Stock Market Today: Big Tech Stocks Plunge Again as Divide With Rest of Wall Street Widens

NEW YORK (AP) — Big technology stocks fell again Wednesday, hurt by concerns about a potential escalation in trade tensions with China, sending stock indexes toward their worst day in months, but conditions may be less daunting beneath the surface, with nearly as many U.S. stocks rising as falling.

The split sent the S&P 500 down 1.1% a day after hitting an all-time high for the 38th time this year. The Nasdaq Composite fell 2.1% and is on track for its worst day since January, also weighed down by losses for those companies. The heavyweights of the market as Nvidia and Apple.

But the Dow Jones Industrial Average was up 103 points, or 0.3%, from its record high set the day before, as of 10:45 a.m. ET. The small-cap Russell 2000 also held up better than the rest of the market, down 0.5%, after roaring in recent days on hopes that Interest rates are about to get easier and the American Economy will help avoid a recession.

It's a continuation of a recent trend that market watchers have called encouraging, one in which more stocks are rising rather than a handful of overwhelming elites.

Markets focused on chip companies, which fell after a Bloomberg News report said President Joe Biden was considering the harshest possible trade restrictions if companies like the Netherlands ASML and Tokyo Electron in Japan continue to ship advanced semiconductor technologies to China. The U.S. government has Chinese access blocked advanced chips and the equipment to make them, citing security concerns, and urged its allies to follow suit.

ASML shares fell 10.6% in U.S. trading, even though the company reported spring sales at the high end of its forecast. Tokyo Electron shares fell 7.5% in Tokyo, cutting its annual gain to 32.2%.

Another major chip company, Taiwan Semiconductor Manufacturing Co., sank after former President Donald Trump criticized the Beijing-claimed self-ruled island, which the United States is obligated by treaty to defend if attacked.

Taiwan should pay us for our defense, Trump said, according to a transcript of an interview published by Bloomberg. Taiwan took our chip business, I mean, how stupid are we? he said.

TSMC shares in the United States fell 6.1%.

The fallout has hit chip stocks around the world, including big U.S. players that have been among Wall Street's biggest stars this year amid a frenzy around artificial intelligence technologyNvidia fell 5.6% after soaring 155.2% this year the previous day.

Advanced Micro Devices fell 7.8% and Broadcom fell 5%.

The moves in the stocks of big tech companies have an outsized effect on indexes like the S&P 500, which give more weight to larger companies. That’s been a boon in recent years, when a small group of companies known as the “Magnificent Seven” have been able to soar almost independently of developments in the broader economy and interest rates. That has helped mask underlying weakness as the economy struggles with high interest rates that are supposed to stifle inflation.

Today, some critics say the Marvelous Seven stocks are overpriced, and investors are once again turning to less favorable parts of the market. The economy has remained remarkably resilient so far, with the jobs market remaining strong, and investors widely expect the Federal Reserve to begin cutting interest rates in September, as inflation has slowed.

Markets can't continue to rise indefinitely based on just a handful of stocks, said JJ Kinahan, CEO of IG North America.

Johnson & Johnson, whose stock is still down slightly year-to-date, jumped 2.9% after beating analysts' earnings forecasts in the latest quarter. That's a big reason why the Dow Jones Industrial Average was able to advance despite declines in all seven major stocks: Alphabet, Amazon, Apple, Meta Platforms, Microsoft, Nvidia and Tesla.

US Bancorp, which has also lagged the rest of the market this year, rose 4.5% after beating analysts' forecasts for both profit and revenue.

Prologis, whose stock has been down year-to-date, jumped 6.1%, becoming one of the strongest stocks of the day in the S&P 500. The company, which owns logistics real estate around the world, reported better-than-analyst results for its latest quarter. While CEO Hamid Moghadam said customer demand remains subdued, it is improving and he expects that trend to continue.

On the losing side of Wall Street was Five belowa retailer that targets teens and tweens with products priced at $5 or less. It fell 19.9% ​​after its CEO, Joel Anderson, resigned from his position and the board. It also gave a second-quarter profit forecast that fell short of analysts' expectations.

Spirit Airlines fell 9% after the low-cost carrier lowered its second-quarter revenue forecast. It said its revenue from fees outside of tickets was lower than expected.

In the bond market, the yield on the 10-year Treasury rose from 4.16% to 4.18% on Tuesday evening.

On foreign stock markets, London's FTSE 100 rose 0.4% after the data showed The inflation rate remained stable in June, at the Bank of England's 2% target. Evidence was mixed elsewhere in Europe and Asia.

___

AP Business writer Elaine Kurtenbach contributed to this report.