The technology-heavy Nasdaq 100 Index fell 1.4 percent at 2:29 p.m. in New York on Thursday, extending losses from the previous session, while the S&P 500 Index dropped 0.5 percent. The decline came after Taiwan Semiconductor Manufacturing Co. raised its full-year sales and capital-spending projections, signaling confidence in chip and data-center demand through 2027, yet saw its American depositary receipts slide alongside peers including Micron Technology, Marvell Technology and Nvidia.
The Philadelphia Stock Exchange Semiconductor Index tumbled 4.2 percent, underscoring a growing skepticism toward the artificial-intelligence trade. Traders have rotated out of AI-linked equities this year on the view that heavy capital outlays have yet to generate meaningful returns. Matt Maley of Miller Tabak + Co. described the move as a “sell the news” reaction, noting that higher spending plans from TSMC have added to the pressure despite the positive guidance.
Not all market participants share the pessimism. Paul Meeks, head of technology research at Freedom Capital Markets, said fundamentals remain strong and he expects the rest of the AI infrastructure ecosystem to confirm that strength as earnings season progresses. Meeks sees no slowdown in AI infrastructure spending until 2028 at the earliest and argues the recent correction has left many semiconductor stocks relatively inexpensive.
Geopolitical risk compounded the market’s caution. The United States intensified strikes against Iran overnight, hitting an oil tanker near the country’s main export terminal as shipping traffic through the Strait of Hormuz slumped. Brent crude hovered around $84 a barrel. CIC economists including Anne-Lise Cornen warned that the challenge for the Trump administration will be to prevent a further rise in inflationary pressures just as the situation was beginning to improve in June.
Fresh economic data offered a mixed backdrop. U.S. retail sales rose modestly in June, dragged down by a drop in gas-station receipts that masked strong gains at other merchants, indicating continued consumer resilience heading into summer. Gary Schlossberg, global strategist at Wells Fargo Investment Institute, said he still expects some moderation in economic growth as renewed firming in oil prices tied to the Iran conflict and fading tax-refund tailwinds challenge spending.
Among individual movers, General Electric declined after posting second-quarter results, and United Airlines Holdings fell after its updated full-year profit forecast trailed the average analyst estimate. UnitedHealth Group jumped after raising its annual outlook and reporting quarterly profit ahead of Wall Street views, while AtaiBeckley surged after Eli Lilly agreed to acquire the psychedelic drugmaker for as much as $3.8 billion.
Louis Navellier, chief investment officer at Navellier and Associates, said a sustained move higher will require progress toward resolving the Iran conflict and the associated energy inflation risk.