U.S. equities experienced a mixed session on Thursday, with broad-based gains in the Dow Jones Industrial Average and small-cap stocks offsetting a sharp decline in the largest technology names. The rotation saw investors shift capital away from the so-called 'Magnificent Seven' into more cyclical and value-oriented areas of the market.
Tech Giants Shed 6 Billion
Apple Inc (NASDAQ:AAPL), NVIDIA Corp (NASDAQ:NVDA), Microsoft Corp (NASDAQ:MSFT), Alphabet Inc (NASDAQ:GOOGL), and Meta Platforms Inc (NASDAQ:META) all traded lower, wiping approximately $416 billion in combined market capitalization, according to live quote data. Apple was the biggest drag, falling after reports that it raised prices on MacBook and iPad models due to higher memory and storage costs. 'The memory environment is tough,' said Ben Bajarin, CEO of Creative Strategies, warning that other device makers may face even steeper cost pressures.
Micron and Qualcomm Lead Semiconductor Surge
In contrast, semiconductor stocks rallied on strong earnings and guidance. Micron Technology Inc (NASDAQ:MU) surged 10.4% after reporting fiscal Q3 revenue of $41.456 billion and adjusted EPS of $25.11. The company also guided Q4 revenue to $50.0 billion, plus or minus $1.0 billion, and disclosed $22 billion in customer commitments for memory, including take-or-pay clauses. CEO Sanjay Mehrotra said he expects 'tight conditions to persist beyond calendar 2027.' Qualcomm Inc (NASDAQ:QCOM) gained 3.6% after raising its long-term revenue targets, aiming for $40 billion in fiscal 2029 non-handset revenue and over $15 billion from data centers. CFO Akash Palkhiwala said the chipmaker 'will be truly diversified,' with custom-chip revenue from two hyperscale customers expected before year-end.
Broad Market Breadth Improves
SPDR S&P 500 ETF Trust (NYSEARCA:SPY) rose 0.3%, while the Invesco QQQ Trust (NASDAQ:QQQ) added 0.3%. The SPDR Dow Jones Industrial Average ETF Trust (NYSEARCA:DIA) gained 1.3%, and the iShares Russell 2000 ETF (NYSEARCA:IWM) climbed 1.1%. Market breadth was positive, with eight of 11 S&P 500 sectors in the green. Industrials gained 2%, the Philadelphia semiconductor index rose 0.7%, but the broader technology sector fell 1%. On the NYSE, advancers outpaced decliners by a ratio of 1.86 to 1.
Economic Data Caps Rally
The rally was tempered by fresh economic data. The Personal Consumption Expenditures (PCE) price index rose 4.1% year-over-year in May, the first reading above 4.0% since April 2023. The Bureau of Economic Analysis revised first-quarter GDP higher to 2.1% from 1.6%, but consumer spending was revised down to 0.5% from 1.4%. 'Inflation remains elevated for now,' said Michele Morganti, senior equity strategist at Generali Investments, noting that a Fed rate hike later this year remains a risk. Michael Monaghan, partner and portfolio manager at Founder ETFs, observed that the market continues to reward AI suppliers while 'punishing those doing the spending.'
Market Outlook
The divergence between tech and the broader market underscores a shifting investor focus toward value and cyclical sectors. With AI-related supply chain news creating winners and losers, the near-term path for equities may hinge on upcoming earnings reports and further inflation data.
