Semiconductor Selloff Weighs on Major Indexes Despite Broad Strength Beneath the Surface

Stocks closed lower on Thursday as another wave of selling in semiconductor shares and late-session weakness among several mega-cap technology companies outweighed continued strength across defensive and value-oriented sectors. The S&P 500 declined 0.5%, the Nasdaq Composite fell 1.5%, and the Dow Jones Industrial Average slipped 0.2%.

Semiconductor stocks remained the market’s biggest drag, with the Philadelphia Semiconductor Index dropping 4.3%. The selling followed another double-digit overnight decline in SK hynix’s Korean-listed shares, while Taiwan Semiconductor Manufacturing faced a classic “sell-the-news” reaction despite delivering a strong beat-and-raise earnings report.

Memory-chip stocks once again led the declines. Sandisk fell 12.6%, while Seagate Technology dropped 10.0%, ranking among the weakest performers in the S&P 500.

Apple and Microsoft provided some support for the technology sector, rising 1.8% and 1.4%, respectively. However, their gains were not enough to offset the widespread weakness across semiconductor names, leaving the information technology sector down 1.8%.

Selling broadened during the afternoon as several other mega-cap growth stocks came under pressure. Communication services was the day’s weakest sector, falling 3.0%, after Alphabet dropped 4.4% on a Bloomberg report that the launch of its Gemini 3.5 Pro AI model has been delayed following missed internal performance targets. Meta Platforms also moved lower, while Netflix edged higher ahead of its quarterly earnings release after the closing bell.

Amazon declined 2.0%, contributing to a 0.3% loss in the consumer discretionary sector. The Vanguard Mega Cap Growth ETF fell 1.4%, underscoring the continued pressure on the market’s largest growth companies.

Beneath the surface, however, market participation remained notably healthy. Consumer staples led all sectors with a 2.9% gain as investors rotated into more defensive names. Coca-Cola advanced 3.0%, while Walmart gained 2.2%, helping cushion losses in the Dow.

Health care also outperformed, climbing 2.2% as UnitedHealth extended its post-earnings advance and Abbott Laboratories surged 10.7% following a strong quarterly report.

Real estate added 2.1%, while the equal-weighted S&P 500 rose 0.9%, significantly outperforming the market-cap-weighted index and highlighting the concentrated nature of the day’s weakness.

Industrials finished little changed despite mixed earnings reactions. GE Aerospace declined more than 4% despite delivering a beat-and-raise quarter, while United Airlines slipped after issuing third-quarter guidance that came in slightly below expectations. Offsetting those losses, J.B. Hunt Transport rallied to a record high after reporting stronger-than-expected earnings and providing encouraging commentary on its outlook.

Energy extended its recent relative strength with a 1.0% gain, even as WTI crude oil finished modestly lower following a comparatively quiet day on the geopolitical front involving the U.S. and Iran.

Among smaller companies, the Russell 2000 gave back early gains to finish 0.3% lower, while the S&P MidCap 400 managed a modest 0.4% advance.

Thursday’s session once again highlighted the market’s two-speed nature. While defensive sectors, real estate, and the equal-weighted S&P 500 continued to demonstrate healthy underlying participation, persistent selling in semiconductor stocks and renewed weakness across several mega-cap growth names remained the dominant force driving index-level performance. Investors now turn their attention to the next wave of earnings reports to determine whether the recent pressure on technology can begin to ease or if market leadership will continue shifting toward more defensive areas.

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