The S&P 500 slipped 0.22% on Wednesday as a sharp semiconductor selloff pulled the index and the Nasdaq lower on the first day of the third quarter. A rally in Meta Platforms softened the decline, while investors weighed Fed Chair Kevin Warsh’s comments on inflation.
U.S. stocks closed slightly lower on Wednesday as technology shares fell, though gains in Meta Platforms limited losses in the S&P 500 and Nasdaq. The S&P 500 lost 16.13 points, or 0.22%, to 7,483.23, while the Nasdaq Composite fell 173.69 points, or 0.66%, to 26,040.03, and the Dow Jones Industrial Average edged down 13.96 points, or 0.03%, to 52,305.24.
Chipmakers drag the market lower
Semiconductors led the retreat. An index of semiconductors ended 6.3% lower, with technology the weakest sector in the S&P 500. Lofty valuations and heavy AI spending by tech companies have worried some market participants.
The Philadelphia Semiconductor Index dropped 6.27% to 13,353.28, reflecting a broad sell-off across the chip sector. AI-related chip stocks had been a major driver of this year’s equity rally.
Meta rallies as Warsh reassures on inflation
Meta Platforms rallied 8.8% after Bloomberg News reported that the company is building a cloud business to sell excess AI computing capacity. The move helped cushion the broader tech decline.
Support also came from Federal Reserve Chair Warsh, who said inflation risks had eased recently. Speaking at the ECB forum in Portugal, Warsh reaffirmed his commitment to price stability. According to Yahoo Finance, Warsh said prices remain too high: “prices are too high.”
Traders slightly pared their rate-hike expectations as Warsh spoke, but they still expect at least one hike this year, according to data compiled by LSEG. Warsh said he would stick firmly to the central bank’s 2% inflation target despite President Donald Trump’s call for interest rate cuts.
A pause after a strong quarter
The day’s weakness followed a strong second quarter. The S&P 500 and Nasdaq registered their biggest quarterly gains since 2020, while the Dow marked its best showing since 2022. Investors now turn to the monthly U.S. jobs report due Thursday, with markets closed Friday for the Fourth of July holiday.
Sources: Reuters, Yahoo Finance
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