U.S. stocks showed mixed performance in late trading on Thursday, with the S&P 500 index declining by 0.6%. The latest financial results from tech giant NVIDIA and software leader Salesforce.com failed to provide a broad market lift. Meanwhile, U.S. initial jobless claims for the past week came in lower than anticipated.
The Dow Jones Industrial Average gained 36.61 points, or 0.07%, to close at 49,518.76. The Nasdaq Composite dropped 291.20 points, or 1.26%, settling at 22,860.87. The S&P 500 fell 37.34 points, or 0.54%, finishing at 6,908.79.
NVIDIA's stock fell approximately 5%, despite the chip giant reporting fourth-quarter profit and revenue that surpassed expectations. This decline positioned the stock for its worst single-day performance since last April. Other semiconductor stocks, including Broadcom, Lam Research, Western Digital, and Applied Materials, also dropped more than 5%. Advanced Micro Devices (AMD) declined by 3.9%.
Tom Graff, Chief Investment Officer at Facet, commented, "The market is currently in a strong 'show me' mode, and NVIDIA's earnings didn't fully deliver the required proof. NVIDIA is grappling with sky-high expectations already reflected in its stock price, while simultaneously facing market skepticism. This could lead to a bumpy ride for the share price over at least the next few quarters."
Conversely, Salesforce.com, one of the recent significant victims of artificial intelligence disruption concerns, saw its stock rise 3% after the software company announced quarterly results that exceeded forecasts. However, the company's revenue guidance for fiscal year 2027 disappointed investors.
James Demmert, Chief Investment Officer at Main Street Research, stated, "Salesforce delivered solid earnings, but its weak forward guidance does little to calm the sentiment collapse in the software sector. Salesforce faces a challenging future due to AI advancements, but we also believe the recent sell-off in software stocks has been overdone."
Certainly, software stocks did advance on Thursday, with the iShares Expanded Tech-Software Sector ETF (IGV) climbing 1%. Nonetheless, the fund remains in bear market territory, as its price is down approximately 30% from recent highs.
Beyond the software sector, other market segments moved higher during the day's trading, including financials, energy, and real estate. Notably, stocks such as JPMorgan Chase, Exxon Mobil, and CBRE Group were among the gainers.
Prior to Thursday, U.S. markets experienced an encouraging trading session on Wednesday, with software and technology stocks rebounding during regular hours. Despite this, sentiment towards software and cybersecurity stocks has remained fragile this year, as concerns persist that rapidly evolving AI capabilities could disrupt the business models of existing software providers.
On the economic data front Thursday, U.S. initial jobless claims for the previous week came in at 212,000, below expectations.
The U.S. Department of Labor reported that first-time claims for unemployment benefits saw a slight increase last week but remained within historical ranges, suggesting that employers are continuing to hold off on widespread layoffs despite softer hiring.
Seasonally adjusted initial jobless claims totaled 212,000 for the week ending February 21, an increase of 4,000 from the upwardly revised figure of the prior week, but lower than the Dow Jones consensus estimate of 215,000. Looking at the longer-term trend, the four-week moving average increased by only 750 to 220,250.
Continuing jobless claims, which are reported with a one-week lag, decreased by 31,000 to 1.833 million.
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