U.S. stock futures slid on Thursday, July 16, 2026, as concerns over the valuation of artificial intelligence (AI) stocks led to a continued selloff in semiconductor shares, dragging down the broader market. This marked the second straight day of declines for chip stocks, with major players like Nvidia falling 2.40% and Alphabet losing 4.4% after reports of a delayed public deployment of its next-generation AI model, Gemini 3.5 Pro. The Philadelphia Semiconductor Index, comprising 30 major U.S.-listed chip stocks, plunged 4.3%, while memory-related names such as Micron, SanDisk, Seagate Technology, and Western Digital saw steep losses of 5.65%, 12.63%, 10.00%, and 9.15% respectively. SK Hynix ADRs also fell 13.69%.
The market jitters extended beyond the semiconductor sector, with all three major U.S. indexes closing lower. The Dow Jones Industrial Average dropped 105.67 points, or 0.20%, to 52,552.97. The S&P 500 fell 38.63 points, or 0.51%, to 7,533.77, and the tech-heavy Nasdaq Composite ended down 387.28 points, or 1.47%, at 25,881.95. The tech and communication services sectors led the laggards, falling 1.77% and 2.85% respectively, while consumer staples and health led gains. Paul Nolte, chief market strategist at Murphy & Sylvest, attributed the chip stock selling to the sector's excessively large weight in the S&P 500, which has surpassed 20% compared to about 8% just three to four years ago.
Adding to the market's headwinds was weaker-than-expected economic data, as the U.S. Commerce Department reported that retail sales edged up just 0.2% in June, a significant deceleration from May's revised 1% surge and below the anticipated 0.3% expansion. This slowing consumer spending raised concerns among financial analysts, even with major international tourism events like the FIFA World Cup and summer online discount events. Despite these concerns, the Q2 corporate earnings season has started strong, with 87% of the 40 S&P 500 corporations that have released results beating market expectations. On the employment front, initial claims for state unemployment benefits dropped by 8,000 to a seasonally adjusted 208,000 for the week ending July 11, aligning with the Federal Reserve's Beige Book which characterized employment as rising on balance. However, Dallas Federal Reserve President Lorie Logan called for "modestly" higher interest rates, stating that recent inflation news was not good enough.
