NEW YORK, July 16, 2026, 4:09 p.m. EDT
U.S. stocks finished down on Thursday, pressured by a 4.29% decline in semiconductor shares. The Nasdaq fell 1.47%, with chip stocks weighing on the index’s performance.
The chip index dropped by over eight times the S&P 500’s 0.51% loss. The Dow edged down just 0.20%, with selling remaining focused.
The concentration issue is now central to investor discussions. According to Paul Nolte, senior wealth adviser at Murphy & Sylvest, chips currently make up over 20% of the S&P 500, compared to roughly 8% three or four years prior.
Nolte stated, “If you look at the rest of the market, it’s doing fine.” Cetera’s chief investment officer, Gene Goldman, commented that the AI trade was “priced on perfection.” Reuters
Final closing figures highlighted the extent of the division.
| Market gauge | Close | Daily move |
|---|---|---|
| S&P 500 | 7,533.86 | down 0.51% |
| Nasdaq Composite | 25,881.95 | fell 1.47% |
| Dow Jones Industrial Average | 52,553.50 | slipped 0.20% |
| PHLX Semiconductor Sector Index | 11,867.50 | dropped 4.29% |
Taiwan Semiconductor Manufacturing Co. Ltd. NYSE:TSM posted second-quarter revenue of $40.20 billion and projected third-quarter sales between $44.6 billion and $45.8 billion. Net profit jumped 77%, but its U.S. shares ended down 2.32% at $409.74.
TSMC’s decline shifted the earnings beat into a question of valuation. Robust demand alone was not enough to satisfy market expectations. Thursday’s trading indicated that investors want more upside than the company’s previously upgraded forecasts.
Micron Technology Inc. NASDAQ:MU shares declined 5.65% to $853.20. SanDisk Corp. NASDAQ:SNDK slid 12.63% to $1,411.08. Western Digital Corp. NASDAQ:WDC was down 9.15% at $466.81.
UnitedHealth Group Inc. NYSE:UNH provided a notable offset, with shares climbing 1.16% to $423.38 as quarterly revenue hit $112.0 billion. The insurer boosted its adjusted earnings outlook for 2026 to a range of $19.50 to $20.00 per share.
Macroeconomic indicators remained mixed yet generally stable. Retail sales in June increased by 0.2%, in line with the consensus economist estimate. Unemployment claims declined, but housing figures dropped more sharply than anticipated.
The earnings benchmark continues to be exceptionally elevated, with LSEG projecting S&P 500 profits to increase by 24.8% year-on-year. Technology sector earnings are anticipated to surge 65.5%, which is roughly 2.6 times faster than the broader market.
The S&P 500 climbed 1.2% last week, while the Nasdaq advanced 1.7%. The Dow retreated 0.5%, snapping a four-week streak of gains. Thursday’s reversal highlighted the rapid shifts in chip sector leadership.
The preliminary University of Michigan sentiment survey is due at 10 a.m. ET on Friday. Looking ahead, Texas Instruments Inc. NASDAQ:TXN will release earnings on July 22, providing a gauge for whether chip sector weakness is extending past names with a strong focus on AI.
Risks persist. An escalation into a broader U.S.-Iran conflict may drive up oil prices and Treasury yields. Disappointing chip outlooks may trigger wider sell-offs, while robust guidance could swiftly undo the decline.
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