Technology stocks failed to stage a comeback on Thursday after the Nasdaq’s worst day since 2022, even as chip maker TSMC (TSM) posted better-than-expected results.
The tech-focused Nasdaq Composite (^IXIC) erased earlier gains and fell more than 1%, while the S&P 500 (^GSPC) also fell 0.7%. The Dow Jones Industrial Average (^DJI) fell 0.4% after hitting a record high for the blue chip index in the previous session.
Wall Street’s rally has faced increasing turbulence this week as political, geopolitical and trading risks unsettle a market finally confident the Fed will cut rates this year.
A sign that the labor market is cooling further boosted hopes for a rate cut on Thursday. The number of continued claims for unemployment benefits again reached the highest level since November 2021.
Read more: What influence does the labor market have on inflation?
Thursday’s losses on the Nasdaq follow a 2.7% decline in the previous session, partly due to a possible escalation of US restrictions on exports to China. Chip stocks Nvidia (NVDA), TSMC and ASML (ASML) all saw a rotation of technology leaders into less prominent parts of the market. All three deteriorated further on Thursday.
TSMC’s strong quarterly results on Thursday helped temporarily brighten the mood. The Taiwanese chip giant beat its profits with a 36% increase and raised its 2024 sales outlook to show confidence in the AI boom.
Netflix (NFLX) is the highlight of Thursday’s earnings call, which is expected after the market closes. Expectations are high for the streamer, although some on Wall Street note that the stock is already flirting with record levels.
Elsewhere, investors are keeping a close eye on the US presidential election given Republican candidate Donald Trump’s potential to move markets. President Joe Biden has faced COVID-19 at a key point in his campaign, and key Democratic leaders have revived talks about an exit.
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Nasdaq and the S&P 500 go red
Technology stocks entered red territory on Thursday after attempting a recovery from heavy losses in the previous session.
The tech-focused Nasdaq Composite (^IXIC) erased earlier gains to fall 0.5%, while the S&P 500 (^GSPC) also fell below the flatline. The Dow Jones Industrial Average (^DJI) rose to new highs after closing at a new record high in the previous session.
Tech tried to recover after chip maker TSMC (TSM) posted better-than-expected quarterly results. Shares of the Taiwan-based company rose as much as 3% before falling into negative territory.
Dow ends up in green territory
The Dow Jones Industrial Average (^DJI) entered green territory shortly after the market opened on Thursday, rising 0.3% to hit another all-time intraday high.
The blue chip index closed above the 41,000 level for the first time ever in the previous session.
The markets have widened recently as investors have moved from Big Tech names to small caps and sectors such as industrials, financials and energy.
Nasdaq and S&P 500 rebound as TSMC allays chip turbulence fears
Tech took back the lead on Thursday after heavy losses in the previous session, as chip maker TSMC (TSM) posted better-than-expected quarterly results.
The tech-heavy Nasdaq Composite (^IXIC) rose 0.8%, while the S&P 500 (^GSPC) rose 0.3%. The Dow Jones Industrial Average (^DJI) fell slightly to reach an all-time high for the blue chip index.
TSMC shares rose 3% after falling more than 7% in the previous session amid the rise of geopolitical headwinds. Chip stocks Nvidia (NVDA) and ASML (ASML) also recovered slightly on Thursday after being hammered on Wednesday.
Continuing claims for unemployment benefits again reached their highest level since November 2021, indicating the labor market is cooling as unemployed workers struggle to find new jobs.
New data from the Ministry of Labor showed that nearly 1.87 million claims were filed in the week ending July 6, up from 1.85 million the week before. Meanwhile, 243,000 initial claims for unemployment benefits were filed in the week ending July 13, up from 222,000 the week before and more than the 229,000 economists expected.
