A retreat in chip stocks and other AI winners pulled the S&P 500 lower on Thursday, even though most stocks in the index rose. The Nasdaq bore the brunt of the selling, while the Dow held roughly flat as strong earnings cushioned the blow.
Slumping AI stocks dragged the S&P 500 down on Thursday, overriding an earnings season that has mostly gone better than Wall Street expected. The index fell 0.5%, even though more of its members rose than fell.
The split showed up across the major benchmarks. The S&P 500 lost 38.63 points to close at 7,533.77, while the Dow Jones Industrial Average dropped 105.67 to 52,552.97 and the Nasdaq composite sank 387.28 to 25,881.95. Earlier in the session, the Dow had traded higher as the lone index in the green.
Chip stocks lead the retreat
Nvidia carries outsized weight because it is the largest company on Wall Street by value, so its slide hit the index hardest. Nvidia fell 2.4%, making it the heaviest drag on the S&P 500. Other AI winners followed, with Micron Technology down 5.6%.
The losses held even after Taiwan Semiconductor Manufacturing, a bellwether of the chip industry, reported a stronger quarterly profit than analysts expected. Its US-listed stock fell 2.3% all the same. According to Yahoo Finance, TSMC also warned of higher prices, which weighed on sentiment despite the beat.
Earnings and data cushion the drop
Away from the chipmakers, results ran strong. Abbott jumped 10.7% after raising its full-year forecast, and J.B. Hunt Transport Services climbed 8% on a quarterly beat.
Economic data pointed to a steady labor market. Initial jobless claims fell to 208,000 in the week ended July 11, below the 217,000 economists had expected. The selling reached beyond US chips, as drops for AI winners like Samsung Electronics and SK Hynix dragged the Kospi index down 6.4%. A Bank of Korea interest rate hike also weighed on stocks in Seoul.
Sources: Associated Press, Yahoo Finance
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