S&P 500 and Nasdaq decline as Broadcom results weigh on chip stocks

The S&P 500 and Nasdaq fell on Thursday after disappointing revenue results from Broadcom pressured semiconductor stocks, while investors paused following a record-breaking rally that had pushed the three major US indexes to fresh all-time highs.

Market performance

As of 9:36 a.m. ET, the S&P 500 was down 13.59 points, or 0.18%, at 7,540.09, while the Nasdaq Composite lost 215.53 points, or 0.80%, to 26,638.44.

Broadcom shares dropped 15% after the chipmaker also maintained its long-term target of generating $100 billion in AI chip sales.

The stock had gained about 55% during the current quarter and could lose nearly $350 billion in market value if losses persist through the close.

The S&P 500 technology sector fell 2.2%, marking the largest decline among major sectors, while the Philadelphia Semiconductor Index dropped 4.4%.

Shares of Marvell Technology and Advanced Micro Devices (AMD) each declined about 5%, while Micron Technology fell 6.6% and Qualcomm lost 2.3%.

Meanwhile, investor rotation away from technology supported other areas of the market, with nine of the eleven major S&P 500 sectors posting gains.

Healthcare stocks rose 2.4%, led by a 5% gain in UnitedHealth after Bank of America upgraded the stock to “Buy.”

That helped lift the Dow Jones Industrial Average by 520.81 points, or 1.03%.

The financial sector also gained 1.8% after suffering sharp losses in the previous session amid renewed concerns over private credit markets.

Blackstone became the latest asset manager to impose withdrawal restrictions on its flagship private credit fund following a surge in redemption requests.

Wall Street’s rally paused this week as investors assessed renewed tensions between the United States and Iran.

Daniela Hathorn, senior market analyst at Capital.com, said the current rotation appears less driven by a fundamental shift in the investment narrative and more by profit-taking, elevated positioning, and a reassessment of geopolitical risks after weeks of nearly uninterrupted gains.

Although both sides agreed to a ceasefire in early April, negotiations aimed at ending the conflict and reopening the Strait of Hormuz have made little progress, raising the risk of sustained high oil prices and persistent inflation pressures.

Economic data

Weekly jobless claims data showed that the number of Americans filing new unemployment claims rose more than expected last week, while Wednesday’s ISM survey indicated that the US services sector continued to expand in May.

Investors are now awaiting Friday’s comprehensive employment report, which will provide newly appointed Federal Reserve Chair Kevin Warsh with an updated assessment of labor market conditions ahead of his first policy meeting later this month, as consumers continue to face rising costs linked to the Iran conflict.

According to LSEG data, traders currently assign a 75% probability to a 25-basis-point interest-rate hike before year-end.

Richmond Fed President Thomas Barkin and San Francisco Fed President Mary Daly are also scheduled to speak on Thursday in the final public appearances by Federal Reserve officials before the pre-meeting blackout period begins.

Individual stock moves

Cybersecurity company CrowdStrike fell 8.5% after reporting higher operating expenses during the first quarter.

Meanwhile, Elon Musk’s SpaceX begins its investor roadshow on Thursday ahead of its planned market debut on June 12.

The company aims to raise $75 billion in what would be the largest initial public offering in history, valuing the company at $1.75 trillion and placing it among the ten largest publicly traded companies in the United States.