The S&P 500 opened lower on Thursday as a second straight day of chip-stock selling pulled the index into the red, even as the Dow climbed. A record earnings report from TSMC failed to lift semiconductors, and traders now see little chance of a Fed rate hike this month.
The S&P 500 fell 0.2% at Thursday's open as semiconductor stocks came under pressure for a second day, dragging the benchmark and the Nasdaq lower while the Dow pushed the other way. The Nasdaq Composite gave up 0.8% at the open. The benchmark index still remains near its June record close.
That split showed up clearly in the tape. Real-time data put the Dow Jones Industrial Average up 126.52 points, or 0.24%, at 52,785.16 around 9:32 a.m. EDT, while the S&P 500 slipped 15.48 points to 7,556.92 minutes into trading.
Chip stocks lead the drop
The weakness ran through the semiconductor sector. SK Hynix tumbled 6% to $166.04 a share shortly after the bell, extending a rout that had already hit chipmakers before the open. Micron Technology fell 4.9% in pre-market trading after shedding 8% the prior session, while Advanced Micro Devices dropped 3.4%.
Yet the selling came despite strong numbers from Taiwan Semiconductor Manufacturing Company. TSMC reported record second-quarter revenue of $40.2 billion and lifted its capital spending outlook, but the stock still fell 4% in premarket trading after management warned of higher prices. Reuters reported the results marked a 77% jump in second-quarter profit that topped market expectations.
Data and the Fed
The moves followed a week of cooler inflation data. A softer-than-expected producer price index reading eased worries over tighter Federal Reserve policy. Markets are now pricing in a 10.2% likelihood of a 25-basis-point Fed rate hike at this month's meeting, according to CME's FedWatch tool.
Thursday's economic prints added little pressure. Retail sales grew 0.2% in June, matching expectations but slowing sharply from May, while initial jobless claims fell to 208,000 in the week ended July 11. With the S&P 500 up more than 10% this year and near its June record close, the rally leaves little room for disappointment. A Netflix report after the close is next on the earnings calendar.
Sources: Yahoo Finance, NDTV Profit, Reuters
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