The S&P 500 and the Nasdaq dropped on Thursday, as Broadcom’s revenue miss pressured chip stocks, while equity investors paused after a record-setting rally lifted all three indexes to fresh highs.
Broadcom (AVGO.O), shares slumped 15% after the chipmaker also stuck to its long-range forecast of $100 billion in sales from its AI chips. The stock has climbed nearly 55% this quarter and could shed nearly $350 billion in market value if losses hold through the session.
The S&P 500 tech index (.SPLRCT), dropped the most, down 2.2%, while the Philadelphia SE Semiconductor index (.SOX), tumbled 4.4%.
Chipmakers Marvell Technology (MRVL.O), and Advanced Micro Devices (AMD.O), were down about 5% each, while Micron Technology (MU.O), and Qualcomm (QCOM.O), fell 6.6% and 2.3%, respectively.
A rotation out of tech shares boosted other areas of the market, with nine out of 11 major S&P 500 indexes in the green.
Healthcare shares (.SPXHC), added 2.4%, aided by a 5% advance in UnitedHealth (UNH.N), after Bank of America raised its rating on the healthcare conglomerate’s shares to “buy”.
This lifted the blue-chip Dow (.DJI), by 520.81 points, or 1.03%.
The financial index (.SPSY), rose 1.8% after a sharp fall in the previous session on renewed concerns over private credit.
Blackstone (BX.N), became the latest asset manager to cap withdrawals from its flagship private credit fund following a rise in redemption requests.
The rally on Wall Street has stalled this week as investors weigh a renewed flare-up in hostilities between the United States and Iran.
“The shift feels less like a fundamental change in narrative and more like a combination of profit-taking, stretched positioning and a reassessment of geopolitical risks after weeks of almost uninterrupted gains,” said Daniela Hathorn, senior market analyst at Capital.com.
Although the two sides agreed to a ceasefire in early April, talks to end the war and reopen the Strait of Hormuz have made little progress, threatening to keep oil prices elevated and stoke inflation.
At 09:36 a.m. ET, the S&P 500 (.SPX), lost 13.59 points, or 0.18%, to 7,540.09 and the Nasdaq Composite (.IXIC), lost 215.53 points, or 0.80%, to 26,638.44.
Weekly jobless claims data showed the number of Americans filing claims increased more than expected last week, while Wednesday’s ISM survey showed the U.S. services sector expanded in May.
Friday’s broader monthly employment report will give new Federal Reserve Chairman Kevin Warsh a fresh read on the U.S. labor market as he heads into his first policy meeting this month, at a time when U.S. consumers are under strain from Iran war-driven price pressures.
Traders see a 75% chance of a 25-basis-point rate hike before the end of the year, LSEG data showed.
Federal Reserve Bank of Richmond President Thomas Barkin and San Francisco Fed President Mary Daly are also due to speak on Thursday, among the last appearances before the Fed’s pre-meeting blackout period.
Among market movers, CrowdStrike (CRWD.O), slumped 8.5% after the cybersecurity company reported a rise in its first-quarter operating expenses.
An investor roadshow for Elon Musk-led SpaceX (SPCX.O), begins on Thursday ahead of its market debut on June 12. It aims to raise $75 billion in a record IPO that would value it at $1.75 trillion and rank it among the top 10 U.S.-listed firms.
Advancing issues outnumbered decliners by a 1.72-to-1 ratio on the NYSE and by a 1.34-to-1 ratio on the Nasdaq.
The S&P 500 posted 7 new 52-week highs and no new lows while the Nasdaq Composite recorded 21 new highs and 40 new lows.
