Tech stocks struggled to recover on Thursday following the Nasdaq’s worst performance since 2022, despite promising earnings from chipmaker TSMC (TSM).
The Nasdaq Composite (^IXIC) reversed early gains to close down over 1%, while the S&P 500 (^GSPC) dropped 0.7%. The Dow Jones Industrial Average (^DJI) also slipped 0.4%, after hitting a record high in the previous session.
The recent rally on Wall Street has encountered increasing headwinds this week, with political, geopolitical, and trade risks rattling a market that had grown confident about a potential Federal Reserve interest rate cut this year.
Signs of a cooling labor market bolstered hopes for a rate cut on Thursday, as the number of continuing applications for unemployment benefits reached its highest level since November 2021.
The Nasdaq’s losses on Thursday followed a 2.7% decline in the previous session, partly driven by fears of heightened US export restrictions to China. Chip stocks, including Nvidia (NVDA), TSMC, and ASML (ASML), were hit hard amid a shift from tech leaders to lesser-known sectors. These stocks continued to slide on Thursday.
TSMC’s robust quarterly earnings briefly buoyed market sentiment. The Taiwanese chip giant reported a 36% profit increase and raised its 2024 sales outlook, signaling confidence in the AI sector’s growth.
On Thursday, Netflix (NFLX) was a focal point for investors, with its earnings report due after the market close. Expectations are high for the streaming service, although some analysts caution that the stock is nearing record highs.
Meanwhile, investors are closely monitoring the US presidential race. Republican nominee Donald Trump’s campaign could significantly impact markets, while President Joe Biden’s COVID-19 diagnosis adds uncertainty to his re-election bid as key Democratic leaders discuss potential alternatives.
