NEW YORK — Chip stocks pulled the Nasdaq and the S&P 500 lower Thursday as they continued to lead broader market moves despite generally upbeat U.S. economic data and a strong start to second-quarter earnings season.
The Dow Jones Industrial Average dropped 105.32 points, or 0.20%, to 52,553.32, the S&P 500 fell 38.63 points, or 0.51%, to 7,533.77 and the Nasdaq Composite tumbled 387.28 points, or 1.47%, to 25,881.95.
Among the 11 major sectors in the S&P 500, technology fell 1.8%, with a 4.3% drop in semiconductor stocks weighing heavily on the sector and the market.
Daily swings in chips increasingly dictated the overall movement of the major U.S. stock indexes, particularly the tech-heavy Nasdaq.
"It comes strictly down to the weight of the chips in the S&P 500," said Paul Nolte, senior wealth advisor & market strategist at Murphy & Sylvest in Elmhurst, Illinois. "Three or four years ago, it was 8%, and now it's over 20%. If you look at the rest of the market, it's doing fine."
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The weakness in chips, even after chip demand bellwether TSMC posted a 77% jump in quarterly profit, demonstrated the lofty expectations for a sector that soared almost 70% so far this year. U.S.-listed shares of TSMC fell 2.3%.
Memory-chip makers were among the biggest laggards, with SanDisk, Western Digital, Seagate Technology and Intel down between 5.8% and 12.6%.
The Dow's losses were cushioned in part by a 1.2% gain in UnitedHealth Group after the company beat Wall Street earnings estimates and hiked its 2026 forecast.
Healthcare stocks rose 2.2%.
United Airlines fell 1.8% as surging oil prices weighed on its forward guidance.
GE Aerospace slid 4.1%, even after the company lifted its 2026 profit forecast.
Analysts set a high bar for second-quarter earnings season. S&P 500 companies, in aggregate, are expected to post year-on-year earnings growth of 24.8%. Technology earnings alone are expected to jump 65.5% from the year-ago quarter, according to the latest available data from LSEG.
A spate of U.S.economic indicators released Thursday showed solid core retail sales, a drop in jobless claims and surging manufacturing activity in the Northeast.
Less positive data came from the housing sector, with a bigger than expected drop in pending home sales and souring homebuilder sentiment reflecting high borrowing costs and strained affordability for would-be homebuyers.
The U.S. and Iran extended their barrage of airstrikes, prolonging a weeklong escalation that all but voided last month's truce. However, Iran's release of a U.S. citizen suggested a path remains for the two sides to avert the resumption of all-out war.
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