NEW YORK: Chip stocks pulled the Nasdaq and the S&P 500 lower on Thursday as they continued to lead broader market moves despite generally upbeat US economic data and a strong start to second-quarter earnings season.
Among the 11 major sectors in the S&P 500, technology fell 1.8%, with a 4.3% drop in semiconductor stocks weighing heavily on the sector and the market. Daily swings in chips have increasingly dictated the overall movement of the major U.S. stock indices, particularly the tech-heavy Nasdaq.
"It comes strictly down to the weight of the chips in the S&P 500," said Paul Nolte, senior wealth advisor & market strategist at Murphy & Sylvest in Elmhurst, Illinois. "Three or four years ago, it was 8%, and now it's over 20%. If you look at the rest of the market, it's doing fine."
The weakness in chips, even after chip demand bellwether TSMC posted a 77% jump in quarterly profit, demonstrated the lofty expectations for a sector that has soared by nearly 70% so far this year. US-listed shares of the chipmaker fell 2.3%.
Memory-chip makers were among the biggest laggards, with SanDisk, Western Digital, Seagate Technology, and Intel down between 5.8% and 12.6%.
"This extreme volatility is very disconcerting for the average investor when they see these huge swings in their portfolio value," said Tim Ghriskey, senior portfolio strategist at Ingalls & Snyder in New York. "(But) a number of the non-tech sectors are doing well, so it's a real mix here."
The Dow Jones Industrial Average fell 105.32 points, or 0.20%, to 52,553.32, the S&P 500 lost 38.63 points, or 0.51%, to 7,533.77 and the Nasdaq Composite lost 387.28 points, or 1.47%, to 25,881.95.
The Dow's losses were cushioned in part by a 1.2% gain in UnitedHealth Group after the company beat Wall Street earnings estimates and hiked its 2026 forecast.
Healthcare stocks rose 2.2%. United Airlines fell 1.8% as surging oil prices weighed on its forward guidance. GE Aerospace slid 4.1%, even after the company lifted its 2026 profit forecast.
Analysts have set a high bar for second-quarter earnings season. S&P 500 companies, in aggregate, are expected to post year-on-year earnings growth of 24.8%. Technology earnings alone are seen jumping 65.5% from the year-ago quarter, according to the latest available data from LSEG.
A spate of US economic indicators released on Thursday showed solid core retail sales, a drop in jobless claims and surging manufacturing activity in the Northeast. Less positive data came from the housing sector, with a bigger than expected drop in pending home sales and souring homebuilder sentiment reflecting high borrowing costs and strained affordability for would-be homebuyers.
The US and Iran extended their barrage of airstrikes, prolonging a week-long escalation that has all but voided last month's truce. But Iran's release of a US citizen suggested a path remains for the two sides to avert the resumption of all-out war.
Declining issues outnumbered advancers by a 1.08-to-1 ratio on the NYSE. There were 351 new highs and 170 new lows on the NYSE.
On the Nasdaq, 1,817 stocks rose and 2,979 fell as declining issues outnumbered advancers by a 1.64-to-1 ratio.
The S&P 500 posted 42 new 52-week highs and 2 new lows while the Nasdaq Composite recorded 197 new highs and 155 new lows.
Volume on US exchanges was 17.19 billion shares, compared with the 21.19 billion average for the full session over the last 20 trading days. — Reuters
