U.S. equities tumbled on Thursday as market participants weighed the sustainability of the artificial intelligence boom against recent earnings reports and escalating geopolitical tensions between the U.S. and Iran.
The Dow Jones Industrial Average (^DJI) erased previous gains to fall 0.3%, while the S&P 500 (^GSPC) dropped 0.5%. The Nasdaq Composite (^IXIC) saw a sharper decline of 1.3%, driven by a second consecutive day of selling in the semiconductor sector.
Chip stocks continued their downward trend even after Taiwan Semiconductor Manufacturing Company (TSM) posted strong earnings results, which failed to satisfy investors increasingly wary of high valuations. AI-related memory firms, including Sandisk (SNDK) and Western Digital Corporation (WDC), were among the most significant losers.
Regarding corporate earnings, UnitedHealth Group (UNH) and GE Aerospace (GE) both reported second-quarter beats before the market opened. Investors are now turning their attention to Netflix (NFLX), which is scheduled to report its Q2 results after the closing bell.
Market volatility was further fueled by concerns over oil supply stability near the Strait of Hormuz, following Wednesday’s U.S. airstrikes against Iran. Reports from The Wall Street Journal indicated that the administration has explored various options to expand the conflict, including increased bombardment and potential ground troop deployment.
On the economic front, June retail sales figures indicated that consumer spending was dampened by rising gasoline costs. However, the labor market showed resilience as initial jobless claims came in lower than anticipated.
