Wall Street traded mostly lower on Thursday as weakness in semiconductor and technology shares offset a strong rally in healthcare stocks.
The Nasdaq Composite fell about 1% after Taiwan Semiconductor Manufacturing Company raised its capital spending plans, renewing concerns about the enormous cost of expanding artificial intelligence infrastructure.
Investors also reviewed US retail sales and unemployment data while awaiting Netflix’s quarterly results after the closing bell.
Nasdaq Falls as Technology Stocks Weaken
At 12:27 ET, or 16:27 GMT, the S&P 500 was down 0.4% at 7,545.96.
The technology-heavy Nasdaq Composite declined 1% to 26,017.95, while the Dow Jones Industrial Average slipped 0.1% to 52,609.83.
Technology was the weakest major sector during the session. Meanwhile, gains in healthcare companies helped limit the broader market decline.
TSMC Delivers Strong Quarterly Results
TSMC reported a 77% increase in quarterly net profit to T$706.6 billion, equivalent to approximately $22 billion.
The result comfortably exceeded market forecasts and provided further evidence that global demand for artificial intelligence infrastructure remains exceptionally strong.
As the leading manufacturer of advanced processors for companies such as Nvidia and Apple, TSMC is closely watched as an indicator of semiconductor and AI investment trends.
AI Demand Remains Strong
TSMC executives indicated that strong demand for advanced computing chips could continue through the end of the decade.
The company’s results showed few signs of weakness in the artificial intelligence growth story. However, investors focused more closely on the cost of meeting that demand.
Despite the earnings beat, TSMC’s US-listed shares fell approximately 3.1%.
Higher Capital Spending Concerns Investors
TSMC increased its 2026 capital expenditure forecast to between $60 billion and $64 billion.
The company also announced an additional $100 billion investment in Arizona, expanding its manufacturing presence in the United States.
Although the extra capacity could help address the gap between chip supply and demand, investors are becoming increasingly concerned about rising construction and production costs.
Expanding outside Taiwan may also place pressure on profit margins.
Strong Results Fail to Lift Chip Stocks
TSMC’s muted market reaction followed a similar response to strong results from Dutch semiconductor equipment company ASML.
Both companies delivered positive operating updates, but their shares struggled as investors questioned whether AI-related spending had become too aggressive.
TSMC’s stock had more than doubled during the previous 12 months, which may also have encouraged profit-taking.
Technology Earnings Face a Major Test
The artificial intelligence rally played a major role in pushing Wall Street back towards record highs earlier this year.
However, technology stocks have faced renewed selling pressure since last month. Investors are increasingly concerned about massive capital expenditure and rising prices for critical AI components, including memory chips.
Upcoming earnings reports from major technology companies will therefore be closely monitored.
Magnificent Seven Results in Focus
Alphabet, Intel, IBM, Texas Instruments, and Tesla are scheduled to report results next week.
Microsoft, Meta Platforms, Amazon, Arm Holdings, Qualcomm, and Apple are expected to publish their earnings during the following week.
Investors will focus heavily on how much these companies plan to spend on data centres, processors, electricity, and other AI infrastructure.
The market will also assess whether strong earnings can generate positive stock reactions or whether capital spending concerns will continue to dominate sentiment.
Netflix Earnings Awaited After the Bell
Netflix was due to report its quarterly results after Thursday’s market close.
The streaming company’s shares have faced pressure this year amid concerns about subscriber engagement and uncertainty surrounding its growth strategy.
Investors are paying particular attention to Netflix’s developing advertising business.
The company produced several successful programmes during the quarter. However, analysts noted that it lacked a major cultural hit capable of driving a significant increase in new subscriptions.
As a result, customer retention may prove more important than subscriber acquisition.
UnitedHealth Lifts Healthcare Stocks
The S&P 500 healthcare sector gained approximately 2%, helping reduce the broader market’s losses.
UnitedHealth shares climbed 3.6% after the company reported quarterly results that exceeded analyst forecasts across several major measures.
Investors responded particularly positively to the improvement in UnitedHealth’s medical care ratio, which measures the percentage of insurance premiums used to cover medical expenses.
A lower ratio generally supports stronger profitability.
Abbott Laboratories Shares Surge
Abbott Laboratories stock rose approximately 10.3%, making it one of the strongest performers in the S&P 500.
The medical device company issued revenue and earnings guidance above market expectations.
Abbott also indicated that sales growth for its continuous glucose monitoring products could return to double-digit levels.
US Retail Sales Rise in June
US retail sales increased by 0.2% month-on-month in June to $768.6 billion, according to the Census Bureau.
The result matched economists’ expectations but slowed from the revised 1% increase recorded in May.
Lower spending at petrol stations contributed to the slowdown. Gasoline station sales fell by 5.3% to $60.6 billion as oil prices declined following the temporary US-Iran peace agreement.
However, spending outside petrol stations remained relatively strong.
Jobless Claims Fall Below Forecasts
Initial applications for unemployment benefits declined to 208,000 during the latest week.
That was below the consensus estimate of approximately 216,000.
The figures indicated that the US labour market remained resilient while consumer spending continued to support economic growth.
Economists said the retail sales report could lead to stronger estimates for second-quarter gross domestic product.
Economic Data Supports a Fed Rate Hold
Earlier inflation reports showed that both US consumer and producer prices increased less than expected.
Combined with the latest retail sales and unemployment figures, the data gives the Federal Reserve more room to keep interest rates unchanged at its July meeting.
According to the CME FedWatch Tool, markets were pricing an approximately 12% probability of a quarter-point rate increase at the July 28–29 meeting.
That was substantially lower than the nearly 25% probability recorded one week earlier.
Iran Conflict Revives Inflation Concerns
Despite softer June inflation data, the outlook has become more uncertain following renewed conflict between the United States and Iran.
Oil prices posted double-digit percentage gains during the week, with Brent crude rising more than 11%.
Higher energy costs could eventually affect transportation, manufacturing, and consumer prices, complicating the Federal Reserve’s policy decisions.
Strait of Hormuz Tensions Escalate
The US military carried out another wave of strikes against Iranian targets on Wednesday.
The fighting resumed after reported Iranian attacks on commercial tankers near the Strait of Hormuz contributed to the collapse of the ceasefire.
President Donald Trump warned that additional Iranian infrastructure could be targeted unless Tehran returned to negotiations.
Iranian officials responded by warning against US interference in the Strait of Hormuz, one of the world’s most important routes for global energy shipments.
The combination of rising oil prices, technology-sector weakness, and geopolitical uncertainty left investors cautious despite encouraging corporate earnings and resilient US economic data.
