Wall Street Highlights: S&P 500, Nasdaq Erase Jobs Report-Related Gains As Semis Pull Back

Amid the second consecutive session of investors rotating out of technology stocks that propelled the market higher in the first part of the year, defensive consumer staples, utilities and healthcare stocks jumped.

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The 500-member gauge gave up gains stemming from a cooler-than-expected employment report that dimmed prospects of an interest-rate hike from the Federal Reserve.
(Photo: Bloomberg News)
US equities finished the holiday-shortened week little changed, erasing their earlier advance as technology stocks trailed the S&P 500 Index for a second-straight day.

The 500-member gauge gave up gains stemming from a cooler-than-expected employment report that dimmed prospects of an interest-rate hike from the Federal Reserve. Meanwhile, the tech-heavy Nasdaq 100 Index fell 1.6% as semiconductor company stocks tumbled. The Philadelphia Stock Exchange Semiconductor Index slumped 5.4%, continuing a sluggish start to the quarter.

"Evidence continues to grow that the AI trade is at best entering a period of significant consolidation, and at worst putting in a meaningful top," Jonathan Krinsky, chief market technician at BTIG, wrote in a note to clients.

Amid the second consecutive session of investors rotating out of technology stocks that propelled the market higher in the first part of the year, defensive consumer staples, utilities and healthcare stocks jumped.

The drop in semis came after the Information's report that Anthropic PBC is in talks with Samsung Electronics Co. to be a manufacturing partner for a custom artificial intelligence chip. Plans are at an early stage and Anthropic is determining details around the processor, the Information said, citing people familiar with the matter.

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"There are concerns that the high memory prices will bring AI solutions that need less memory, and that the data center build-out may not all get built in the end," said Louis Navellier of Navellier & Associates. "And that token pricing of AI software will push users to lower-cost versions, especially Chinese offerings, and is bringing increased caution regarding the enthusiasm for all things AI."

Initially, the S&P 500 and Nasdaq 100 received a boost from a report that showed US hiring slowed sharply in June even as the unemployment rate fell. The report suggested the labor market still faces some challenges despite signs of strength in recent months.

"A mixed June employment report signaled moderation in job growth from May's accelerated rise, taking the steam out of market expectations for Fed rate hikes by year end," said Jennifer Timmerman, senior investment strategy analyst at Wells Fargo Investment Institute.

Interest-rate swaps showed traders pricing in about a 20% chance of an increase at the Fed meeting later this month, down from around 33% before the data was issued.

The soft jobs report comes a day after Fed Chairman Kevin Warsh said inflation risks had come down in recent weeks and reiterated his determination to bring the pace back down to the central bank's 2% target.

"As we are learning how the Fed reaction function will form under Warsh, this print takes some of the pressure off of the inflation fighting institution to hike near term," said Bradford Smith, portfolio manager at Janus Henderson Investors.

Smith noted that moderating oil price inflation and softness on jobs "likely keeps the Fed on hold at least for the next meeting."

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Among single-name stock moves, Tesla Inc. fell after the company's second-quarter delivery figures failed to impress investors. Adobe Inc. advanced after the software company was upgraded to buy from hold at HSBC. Palantir Technologies Inc. rose as DA Davidson raised its recommendation to buy from neutral.

Sectors in Focus

  • Shares of semiconductor companies fell on Thursday, after the Information reported that Anthropic started early-stage work on its own AI chip and held talks with Samsung Electronics as a potential manufacturing partner. The report cited three people familiar with the matter. 
  • Shares of hospital operators gained after the Centers for Medicare & Medicaid Services proposed revising payment policies for hospital outpatient departments and ambulatory surgical centers beginning in 2027, targeting drug cost reductions and site-of-care payment disparities.

(This story has not been edited by NDTV staff and is auto-generated from a syndicated feed.)

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