphia semiconductor index fell 2.4 percent, putting it on track for a seventh straight decline and nearly USD2 trillion in combined market-value losses in the period.
On the flip side, traditionally defensive sectors continued to rise, with healthcare and consumer staples adding 2.6 percent and 1 percent, respectively.
Drugmaker Eli Lilly gained 5.2 percent, UnitedHealth was up 4 percent, while Walmart rose 2.3 percent after a rating upgrade by Deutsche Bank.
“That is emblematic of a defensive rotation. It’s because of the worry that maybe some sort of a debt crisis is emerging,” said Sam Stovall, chief investment strategist at CFRA Research.
Still, heavily indebted data-center operator CoreWeave lost 1.3 percent after a 15 percent drop on Wednesday. Its bonds also fell, pushing yields to record highs.
“There has been growing concern about the cash flow reality underlying the AI narrative and has been building at a time that rates have been rising and (interest) rate volatility is increasing,” said Jordan Rizzuto, CIO at GammaRoad Capital Partners.
“To the degree that rate volatility persists, we would expect credit related pressures to continue to mount for such (indebted) companies.”
At 12:44 p.m. ET, the Dow Jones Industrial Average rose 457.99 points, or 0.89 percent, to 52,078.61, the S&P 500 gained 3.74 points, or 0.05 percent, to 7,722.68, and the Nasdaq Composite fell 126.38 points, or 0.47 percent, to 26,566.48.