After enduring the worst day for big technology stocks since 2022, Wall Street showed signs of stability on Thursday. The S&P 500 edged up 0.3% in early trading, while the Nasdaq composite rose by 0.5%, following a 3.7% tumble the previous day. The Dow Jones Industrial Average added 38 points, or 0.1%, as of 9:40 a.m. Eastern time.
The heavy losses on Wednesday were primarily driven by concerns surrounding chip companies, exacerbated by potential trade tensions with China. However, the sector saw some relief as Taiwan Semiconductor Manufacturing Co. (TSMC) reported stronger-than-expected profit growth for the latest quarter, helping to steady the market. TSMC’s U.S.-traded stock rebounded by 2% after an 8% drop the previous day. Other major U.S. chip companies, including Nvidia, also saw gains, with Nvidia rising 1.9%, partially recovering from its 6.6% plunge. This recovery played a significant role in lifting the S&P 500.
The recent surge in technology stocks has been largely driven by enthusiasm around artificial intelligence (AI) technology. Despite Wednesday’s drop, chip companies and tech stocks, in general, have performed remarkably well over the past year. For instance, Nvidia’s stock remains up nearly 143% year-to-date.
Mixed earnings reports from other major U.S. companies contributed to the market’s fluctuating performance. Homebuilder D.R. Horton saw a 7.9% jump in its stock price after reporting better-than-expected profit and revenue for the spring season. On the other hand, Domino’s Pizza experienced an 11.6% drop despite exceeding profit expectations, as it suspended its forecast for global store openings. Analysts indicated this would likely frustrate investors, especially just eight months after the forecast was issued. In a notable deal, Chuy’s surged by 47.6% following an announcement that Darden Restaurants would acquire the Tex-Mex chain in an all-cash deal valued at $605 million. However, Darden’s stock fell by 1.6%.
In the bond market, Treasury yields fluctuated after mixed economic data but remained slightly higher. The yield on the 10-year Treasury increased to 4.17% from 4.16% the previous day. One report indicated that more workers applied for unemployment benefits last week than economists had anticipated, suggesting a potentially softening job market. Another report showed better-than-expected growth in mid-Atlantic manufacturing.
Wall Street is hopeful for a “Goldilocks” economy—one that is neither too hot to drive up inflation nor too cold to slip into a recession. With such high hopes, traders are widely expecting the Federal Reserve to start cutting interest rates in September after raising them to the highest levels in over two decades to combat inflation. Lower rates would alleviate pressure on both the economy and financial markets.
European indexes rose following the European Central Bank’s decision to hold its main interest rate steady, while Asian indexes showed mixed results.
In summary, Wall Street’s steadier performance on Thursday was a welcome reprieve after a volatile period for tech stocks. Positive earnings reports and a slight recovery in the chip sector provided a boost, while mixed economic data and cautious optimism about future Federal Reserve policies continue to shape market sentiment.