Lisa Pauline Mattakal and Ankika Biswas
(Reuters) – The Nasdaq and Nasdaq indexes fell on Friday as chip stocks fell while investors also weighed stronger-than-expected U.S. business activity data.
Shares of artificial intelligence chip maker Nvidia (NASDAQ:) fell 4.4% after losses in the previous session sent its market value falling below that of Microsoft (NASDAQ:).
Shares of semiconductor companies Qualcomm (NASDAQ:), Broadcom (NASDAQ:), Micron Technology (NASDAQ:) and Hand Shares of (NASDAQ:) fell 2-5%, down 2.2%.
Technology was the hardest hit among the major S&P 500 industry indexes, falling 1.3%.
Shares of companies such as Alphabet (NASDAQ:), Amazon.com (NASDAQ:) and Apple (NASDAQ:) rose 0.6-1.4%.
US business activity rose to a 26-month high in June as employment recovered, but price pressures eased significantly, raising hopes that the recent slowdown in inflation is likely to be sustained.
The services PMI rose to 55.1 this month, beating expectations of 53.7, while the manufacturing PMI rose to 51.7, compared with expectations of a fall to 51.
The market is also weighing a series of worsening economic data and comments from US Federal Reserve officials that interest rates could remain high for a long time unless there is a consistent improvement in inflation figures.
Friday’s session will mark the expiration of quarterly derivatives contracts tied to stocks, index options and futures, also known as the “triple whammy,” adding to market volatility.
Money markets still price the odds of a 25 basis point rate cut in September at 58% and still expect about two rate cuts this year, according to LSEG FedWatch data.
The S&P 500 topped 5,500 during Thursday’s session, but both the benchmark index and the tech-heavy Nasdaq closed lower as large-cap stocks pulled back.
Wall Street’s incredible rally since the tail end of 2023 has been driven primarily by stocks like Nvidia and a number of other highly valued artificial intelligence stocks. Analysts, however, expressed concern about whether the sharp rise in their estimates is sustainable.
“The largest companies in the S&P 500 are excellent, very profitable and growing fast… but they’re getting a little more expensive,” said Chris Zaccarelli, chief investment officer of the Independent Advisor Alliance.
“We wouldn’t be surprised if the market takes a breather and cools a bit in the short term.”
At 9:55 a.m. ET, the S&P 500 was up 73.72 points, or 0.19%, at 39,208.48, while the S&P 500 was down 17.36 points, or 0.32%, at 5,455. 81, and the index fell 98.42 points, or 0.56%, to 17,623.17.
Spirit AeroSystems (NYSE:) rose 4.8% following a Reuters report that Boeing (NYSE:) is close to a deal to buy out the aircraft parts supplier after months of negotiations.
Sarepta Shares of Therapeutics (NASDAQ:) jumped 34.8% after the U.S. Food and Drug Administration approved expanding the use of the company’s gene therapy to patients with Duchenne muscular dystrophy aged four years and older.
Declining issues outnumbered advancing ones by a 1.37-to-1 ratio on the NYSE and 1.14-to-1 on the Nasdaq.
The S&P recorded 14 new 52-week highs and one new low, while the Nasdaq recorded 12 new highs and 60 new lows.