Wall Street finished the regular trading session on a mixed note Wednesday, as a sharp decline in artificial intelligence-related chip stocks offset gains in the broader market. The S&P 500 edged down 16.13 points, or 0.22%, to close at 7,483.23, marking its eighth decline in the last 11 sessions. The Nasdaq Composite fell more sharply, dropping 173.69 points, or 0.66%, to 26,040.03, while the Dow Jones Industrial Average managed to hold nearly flat, losing just 13.96 points, or 0.03%, to end at 52,305.24, according to LSEG data.
Breadth vs. Weighted Performance
Despite the headline index declines, market breadth told a more optimistic story. The Associated Press reported that roughly three out of every five S&P 500 stocks ended the day higher. This divergence highlights the outsized influence of a handful of mega-cap AI and semiconductor stocks on cap-weighted benchmarks. When these heavyweights fall, they can pull the entire index down even as the majority of stocks rise.
Exchange-traded fund activity after the bell reinforced this split. The SPDR S&P 500 ETF Trust (SPY) slipped 0.12%, while the Invesco S&P 500 Equal Weight ETF (RSP), which gives each component equal influence, added 0.30%. The tech-heavy Invesco QQQ Trust (QQQ) dropped 1.51%, and the VanEck Semiconductor ETF (SMH) tumbled 5.43%, underscoring the pain in chip stocks.
AI and Semiconductor Stocks Under Pressure
The AI hardware sell-off was led by Micron Technology (MU), which plunged 10.36% to $1,032.28. Advanced Micro Devices (AMD) fell 6.89% to $540.88, and Nvidia (NVDA) slipped 1.27% to $197.58. In contrast, Meta Platforms (META) surged 8.83% to $612.91 after reports that it is building a cloud business to offer additional AI computing capacity. This news weighed on smaller AI cloud stocks, with CoreWeave (CRWV) falling 13.92% and Nebius Group (NBIS) sinking 17.02%, as traders worried Meta might reduce spending with those firms and become a rival. Gil Luria of D.A. Davidson noted the impact is likely to be more on neoclouds than the big hyperscalers.
Economic Data and Fed Policy
Factory sector data provided some relief on the inflation front but was insufficient to lift the Nasdaq. The ISM manufacturing PMI slipped to 53.3 in June from 54.0 in May, while the prices paid index dropped to 73.0 from 82.1. Oliver Allen, senior U.S. economist at Pantheon Macroeconomics, described the manufacturing sector as still in relatively good health. Meanwhile, Federal Reserve Chair Kevin Warsh kept the door open for rate hikes, reiterating the Fed's commitment to its 2% inflation target and warning that those expecting higher inflation tolerance would be disappointed. Following his comments, traders priced in a 70% chance of a rate hike in September, according to Reuters.
Corporate Movers
General Mills (GIS) climbed 8.68% to $37.77 after reporting a 1% rise in fourth-quarter net sales to $4.6 billion, with adjusted diluted EPS up 27% in constant currency. The company outlined plans for $3 billion in total cost savings through fiscal 2030. Kroger (KR) rose 1.28% to $56.24 after announcing it would buy Giant Eagle for $1.65 billion, including $1.25 billion in cash and about $400 million in assumed debt. Nike (NKE) gained 5.07% to $43.06, brushing off a 17% drop in China sales and cautious guidance, with analysts citing more positive takeaways from the quarter.
Outlook
Investors now turn their attention to Thursday's jobs report, which will be critical for the rate outlook. U.S. markets will be closed on Friday for the Independence Day holiday. The mixed session underscores the market's sensitivity to AI sector dynamics and monetary policy signals, with the upcoming payroll data likely to set the tone for the next leg of trading.
