US stock markets opened with mixed performance on Thursday evening, Beijing time. The semiconductor sector showed particular softness. The session followed US retail sales data meeting expectations, a decline in jobless claims, and a key regional factory activity indicator hitting a near five-year high.
The Dow Jones Industrial Average rose 266.22 points, or 0.51%, to 52,924.86. The S&P 500 index fell 13.60 points, or 0.18%, to 7,558.80. The Nasdaq Composite dropped 111.618 points, or 0.43%, to 26,157.609.
Chip stocks were broadly lower in early trading. The VanEck Semiconductor ETF (SMH) declined 2.2%, with Arm Holdings leading the drop, down 4%. Shares of Taiwan Semiconductor Manufacturing Company fell 4.6% despite its latest quarterly results exceeding expectations.
Following an 11% plunge in shares of SK Hynix in Seoul, Switzerland's STMicroelectronics—Europe's largest chipmaker—declined 3%. Dutch chip equipment maker ASM International dropped 2.92%, and Germany's Infineon Technologies fell 2.8%.
Wall Street had advanced in the prior session, buoyed by a lower-than-expected US Producer Price Index (PPI) reading, which bolstered optimism about cooling inflation. Additionally, strong earnings reports from major financial institutions reassured investors that profit growth remains robust even as inflation eases. A decline in US Treasury yields also boosted demand for growth stocks, particularly large-cap technology names.
Michael Kantrowitz, chief investment strategist and head of portfolio strategy at Piper Sandler, emphasized in an interview that stable or declining interest rates are crucial for broadening market participation.
"To get the market broadening, I firmly believe you need rates to either go sideways or down," he said. "In the current environment, the most favorable backdrop for the stock market is for employment to remain relatively weak, because I think that helps keep a lid on rates and prevents them from going higher."
Corporate earnings remain a key driver. UnitedHealth Group is set to report results before the bell, while Netflix will release its earnings after Thursday's market close.
Economic data released on Thursday showed US retail sales growth matched forecasts, initial jobless claims fell, and a key factory activity gauge for the Philadelphia region surged to its highest level in nearly five years.
According to seasonally adjusted data from the US Commerce Department that was not adjusted for inflation, the advance estimate for retail and food services sales increased 0.2%, in line with expectations. However, sales excluding autos declined 0.2%, against market expectations for a 0.2% gain. Sales at gasoline stations plunged 5.3%, impacted by falling oil prices.
For the week ending July 11, seasonally adjusted initial jobless claims fell to 208,000, a decrease of 8,000 from the previous week and below the Dow Jones estimate of 218,000. Continuing claims, which lag by a week, decreased by 16,000 to just over 1.8 million.
The Philadelphia Fed Manufacturing Index, which measures the proportion of firms reporting growth versus contraction, surged to 41.4 in July. This represents a jump of about 31 points from the prior reading, far exceeding the expected 9.8 and marking the highest level since November 2021.
The New York Fed's Services Business Activity Index registered 8.7, marking its first positive reading in nearly two years and reaching its highest level since 2022.
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