U.S. stock markets ended mixed on Thursday, with megacap technology stocks experiencing declines that offset strong gains in the semiconductor sector. The Dow Jones Industrial Average rose by 0.14%, gaining 71.72 points, while the S&P 500 closed nearly flat, down 0.01% with a loss of 0.73 points. The Nasdaq Composite, heavily weighted by technology, declined by 0.46%, shedding 118.03 points.
Several prominent technology companies saw significant drops. Apple Inc. (AAPL) shares plunged over 6% after announcing price hikes for iPads and MacBooks due to rising memory and storage chip costs. Microsoft Corp. (MSFT) also fell more than 3% following price increases for its Xbox consoles, leading Stifel to lower its price target to $400 from $415. Amazon.com (AMZN) and Meta Platforms (META) each declined by over 3% and 2% respectively, contributing to a broader tech weakness that is expected to result in a third consecutive week of declines for the Nasdaq. The S&P 500 is also poised to end the week lower, contributing to a broader trend of U.S. stock markets heading for a month in the red.
In contrast, the semiconductor sector showed robust performance. Micron Technology (MU) surged nearly 16% after reporting stronger-than-expected third-quarter earnings and an optimistic outlook, driven by strong demand for AI memory. This rally boosted other memory supply chain stocks like SanDisk (SNDK), while the Philadelphia Semiconductor Index closed up 3.59%. This divergence highlights a market where investors are increasingly selective, favoring companies directly benefiting from AI infrastructure spending over those facing margin pressures or elevated expectations.
Economically, the Personal Consumption Expenditures (PCE) Index, the Federal Reserve's preferred inflation gauge, advanced 4.1% in May on an annualized basis, marking a 31-month high. Core PCE, excluding food and energy, rose 3.4% year-over-year. Although the monthly data was largely in line with expectations, this persistent inflation, significantly above the Fed's 2% target, keeps markets cautious about the possibility of future interest rate hikes. Traders anticipate the Fed will lift interest rates by at least 25 basis points before the year-end.
