The Nasdaq led Wall Street lower Wednesday with a mixed performance from technology stocks, as investors waited for key earnings reports to gauge the health of a market rally fed by enthusiasm for artificial intelligence.
The S&P 500 fell slightly and the Dow ended virtually unchanged as traders also monitored the latest Middle East hostilities, which led oil futures to settle at a six-week high, fanning inflation worries.
The Dow Jones Industrial Average edged down 6.06 points, or 0.01%, to 52,218.58. The S&P 500 slipped 10.24 points, or 0.14%, to 7,498.96. The Nasdaq Composite dropped 146.30 points, or 0.57%, to 25,690.90.
After months of gains that lifted the major indexes from their March lows, momentum wobbled with uneven trading in heavyweight semiconductor stocks and weakness in software companies.
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The Philadelphia SE Semiconductor index ended up 0.4%, recovering from early losses for its third straight session of gains after three days of losses that confirmed it was in a bear market late last week.
Second-quarter results were due after the bell from Alphabet and Tesla, the first of the so-called "Magnificent Seven" megacap companies to report. Investors hoped for fresh evidence that these companies' multibillion-dollar investments in AI are paying off.
"Investors have become a lot more discerning and specific as to where they're choosing to invest in the AI trade," said Kevin Gordon, head of macro research and strategy at Charles Schwab, noting the stark difference in performance between software and chip stocks on the day.
Trading was choppy in Alphabet, which closed down 1.5%. It will be under scrutiny after a delay in the launch of a model central to its AI ambitions.
Texas Instruments lost ground in extended trading after finishing the regular session up 1% before it issued its results and forecast current quarter revenue above expectations.
After closing the regular session down 1.3%, Tesla added to losses in late trade, falling 3% after it reported negative free cash flow in the second quarter for the first time in more than two years.
The crowded earnings calendar leaves markets vulnerable to sharper swings this week, while geopolitical tensions added another layer of caution.
Crude oil futures recorded their highest settlement since June 11, up about 3% on the day as Yemen's Iran-backed Houthi militia threatened shipping in the Red Sea.
Shares in Super Micro Computer rallied 19.8%, making it the S&P 500's biggest percentage gainer on the day, after the server maker said it secured more than $60 billion in new orders in the fourth quarter. Its peers Dell Technologies finished up 9.3% while Hewlett Packard Enterprise added 3%.
