Wall Street closed lower on Thursday as weakness in semiconductor stocks offset positive earnings reports and strong economic data. The Nasdaq Composite fell 387.28 points, or 1.47%, to 25,881.95, while the S&P 500 lost 38.63 points, or 0.51%, ending at 7,533.77. The Dow Jones Industrial Average decreased by 105.67 points, or 0.2%, to 52,552.97.
Chip Sector Under Pressure
Chip stocks led the decline, with the semiconductor sector dropping 4.3%. This downturn contributed significantly to the overall performance of the technology sector, which fell 1.8%. Despite a 77% increase in quarterly profit reported by TSMC, shares of the chipmaker declined by 2.3%. Analysts noted that the semiconductor sector has risen nearly 70% in 2026, leading to heightened expectations and subsequent volatility. Memory-chip manufacturers, including SanDisk, Western Digital, Seagate Technology, and Intel, saw declines ranging from 5.8% to 12.6%.
Broader Market Context
While technology stocks struggled, other sectors performed well, indicating a mixed market environment. Paul Nolte, a senior wealth advisor, highlighted that the weight of chip stocks in the S&P 500 has increased from 8% to over 20% in recent years, amplifying their impact on market movements. Tim Ghriskey, a senior portfolio strategist, expressed concern about the volatility affecting investor sentiment, noting that significant swings in portfolio values can be disconcerting.
The decline in semiconductor stocks is likely to weigh on technology indices, particularly the Nasdaq, as these stocks have a substantial influence on overall market performance. Investors will watch for further earnings reports from the tech sector and any signs of stabilization in chip demand as potential indicators of market direction.