U.S. stocks declined on Thursday as investors processed a mixed slate of earnings from major technology companies and reacted to the conclusion of a high-stakes trade meeting between the U.S. and China.
The S&P 500 fell 0.99% to close at 6,822.34, and the tech-heavy Nasdaq Composite slid 1.57% to 23,581.14. The Dow Jones Industrial Average shed 109.88 points, or 0.23%, to end the day at 47,522.12.
The technology sector faced significant pressure following quarterly results released Wednesday evening. While Alphabet shares rose 2.5% on strong performance, Meta and Microsoft saw their stock prices tumble by over 11% and approximately 3%, respectively. Investor concerns centered on the increased spending forecasts from both Meta and Microsoft.
The downturn in major tech stocks, including artificial intelligence chipmaker Nvidia, prompted a market rotation into other sectors. Financial stocks like JPMorgan and Bank of America posted gains, while the healthcare sector was bolstered by Eli Lilly, which rose nearly 4% after reporting stronger-than-expected earnings and raising its guidance.
“It’s a value day,” said Jed Ellerbroek, portfolio manager at Argent Capital Management, describing the shift as a “natural, healthy thing” for a market recently led by technology. He noted, however, that “all signs remain that AI infrastructure spending is extremely strong.”
In geopolitical news, trade was a key focus after President Donald Trump announced an agreement with Chinese President Xi Jinping. The deal involves the U.S. cutting tariffs on fentanyl-related items from China to 10%. In exchange, Beijing committed to curbing fentanyl flows into the U.S. and purchasing more American agricultural products. As part of the agreement, China also delayed new restrictions on rare earth exports for one year. “Rare earth issue has been settled,” Trump stated.
However, several contentious issues remain unresolved, including U.S. restrictions on Nvidia chip exports and the mandated divestiture of TikTok. While China’s Ministry of Commerce expressed a willingness to work with the U.S. on the TikTok matter, it offered no specific details. Ellerbroek noted that the trade situation is “not at all over,” adding, “The Trump-related trade volatility is going to remain a feature of our capital markets as long as he’s president.”
Semiconductor stocks, including Broadcom and AMD, were also under pressure. Ellerbroek characterized the chip sector as “the ball that’s being batted around” in the U.S.-China trade dynamic.
Thursday’s downturn followed a mixed session on Wednesday, where major indices retreated from intraday highs after Federal Reserve Chair Jerome Powell indicated the central bank might not implement another interest rate cut in December, contrary to prevailing market expectations.
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