U.S. stock indexes closed mixed on Thursday, with the S&P 500 (SPY) finishing unchanged, the Dow Jones Industrial Average (DIA) surging +1.14%, and the Nasdaq 100 (QQQ) falling -1.61%.
Chipmakers extended their losses into a second consecutive session, weighing heavily on the broader market and dragging the Nasdaq 100 sharply lower.
The semiconductor sector came under pressure after South Korea’s Kospi Index plunged more than -7% to a 3-week low, led by steep declines in SK Hynix and Samsung Electronics amid renewed doubts over the sustainability of the AI buildout boom.
Negative sentiment in the chip sector also carried over from Wednesday, when Meta Platforms said it plans to sell computing power, raising questions about potential excess AI capacity.
The iShares Semiconductor ETF (SOXX) fell more than -5%, with SanDisk (SNDK) leading declines in the S&P 500 and Nasdaq 100 after closing down more than -14%.
KLA Corp (NASDAQ: KLAC) closed down more than -12%, Marvell Technology (NASDAQ: MRVL) fell more than -11%, and both Lam Research (NASDAQ: LRCX) and Seagate Technology Holdings (NASDAQ: STX) dropped more than -10%.
Stocks initially opened higher and found early support after U.S. June nonfarm payrolls rose just +57,000, well below expectations of +113,000, bolstering speculation that the Fed will be unable to raise interest rates anytime soon.
May nonfarm payrolls were also revised lower to +129,000 from the originally reported +172,000, while the June unemployment rate unexpectedly fell -0.1 to a 1-year low of 4.2%.
U.S. May factory orders fell -1.3% month-over-month, a smaller decline than the expected -2.0%, while factory orders excluding transportation rose +1.9% month-over-month, the biggest increase in more than four years.
Q2 earnings forecasts remain a bullish factor for equities, with Bloomberg Intelligence estimates suggesting earnings growth may reach 23%, close to Q1’s blowout result of 30%, which was more than double the 12% analysts had initially expected.
AI infrastructure stocks are projected to contribute nearly 60% of the S&P 500’s earnings-per-share growth in Q2, underscoring how central AI spending has become to overall market performance.
Software stocks provided a notable counterbalance on Thursday, rising for a second straight session, with Adobe (NASDAQ: ADBE) climbing more than +4% after HSBC upgraded the stock to buy from hold with a price target of $308.
Palantir Technologies (NASDAQ: PLTR) gained more than +2% after DA Davidson upgraded the stock to buy from neutral with a price target of $175, while Autodesk (NASDAQ: ADSK), Intuit (NASDAQ: INTU), and Workday (NASDAQ: WDAY) each closed up more than +3%.
Apple (NASDAQ: AAPL) led gainers in the Dow Jones Industrials, closing up more than +4% after Nikkei reported the company told its suppliers it plans to produce 10 million foldable iPhones this year, up from an earlier forecast of 7 million to 8 million.
Tesla (NASDAQ: TSLA) closed down more than -7% after the company’s Q2 deliveries beat expectations but failed to impress investors seeking stronger results.
Genuine Parts (NYSE: GPC) surged more than +12% to lead S&P 500 gainers on reports that O’Reilly Automotive has put in a bid for the company.
AeroVironment (NASDAQ: AVAV) closed up more than +10% after being awarded a U.S. Army contract valued at up to $500 million for the procurement of commercial unmanned aerial systems and counter small-unmanned aerial systems capabilities.
WTI crude oil (CLQ26) fell to a fresh 4.25-month low as global supplies increased, with the United Arab Emirates ramping up shipments of crude oil and condensates by 30% in June to more than 3.9 million barrels per day, restoring oil exports to pre-war levels.
BOE Governor Andrew Bailey stated that interest rate cuts are “off the table at the moment,” as households have yet to feel the full effect of the Iran war, while markets are currently discounting an 18% chance of a +25 basis point rate hike at the next FOMC meeting on July 28-29.
