The Nasdaq Composite fell on Thursday, even after Micron Technology’s excellent earnings report, as traders retreated from key technology stocks.
The market was divided as non-AI names lifted the Dow Jones Industrial Average to a new all-time intraday high.
The Nasdaq fell 0.6%, while the S&P 500 traded around stagnant. The Dow, which includes 30 stocks, rose 80 points, or 0.2%. As for the Dow Jones, health, financial and industrial stocks provided a boost to the blue-chip index. Shares of Johnson & Johnson and JPMorgan Chase rose more than 1% and 2%, respectively, while Caterpillar shares jumped 5%.
Apple shares led the decline on the Nasdaq, falling 5% after the company announced price increases for MacBooks and iPads. Apple cited the rise in prices of components such as chips as the reason. In addition, Microsoft shares fell by almost 4% after the company announced that it is increasing the price of Xbox consoles.
Other major technology firms, which buy semiconductors, also fell. Alphabet and Meta Platforms, for example, fell 1%. There may be some concern that the margins of major tech firms could be squeezed by the rising cost of chips.
With the price of memory rising, Argent Capital Management’s Jed Ellerbroek noted that “everything we buy that’s electronic and has semiconductor content,” like TVs and cars, “is going to go up in price.”
“I think there are pretty big spillover effects from really high inflation and technology supply chains,” the portfolio manager said. However, at the moment the consumer is “strong enough to absorb these price increases”, he added.
May’s personal consumption expenditures price index – the Federal Reserve’s preferred gauge of inflation – showed that the main index rose 0.4% from the previous month, slightly less than the 0.5% economists polled by Dow Jones expected. The main index also rose 4.1% year-on-year, in line with expectations.
Excluding volatile food and energy prices, core PCE rose 0.3% from the previous month and 3.4% from the previous year. Both were also in line with economists’ expectations. While core inflation hit its highest level since October 2023, investors were relieved that the numbers were not even higher after rising energy prices caused by the conflict in the Middle East.
U.S. Treasury yields fell slightly, with the yield on the benchmark 10-year U.S. Treasury note down more than 1 basis point to 4.384%.
“Inflation is too high, but not out of control,” Ellerbroek said.
Micron bucked the market’s decline, as shares rose 14% after the chipmaker reported fiscal third-quarter results that beat analysts’ expectations. Fellow semiconductor company Qualcomm rose 6% after raising guidance for its non-mobile revenue in fiscal 2029. Other chip names such as Sandisk, Western Digital, KLA and Applied Materials rose in sympathy.
