US stocks trim gains as semiconductor sector sells off despite cooling inflation
Wall Street seesawed on Wednesday as positive wholesale inflation data and strong earnings from ASML were offset by a sharp decline in chip stocks and geopolitical tensions over Iran.
US equity markets experienced mixed trading on Wednesday, with the Dow Jones Industrial Average and the S&P 500 hovering near the flat line while the Nasdaq Composite rose a marginal 0.1%. The session was characterised by a divergence in performance, as strong macroeconomic indicators and positive corporate guidance from major semiconductor equipment maker ASML were largely negated by a significant sell-off in chip stocks.
ASML raised its annual sales forecast above Wall Street expectations, citing robust demand driven by artificial intelligence infrastructure. The company also announced plans to increase its production capacity for chipmaking equipment by 30%. Despite this bullish outlook, the broader semiconductor sector struggled, with memory chip manufacturers Micron Technology and SK Hynix tumbling 10% and 13% respectively.
On the economic front, the Producer Price Index revealed that wholesale inflation slowed more quickly than expected in June. This data echoed cooler-than-anticipated Consumer Price Index figures, which recorded the largest single-month decline in inflation since April 2020. The encouraging inflation readings helped provide a floor for the markets, offsetting some of the downward pressure exerted by rising oil prices.
Geopolitical tensions continued to weigh on sentiment, particularly regarding energy costs. President Trump stated he would intensify attacks on Iran until the country relents, telling Fox News that the US would "knock out all of their bridges unless they get to the table and negotiate." The resulting volatility in oil markets contributed to the seesawing nature of the trading day.
Corporate earnings season remained a key focus for investors, with major firms reporting results throughout the session. Morgan Stanley, BlackRock, and Johnson & Johnson released their earnings before the market open, while United Airlines Holdings was scheduled to report after the close.
