Tech Stocks Stumble as Semiconductor Sector Extends Two-Day Slide

TLDR

• Nasdaq declined 0.5–0.7% Thursday as semiconductor stocks continued their selloff
• PHLX Semiconductor Index tumbled approximately 3.5%, Nvidia shares dropped nearly 2%
• TSMC’s record Q2 results couldn’t prevent stock decline following price increase warnings
• Dow posted modest gains while S&P 500 remained relatively unchanged
• Middle East tensions and strong employment data contributed to volatile market sentiment

Thursday’s trading session saw major US indices move in opposite directions as semiconductor stocks weighed heavily on technology-focused benchmarks.

The Dow Jones Industrial Average managed to advance approximately 0.2%, standing as the sole major index posting gains. The S&P 500 remained essentially unchanged, oscillating around breakeven, while the Nasdaq Composite retreated between 0.5% and 0.7%.

E-Mini S&P 500 Sep 26 (ES=F)

The semiconductor sector bore the brunt of selling pressure. The PHLX Semiconductor Index plummeted nearly 3.5% during Thursday’s session, extending Wednesday’s 2% decline.

Nvidia shares fell approximately 1.8%, leading losses among major chip manufacturers. The semiconductor industry has faced mounting skepticism from investors questioning whether current stock valuations accurately reflect potential returns from artificial intelligence investments.

Record TSMC Results Unable to Reverse Sector Sentiment

Taiwan Semiconductor Manufacturing Company announced record-breaking second quarter revenues and increased its annual capital expenditure guidance. However, the positive financial results couldn’t prevent the stock from declining after management indicated upcoming price increases.

Investor sentiment has oscillated between optimism and caution as market participants scrutinize elevated valuations throughout the chip and artificial intelligence sectors.

Wednesday’s trading painted a contrasting picture. The Magnificent Seven technology giants surged, with Apple climbing 4%, while Alphabet, Meta, and Amazon each advanced more than 3%. Microsoft shares appreciated 2.8%.

Thursday witnessed a reversal. The Roundhill Magnificent Seven ETF traded in negative territory, with Meta declining 1% and Nvidia posting the steepest losses. The remaining Mag Seven components showing gains advanced less than 1%.

Corporate Earnings and Economic Indicators Take Center Stage

UnitedHealth Group and GE Aerospace both exceeded earnings expectations in pre-market announcements. Netflix’s after-market earnings report captured considerable investor interest.

Economic releases showed June retail sales figures revealing consumer spending pressure from elevated gasoline costs. Weekly unemployment claims registered below forecasts, indicating continued labor market strength.

Treasury yields and the US dollar both strengthened modestly, reflecting robust employment conditions.

Geopolitical developments also commanded market attention. The United States executed additional airstrikes against Iran on Wednesday evening. Reports from The Wall Street Journal indicated President Trump received briefings on potential conflict escalation scenarios, including intensified bombing campaigns and possible ground force deployments.

Energy markets remained focused on potential disruptions to oil shipments through the Strait of Hormuz and their implications for global energy prices.

The Nasdaq had concluded Wednesday’s session with a 0.6% gain despite chip sector weakness, but Thursday’s trading proved more challenging without broad-based Big Tech support.

By mid-morning Thursday, the S&P 500 traded near 7,562, registering a modest decline for the session.

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