In recent trading sessions, US equity indexes have displayed a mixed performance, primarily driven by a significant sell-off in semiconductor stocks, which heavily impacted the Nasdaq Composite and S&P 500 indices. The Nasdaq Composite witnessed a notable decline of 2.6%, closing at 18,051.5, while the Dow Jones Industrial Average managed to rise modestly by 0.4% to 41,133.4 during intraday trading.
The S&P 500 also experienced a downturn, dropping 1.2% to finish at 5,599.7 after midday on Wednesday. This downturn comes after a remarkable streak where the S&P 500 reached an all-time high for the 10th time in the last 11 sessions, according to recent analysis from D. A. Davidson. Over the past 37 weeks, this index has recorded gains in 28 of those weeks, marking the strongest performance in 35 years, as noted by Deutsche Bank. Among the sectors, technology, communication services, and consumer discretionary faced substantial losses, while energy and real estate sectors emerged as leaders in gains during intraday trading. A report from Bloomberg, cited in D.A.
Davidson's note, indicates that the US government is contemplating the establishment of a foreign direct product rule. This regulation would empower the US to impose restrictions on foreign-made products that utilize even minor amounts of American technology, particularly targeting semiconductor chips produced in China. According to the report, ASML ($ASML), a key player in the semiconductor industry, is at risk of facing the most stringent US trade restrictions if it continues to supply China with advanced semiconductor technology.
Following this news, shares of ASML plummeted by 11% intraday, making it the worst performer on the Nasdaq. Additionally, Taiwan Semiconductor Manufacturing Company ($TSM) saw a decline of 6.4% amid comments from former US President Donald Trump. Trump remarked to Bloomberg Businessweek that Taiwan should financially contribute to its defense, stating that "it doesn't give us anything." In the realm of economic indicators, US industrial production for June increased by 0.6%, surpassing expectations set at 0.3%, based on a survey compiled by Bloomberg.
This figure also follows an upwardly revised increase of 0.9% recorded in May. Housing starts in June rose 3% from May, totaling an annual rate of 1.353 million, also above expectations of a 1.30 million rate, after having decreased to a pace of 1.314 million in the previous month. Interest rates moved slightly as well, with the US 10-year Treasury yield climbing 1.4 basis points to 4.18%, while the two-year rate jumped 1.7 basis points to 4.46%. In the commodities market, West Texas Intermediate crude oil surged by 2.2%, reaching $82.54 per barrel. Overall, the trading landscape remains intricate with prevailing geopolitical uncertainties, significantly impacting semiconductor stocks and broader market sentiment..