The U.S. stock market stumbled near record highs on Wednesday, dragged down by a selloff in semiconductor stocks after SK Hynix’s lackluster earnings raised doubts about the sustainability of AI-related demand. Heavyweights Nvidia (NVDA), AMD (AMD), and Broadcom (AVGO) led declines, with the Philadelphia Semiconductor Index retreating 1.3%. Investors were cautious following the earnings, which tempered enthusiasm for the AI-driven market rally.
While chip stocks faltered, the broader market showed resilience. The S&P 500 (SPY) remained largely flat, the Dow Jones (DIA) rose 0.4%, and the Nasdaq 100 (QQQ) fell 0.3%. Meanwhile, Bitcoin (GBTC) rebounded 0.9% to $105,056.2 after swinging between gains and losses. The bond market (TLT) saw yields on 10-year Treasuries rise three basis points to 4.65%. Traders also monitored labor market data, which showed a slight increase in weekly jobless claims and continuing claims reaching a three-year high.
Market Overview:- S&P 500 was flat; Nasdaq 100 fell 0.3%; Dow Jones rose 0.4%.
- Philadelphia Semiconductor Index dropped 1.3% as Nvidia and AMD slid.
- Bitcoin rose 0.9% to $105,056.2; 10-year Treasury yields increased to 4.65%.
- SK Hynix’s earnings raised concerns about AI chip demand.
- Labor market data showed jobless claims at a three-year high.
- AI-driven investments by OpenAI, SoftBank, and Oracle (ORCL) continue to buoy optimism.
- Fed interest rate decision expected next week with no cuts anticipated.
- Investors await Eurozone PMI and U.S. home sales data on Friday.
- Corporate earnings, including chipmakers, could guide market direction.
- The broader market showed resilience despite semiconductor stock declines, with the Dow Jones rising 0.4% and the S&P 500 remaining flat, reflecting investor confidence in non-tech sectors.
- Bitcoin’s 0.9% rebound to $105,056.2 highlights continued optimism in digital assets, which could support broader risk-on sentiment in financial markets.
- AI-driven investments by OpenAI, SoftBank, and Oracle underscore the long-term potential of AI infrastructure, providing a strong growth narrative for semiconductor stocks despite near-term volatility.
- Labor market data, while showing increased jobless claims, indicates wage growth and job openings remain robust enough to sustain consumer spending and economic expansion.
- Upcoming corporate earnings from chipmakers could provide clarity on AI demand trends, potentially reversing negative sentiment in the semiconductor sector.
- The Philadelphia Semiconductor Index’s 1.3% drop, led by Nvidia and AMD, raises concerns about the sustainability of AI-related demand following SK Hynix’s lackluster earnings.
- Labor market data showing jobless claims at a three-year high suggests potential cracks in economic resilience, which could weigh on consumer confidence and spending.
- Rising 10-year Treasury yields (up three basis points to 4.65%) may increase borrowing costs for businesses and consumers, dampening economic growth prospects.
- Institutional inflows into equities remain subdued despite the market rally, signaling skepticism about the durability of current valuations amid economic uncertainties.
- Investors face heightened risks as semiconductor stocks, a key driver of this year’s market gains, encounter scrutiny over inconsistent earnings and slowing AI momentum.
The labor market remained a focal point as continuing claims hit their highest level in three years, reflecting some weakness in hiring trends. However, economists noted that wage growth and job openings remain robust enough to keep the economy on solid footing. Fed policymakers, who meet next week, are not expected to cut rates amid these mixed economic signals.
Semiconductor stocks, a major driver of the market’s gains this year, face heightened scrutiny as AI-related momentum shows signs of wavering. Analysts cautioned that while demand for AI infrastructure remains robust, earnings consistency across chipmakers will be critical to sustaining market confidence. Meanwhile, broader market skepticism persists as large institutional inflows remain subdued despite the rally.
