Stock market today: Big tech stocks plunge again, ending Wall Street's record rally

But slightly more S&P 500 stocks rose than fell, and the Dow Jones Industrial Average added 243 points, or 0.6 percent, to its record high set the day before.

The combination continued a recent trend that market watchers have called encouraging, one in which more stocks are rising rather than a handful of elites dominating. The smaller stocks in the Russell 2000 were coming off a five-day streak of big gains on hopes that Interest rates are about to get easier and the American Economy will avoid a recession, even though the index fell 1.1% on Wednesday, giving back some of the gains.

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 12.7 percent in U.S. trading, even though the company reported spring sales at the high end of its forecast. Tokyo Electron shares fell 7.5 percent in Tokyo, paring their annual gain to 32.2 percent.

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 8%.

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 6.6% after soaring 155.2% this year the previous day.

Advanced Micro Devices fell 10.2% and Broadcom fell 7.9%.

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 were able to soar almost independently of developments in the broader economy and interest rates. That helped mask underlying weakness as the economy struggled with high interest rates that were 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 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 has been down since the start of the year, climbed 3.7% after beating analysts’ profit forecasts in the latest quarter. That’s a big reason why the Dow Jones Industrial Average was able to advance despite declines of at least 1% for each of its seven leading stocks: Alphabet, Amazon, Apple, Meta Platforms, Microsoft, Nvidia and Tesla.

US Bancorp, which has also lagged the rest of the market this year, rose 4.6% after beating analysts' forecasts for both profit and revenue.

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 25.1% 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 10.8% after lowering its revenue forecast for the second quarter. The airline said its revenue from non-ticket fees was lower than expected.

Overall, the S&P 500 lost 78.93 points to 5,588.27. The Dow Jones climbed 243.60 points to 41,198.08 and the Nasdaq Composite fell 512.42 points to 17,996.92.

In the bond market, the yield on the 10-year Treasury fell to 4.14% from 4.16% late Tuesday.

On foreign stock markets, London's FTSE 100 rose 0.3% 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.