A strong sales surge in the shares of semiconductor companies led to lower Wall Street, as doubts about whether huge investments in artificial intelligence can justify the high evaluations of technological groups. The investment climate was also burdened by the resurgence of geopolitical risks.
On the dashboard, the S&P 500 In the case of the United Kingdom, the rate of increase in the rate of increase was reduced by 0.51% at 7.533 points, and the rate of increase was reduced by 0.51% at 7.533 points. Nasdaq She took a dive of 1.47% by falling to 25,881 units. Dow Jones, although he tried intra-sessionally to resist pressures, eventually followed the downward current by losing 0.20% at 52.552 units.
On the bond market, the 10-year return was boosted to 4.56% and the 30-year-old reached 5.09%.
The technological industry and, in particular, the shares of semiconductor companies after the upgrading of investment costs by TSMC’s colossus, which is a key manufacturer of advanced processors for Big Tech such as Nvidia and Apple, were the main protagonist of the meeting.
The company announced an impressive 77% increase in net quarterly profits, which amounted to $706.6 billion Taiwan, or about $22 billion, comfortably surpassing analysts' converging estimates. However, its results did not reassure the market.
Investors are concerned about the intense rally of shares associated with artificial intelligence and question their performances, repeating the pattern that had been recorded one day earlier, after the strong results of Dutch ASML.
«The progress of the shares of chip companies now remains the most important issue for the stock market», stated. «They are already showing some substantial cracks, so they should soon record a strong and sustainable recovery, otherwise they will start broadcasting real warning signals» commented Matt Maley of Miller Tabak.
We recall that the strong rally of shares associated with artificial intelligence earlier this year contributed decisively so that Wall Street could overcome the effects of the conflict in the Middle East and return to historically high. However, since last month there has been a wave of profit registration, as concerns about the huge capital costs in the technological sector and the ejecting of product prices such as memory chips, which are used in the processing of artificial intelligence applications, are reinforced.
Interest now revolves around the period of corporate announcement and in particular on large semiconductor companies and high capitalization shares, such as the so-called Fabulous Seven, starting today with Netflix.
Netflix will publish quarterly results after the completion of the NYSE meeting and at a time when its share has been under several pressure, due to the weaker participation of users and doubts surrounding the streaming platform's development strategy.
«Corporate effects are expected to help separate essential signs from noise, revealing whether consumers remain durable or whether they are finally beginning to limit their costs», commented Brett Kenwell of eToro.
The following week the quarterly announcements of Alphabet, Intel, IBM, Texas Instruments and Tesla are expected. One week later Microsoft, Meta, Amazon, Arm, Qualcomm and Apple will follow.
At today's meeting, a counterweight to the pressures of the technological sector was the strong rise of the shares of basic consumer goods and health, with the second sector being strengthened by the rise of UnitedHealth insurance after its results were announced.
Investors also assessed economic data showing the resilience of consumer spending focusing on retail sales and the US labour market, while closely monitoring the tense situation in the Middle East.
According to the data announced, retail sales increased by 0.2% on a monthly basis in June and amounted to $768.6 billion, confirming estimates. The growth rate slowed down from the revised 1% of May, as American consumers reduced their fuel costs.
At the same time, the U.S. Labour Ministry announced that the new unemployment allowance applications declined to $208,000 last week, lower than the average estimate of 216 000.
Earlier this week, investors had been encouraged by the lowest of expected inflation figures. The relaxation of inflationary pressures in combination with the decrease in retail sales at the fuel stations indicated that the Federal Reserve had some room to avoid going directly into an increase in interest rates.
According to CME's FedWatch tool, the chances of raising interest rates by 25 basis points at the meeting of 28 and 29 July have declined significantly over a week earlier.
However, the statements of the president of the Dallas Fed, Laurie Logan, brought to the fore the pressure of the council's hawks.
«I now believe that slightly higher interest rates would better balance the prospects and risks for the two objectives of the Federal Open Market Commission», Logan said that despite the best inflationary elements, the landscape remains fragile. «It requires that new price pressures be avoided from energy shock in the short term and from strengthening demand in the medium term. At present, it is more hope than the most likely scenario», he warned.
Depending on the president of the Kansas City Fed, Jeff Schmidt, argued that inflation is his greatest concern, given the risk of further accelerating in the coming months.
Indeed, although the slowdown in inflation in the US in June is encouraging, inflationary conditions have changed rapidly in July, after the sharp escalation of tensions between Washington and Tehran. Donald Trump warned of new attacks on Iranian infrastructure, while Iran insisted that it would not allow the US to interfere in the Straits of Hormuz.
Against this background, oil prices have recorded a two-digit percentage rise this week, with Brent's future fulfillment contracts, which are the world reference point, having been strengthened by more than 11%.
At Thursday's meeting, prices declined, but remained high. The September Brent contracts closed with a 0.85% drop to $84.23 and the American WTI slightly fell below $79 a barrel.
At share level, the semiconductor industry was under the greatest pressure, but more generally the technology industry measured several losses.
Indicatively Alphabet fell over 4%, after information that Google is several months behind schedule for delivering the strongest leading artificial intelligence model it develops.
A strong fall for Intel, Western Digital and Seagate Technology, as the correction was extended to the entire sector of memory and storage chips, while Nvidia, AMD, Broadcom and Arm Holdings were also moved on negative ground.
A wave of liquidations also hit United Airlines Holdings as its results moved lower than expectations, highlighting the way in which ejecting fuel costs obscured strong travel demand.
In the winning, on the contrary, Eli Lilly, who agreed to buy AtaiBeckley for an amount that can reach $3.8 billion, confirmed the growing interest in the previously marginal branch of psychedelic drugs, as did Merck, as she received approval from the American regulators for a pill competing with strong injectable treatments in reducing dangerously high cholesterol levels.
Jump over 7% for JB Hunt Transport Services as its results showed that the highest fares in freight transport and the reduction of available transport capacity are beginning to reflect positively on profitability
Promotion to UnitedHealth Group gave the high quarter profits and the upgrade of its forecasts for the whole year, while high performance sent to +10% Abbott Laboratories' share.
In addition, investors and the news that Uber Technologies agreed to acquire Delivery Hero in a transaction that valued the German company at $14.8 billion, giving a boost to its share.
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