The Nasdaq Composite fell 1.5% on Thursday, leading a broad retreat across major U.S. stock indexes as investors reacted to renewed concerns regarding artificial intelligence spending. The downturn snapped a two-day winning streak for major indexes, with the S&P 500 and the Dow Jones Industrial Average finishing lower by 0.5% and 0.2%, respectively.
Semiconductor Sector Faces Sustained Selling Pressure
The semiconductor industry bore the brunt of the market’s volatility on Thursday, extending losses from the prior session. Memory stocks saw particularly sharp declines. SK Hynix, the South Korean firm, saw its U.S.-listed shares drop approximately 14% following a 9% decline on Wednesday. The Roundhill Memory ETF (DRAM) also fell nearly 9%, building on a 6% pullback in the previous session. Individual components within the sector experienced significant hits: Seagate Technology Holdings and Sandisk saw their shares drop 10% and 13%, respectively. Even industry giant Taiwan Semiconductor Manufacturing Co. (TSMC) slipped more than 2%. This decline occurred despite the company reporting better-than-expected results and increasing its full-year forecast for capital expenditures, signaling continued strong demand for AI chips. The iShares Semiconductor ETF (SOXX), which includes TSMC, recorded a 4.5% decline for the day.
Mega-Cap Tech and AI Development Concerns
The broader tech sector struggled as five of the Magnificent Seven
mega-cap stocks ended the session lower. Alphabet shares led the decline, falling approximately 4.5% following reports that its Google unit is behind schedule on the delivery of its Gemini 3.5 Pro AI model.
Additionally, SpaceX saw its shares fall 3%, closing below their IPO price for the first time. These movements reflected a shift in sentiment for major tech players that had largely finished higher in the previous trading session.
Economic Data and Market Context
Despite the equity market weakness, economic indicators released Thursday suggested continued resilience in the U.S. economy. Retail sales for June rose by 0.2%, meeting economist estimates, while jobless claims for the week ending July 11 reached 208,000, coming in lower than anticipated. Ellen Zentner, Chief Economic Strategist for Morgan Stanley Wealth Management, noted in written commentary that while the data reflects ongoing resilience, it is unlikely to alter the Federal Reserve’s current path. In other areas of the market: * UnitedHealth Group: Shares rose to their highest level in over a year, finishing up 2% after the company reported quarterly results that exceeded analyst expectations and raised its full-year profit outlook. * Energy: Oil prices trended lower as traders monitored geopolitical developments, with West Texas Intermediate futures down 0.7% to $79 per barrel and Brent crude down 0.8% to $84.25 per barrel. * Treasury Yields: The 10-year Treasury yield rose one basis point from Wednesday’s close to approximately 4.57%. * Precious Metals and Currency: Gold futures declined 1.8% to $3,980 an ounce, while the U.S. dollar index increased 0.3% to 100.78. The market activity followed a brief period of optimism earlier in the week, when indexes closed higher following an unexpected decline in wholesale inflation readings. As of Thursday’s close, investors were also monitoring corporate earnings reports, including mixed results from Netflix, which saw its stock drop in extended trading after its third-quarter outlook fell short of forecasts.
