Wall Street concluded a volatile Thursday with a mixed performance, largely influenced by a divergence between surging artificial intelligence (AI) chip stocks and struggling megacap technology companies. The S&P 500 remained nearly unchanged with a dip of less than 0.1%, while the Dow Jones Industrial Average rose 0.1%, or 71 points. The Nasdaq composite, heavily weighted by tech giants, fell 0.5%. This mixed result reflects investors' ongoing confidence in companies with strong AI-linked earnings visibility but also growing caution regarding large technology firms facing margin pressures and pricing concerns.
Driving the positive sentiment were chipmakers, notably Micron Technology, whose shares jumped 15.7%. Micron reported better-than-expected profit and revenue for the latest quarter and provided a strong growth forecast, boosting confidence in demand for memory products essential for AI infrastructure. Qualcomm also saw gains, with a 3.8% rise, after projecting $15 billion annually in data center sales by 2029. These developments helped lift the broader semiconductor index, reinforcing the idea that companies directly benefiting from AI infrastructure spending are still highly attractive to investors.
Conversely, several megacap technology stocks experienced declines, weighing down the Nasdaq. Apple, in particular, slumped 6.1% and was the single heaviest drag on the S&P 500, after announcing price hikes of 15% to 20% on many products, including Mac computers, citing increased costs for memory and other components. Other tech giants like Microsoft (down 3.5%), Alphabet (down roughly 1%), and Meta (down roughly 2%) also faced pressure. This indicated a growing market concern that while rising AI demand benefits chipmakers, the associated increasing costs could squeeze the margins of companies selling finished products.
Inflationary concerns also played a role in market sentiment, with the May personal consumption expenditures (PCE) price index showing a 4.1% year-on-year increase, the largest since April 2023. The core PCE, excluding food and energy, climbed 3.4% year-on-year, its highest since October 2023. While these figures were largely within market expectations, they contribute to worries about sustained high interest rates. Treasury yields eased slightly after the inflation report, with the 10-year yield falling 0.59 basis points to 4.394% and the 2-year yield dropping 1.2 basis points to 4.125%.
