US stock markets ended with a mixed performance on Thursday. The Nasdaq Composite index closed in negative territory, with Apple Inc. leading the decline on the Nasdaq. The stock fell sharply by 6% following news of price increases for its MacBook and iPad products. Apple attributed the price adjustments primarily to significant cost increases for components such as chips. Additionally, Microsoft Corporation announced price hikes for its Xbox gaming consoles, which contributed to its stock declining by 3.5%.
The Nasdaq index fell by 0.46% to close at 25,358.60 points. Meanwhile, the S&P 500 index edged down by 0.01% to finish at 7,357.49 points, while the Dow Jones Industrial Average gained 0.14%, closing at 51,920.62 points.
The Nasdaq Composite closed lower on Thursday. Despite Micron Technology Inc. delivering a better-than-expected earnings report, trading capital flowed out of core technology stocks, dragging the index down. Market sector performance diverged: shares in non-artificial intelligence sectors showed strength, helping to push the Dow Jones Industrial Average to a new intraday record high. Stocks in the healthcare, financial, and industrial sectors provided support for the blue-chip Dow index, with Johnson & Johnson shares rising approximately 1% and Caterpillar Inc. surging 6%.
The US Personal Consumption Expenditures (PCE) Price Index for May, a key inflation gauge closely watched by the Federal Reserve, was released. The data showed the PCE index rose 0.4% month-over-month, slightly below the 0.5% increase anticipated by economists surveyed by Dow Jones. On a year-over-year basis, it increased by 4.1%, matching market expectations.
Excluding the volatile food and energy categories, the core PCE index rose 0.3% month-over-month and 3.4% year-over-year. Both figures aligned with market forecasts. While core inflation reached its highest level since October 2023, investor concerns that the data might have been even higher due to energy price increases driven by Middle East conflicts were alleviated once the final numbers were released.
US Treasury yields saw a slight decline, with the yield on the benchmark 10-year note falling less than 1 basis point to 4.396%.
Other major technology companies that are large-scale purchasers of semiconductors also saw their share prices weaken: shares of Alphabet Inc., Google's parent company, fell nearly 1%, while shares of Meta Platforms Inc. dropped over 2%. The market began to worry that rising chip prices could compress profit margins for major tech firms.
Jed Ellerbrook of Argentina Capital Management noted that the ongoing increase in memory chip prices means "the prices of all electronics containing semiconductor components, including televisions and cars, will rise accordingly."
The portfolio manager added, "There is significant inflation in the technology supply chain, and the resulting ripple effects should not be underestimated." However, he also stated that current consumer purchasing power remains sufficient to absorb this round of price increases.
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