The S&P 500 dropped 0.50% on the day, while the Nasdaq fell 1.47%, dragged down by a 3.5% slide in semiconductor stocks. Strong earnings reports from TSMC and UnitedHealth Group were overshadowed by the chip sector's weakness, which weighed on the broader market.
Chip sector drags markets lower
Semiconductor stocks were the biggest drag on the S&P 500 and Nasdaq, falling 3.5% as a group. The decline erased earlier gains and pushed both indexes into negative territory for the session. The weakness in chips came despite a solid earnings beat from TSMC, the world's largest contract chipmaker, which reported better-than-expected quarterly results. Investors appeared to focus on broader concerns about the chip cycle rather than the strong numbers from individual companies.
Strong earnings fail to lift sentiment
TSMC posted earnings that topped analyst estimates, but the positive news was overshadowed by the broader selloff in semiconductor stocks. Similarly, UnitedHealth Group reported strong quarterly results, yet the health insurer's shares could not offset the drag from the tech sector. The disconnect between company-level performance and market reaction suggests investors are more worried about macro headwinds facing the chip industry than about individual earnings beats.
The Nasdaq's 1.47% decline was its steepest in weeks, while the S&P 500's 0.50% loss was more modest but still broad-based. The Dow Jones Industrial Average, which has less exposure to tech, fared better but still ended lower.
The chip sector's slide erased gains from otherwise strong earnings reports, leaving investors to weigh the sector's outlook. No new catalysts emerged during the session to reverse the selling pressure.
