Wall Street Slips From Record Highs As Chip Stocks Retreat, Iran Talks In Focus

Technology and artificial intelligence-linked stocks have continued to drive Wall Street’s rally this year amid strong earnings and robust demand for AI infrastructure.

However, gains faded as the trading session progressed, with heavyweight chipmakers dragging the major indexes lower.

Source : Pexel

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Key points generated by AI, verified by newsroom

• Stocks retreated from records as chipmakers dragged indexes lower.
• Markets watched U.S.-Iran talks and awaited key employment data.
• Semiconductor stocks declined amid supply concerns and broader selloff.

U.S. stocks pulled back from record highs on Thursday as a selloff in semiconductor shares weighed on the broader market, while investors closely monitored developments in U.S.-Iran peace talks and awaited key employment data due on Friday.

The S&P 500 and the Nasdaq touched fresh record highs earlier in the session, supported by falling oil prices and optimism that a possible agreement between Washington and Tehran could help ease geopolitical tensions and stabilise global crude supply.

However, gains faded as the trading session progressed, with heavyweight chipmakers dragging the major indexes lower.

Chip Stocks Drag Markets Lower

U.S.-listed shares of Arm Holdings tumbled 10.8 per cent after concerns over the company’s ability to secure sufficient supplies for its new AI chip overshadowed a strong earnings forecast.

The Philadelphia SE Semiconductor index fell more than 2 per cent after rallying nearly 60 per cent so far this year.

“The markets are just waiting for news (out of Iran) and obviously the big jobs number tomorrow,” said Phil Blancato, chief market strategist at Osaic Wealth in New York.

“The earnings season has been excellent. Despite higher costs of fuel, we're still seeing a market that's very resilient and wanting to go higher. If we get a positive announcement on the war, it's going to go much higher,” he added.

Iran Peace Talks Remain Key Market Trigger

The United States and Iran are edging closer to a temporary agreement aimed at halting the conflict, according to officials and sources familiar with the negotiations.

Tehran is currently reviewing a proposal that could stop the fighting while leaving several contentious issues unresolved.

Oil prices fell around 3 per cent in volatile trading, bouncing off session lows during the day.

The S&P 500 energy sector led declines among the major sectors, falling 2.3 per cent.

Major Indexes Trade Lower

At 12:17 p.m. ET, the Dow Jones Industrial Average fell 176.08 points, or 0.35 per cent, to 49,734.51.

The S&P 500 lost 22.39 points, or 0.30 per cent, to 7,343.95, while the Nasdaq Composite shed 41.02 points, or 0.16 per cent, to 25,797.93.

AI Rally Continues To Support Markets

Technology and artificial intelligence-linked stocks have continued to drive Wall Street’s rally this year amid strong earnings and robust demand for AI infrastructure.

Recent economic data has also eased concerns over slowing U.S. growth.

Fresh data released on Thursday showed the number of Americans filing unemployment claims rose less than expected last week, indicating layoffs remain low and the labour market continues to stay resilient.

Investors Await Key Jobs Report

After Wednesday’s stronger-than-expected private payrolls report, investors are now awaiting Friday’s nonfarm payrolls data.

According to a Reuters poll of economists, U.S. jobs are expected to have increased by 62,000 in April after rebounding by 178,000 in March.

Traders continue to expect the U.S. Federal Reserve to keep interest rates steady through the end of the year due to a resilient labour market and elevated energy prices.

Beth Hammack said she expects the central bank to hold rates steady for the foreseeable future amid continued uncertainty.

Cybersecurity Stocks Surge

Cybersecurity stocks outperformed after Datadog raised its full-year earnings forecast.

Datadog shares surged 28 per cent, while CrowdStrike and Palo Alto Networks gained 6.9 per cent and 6.3 per cent respectively.

Meanwhile, Whirlpool plunged 12.5 per cent after the home appliance maker missed first-quarter sales estimates and suspended its dividend.

Market Breadth

Declining stocks outnumbered advancing shares by a 1.38-to-1 ratio on the NYSE and by a 1.46-to-1 ratio on the Nasdaq.

The S&P 500 posted 17 new 52-week highs and nine new lows, while the Nasdaq Composite recorded 115 new highs and 66 new lows.