S&P 500, Nasdaq fall as chip stocks weaken; earnings and data in focus

The S&P 500 and the Nasdaq fell on Thursday as renewed weakness in chip stocks overshadowed 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. The Philadelphia SE Semiconductor index .SOX fell 3.8%. U.S.-listed shares of TSMC TSM.N fell 2.5%, even after the advanced AI chipmaker reported stellar results, ramping up volatility in the market. Memory-chip makers were among the biggest laggards, with Western Digital WDC.O and Seagate Technology STX.O down 7.3% each, while Micron Technology MU.O fell 4.8%. 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 benchmark S&P 500 .SPX has risen more than 10% this year and remains close to its June record closing high, leaving the rally vulnerable to any disappointment. The consumer staples sector .SPLRCS was leading gains on the benchmark with a 2.1% rise, while a 1.9% fall in the information technology sector .SPLRCT muted gains on the rest of the index. 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. "Slower headline retail sales growth is actually positive, mainly because it reflects lower gasoline prices, not weaker consumer demand," said Bill Adams, chief U.S. economist at Fifth Third Commercial Bank. "The report is constructive for second-quarter real GDP." Separately, weekly jobless claims fell to 208,000 for the week ended July 11, below economists' expectations. Benign inflation reports for June earlier this week reduced worries over tighter Federal Reserve policy. Markets are currently pricing in about 88% likelihood that the Fed will stay on hold at this month's monetary policy meeting, according to CME's FedWatch tool. At 09:50 a.m. ET, the Dow Jones Industrial Average .DJI rose 82.28 points, or 0.16%, to 52,740.92, the S&P 500 .SPX lost 29.56 points, or 0.39%, to 7,542.84 and the Nasdaq Composite .IXIC lost 262.08 points, or 1.00%, to 26,007.14. The latest in a slate of upbeat quarterly results, UnitedHealth UNH.N raised its 2026 profit forecast, sending shares of the healthcare giant up 7.8% and kept the Dow afloat. The healthcare sector .SPXHC was up 2%. Meanwhile, geopolitical risks remained in focus as U.S.-Iran tensions simmered. Iran has asked Yemen's Houthi movement to stand ready to close the Red Sea oil route if the U.S. strikes Iranian power infrastructure, sources told Reuters, posing a fresh threat to global energy supplies. United Airlines UAL.O fell 2.8% as a renewed surge in oil prices weighed on its third-quarter and full-year profit outlooks. GE Aerospace GE.N dipped 4.4%, despite the jet-engine maker lifting its 2026 profit forecast. Advancing issues outnumbered decliners by a 1.02-to-1 ratio on the NYSE, while declining issues outnumbered advancers by a 1.55-to-1 ratio on the Nasdaq.

S&P 500, Nasdaq fall as chip stocks weaken; earnings and data in focus

Stocks fall as chip weakness offsets earnings optimism

Retail sales and jobless claims point to a steady economy

UnitedHealth lifts Dow while energy and airline names move on geopolitics and oil

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