Midday: U.S. stocks mixed, semiconductor sector drags down Nasdaq
In the early morning of July 17th, Beijing time, U.S. stocks were mixed at midday on Thursday. Weakness in the semiconductor sector dragged the Nasdaq lower. Traders are assessing whether corporate earnings are enough to support further gains in artificial intelligence trading, while uncertainty over the situation in the Middle East continues to simmer. U.S. retail sales were in line with expectations, jobless claims fell and a gauge of factory activity in the Philadelphia area hit a nearly five-year high. The Dow rose 88.20 points, or 0.17%, to 52746.84 points; the Nasdaq fell 170.72 points, or 0.65%, to 26098.51 points; the S&P 500 fell 9.24 points, or 0.12%, to 7563.16 points. Chip stocks were broadly lower in early trading. The VanEck Semiconductor ETF (SMH) fell 2.2%, led by a 4% decline in Arm Holdings. fell 4.6% despite its latest quarterly results beating expectations. Switzerland's STMicroelectronics - Europe's largest semiconductor maker - fell 3% after SK Hynix shares plunged 11% in Seoul. Dutch chip equipment maker ASMI fell 2.92%, and Germany's Infineon Technologies fell 2.8%. Wall Street rose in the previous session as a lower-than-expected U.S. producer price index (PPI) bolstered optimism about cooling inflation. Additionally, strong earnings reports from major financial institutions reassured investors that earnings growth remains solid despite slowing inflation, while falling U.S. Treasury yields boosted demand for growth stocks, especially large technology stocks. Michael Kantrowitz, chief investment strategist and head of portfolio strategy at Piper Sandler, emphasized in an interview that interest rates remaining flat or falling will be critical to market broadening. "For the market to widen, I fully believe you need rates to either move sideways or fall," he said. "In the current environment, the most favorable backdrop for stocks is for employment to remain relatively soft, because I think that will help keep interest rates from rising and prevent them from rising." Corporate earnings remain a key driver. The group will announce its results before the market opens. Earnings will be released after the close on Thursday. Economic data released on Thursday showed U.S. retail sales rose in line with expectations, jobless claims fell and a gauge of factory activity in the Philadelphia area hit a nearly five-year high. According to data from the U.S. Department of Commerce, which is seasonally adjusted but not adjusted for inflation, retail and food service sales are expected to increase by 0.2%, in line with expectations. But sales excluding automobiles fell 0.2%, compared with market expectations for a 0.2% increase. Affected by falling oil prices, gas station sales plummeted 5.3%. In the week ending July 11, the number of people filing for unemployment benefits for the first time fell to 208,000 on a seasonally adjusted basis, a decrease of 8,000 from the previous week and below Expected 218,000 people. Continuing claims (which are lagged one week) fell by 16,000 to just over 1.8 million. The Philadelphia Fed Manufacturing Index (which measures the proportion of companies reporting growth versus contraction) surged to 41.4 in July, up about 31 points from the previous value and well above expectations of 9.8, setting a new high since November 2021. The New York Fed's service industry sentiment index recorded 8.7, the first positive value in the past two years and the highest level since 2022.