Nasdaq Closes Lower at 26,040 as Chipmakers Tumble; Dow Hits Record High Before Pulling Back

Mumbai, July 2: The Nasdaq Composite closed lower on Wednesday, shedding 173.69 points, or 0.66%, to finish at 26,040.03, as a broad-based sell-off in semiconductor stocks offset gains in other technology shares. The Dow Jones Industrial Average touched a fresh intraday record of 52,742.66 before retreating to close marginally lower at 52,305.24 (0.027% or 13.96 points), while the S&P 500 declined 16.13 points, or 0.22%, ending at 7,483.23. 

The mixed performance marked a cautious start to the second half of 2026, with investors rotating profits from high-flying technology names into more defensive sectors. Trading volume on the Nasdaq reached 7.79 billion shares, with the index trading between a low of 25,954.46 and a high of 26,238.06 during the session. 

Chip Sector Meltdown Deepens as Profit-Taking Intensifies 

The semiconductor sector bore the brunt of Wednesday’s selling pressure, with the PHLX Semiconductor Index plunging 6.27% to 13,353.28. Micron Technology tumbled 10.30% to lead declines, despite the stock remaining up more than 260% year-to-date. Intel dropped 9.00%, while Lam Research fell 9.71% and Applied Materials declined 9.93%. 

KLA Corporation suffered the steepest decline among major chipmakers, slumping 11.77% to 266.19, followed by Western Digital, which fell 6.32%, and Advanced Micro Devices, which dropped 6.85%. The sell-off extended to European semiconductor names, with ASML Holdings declining 7.36%. 

The chip sector rout was attributed to profit-taking following an extraordinary first-half performance, during which semiconductor stocks surged more than 80% on average. Corning Incorporated fell 13.62%, while Teradyne dropped 11.68% as investors locked in gains ahead of the July 4 holiday weekend. 

Small-Cap Losers Plunge Over 20% as ChronoScale, Riot Platforms Lead Declines 

While semiconductor giants led the headline losses, several small- and mid-cap technology stocks fell even more sharply on Wednesday. ChronoScale Corporation plunged 20.61%, followed by Boost Run (-13.68%), Riot Platforms (-12.49%), MaxLinear (-12.22%), and Aehr Test Systems (-12.11%).  

The broad sell-off reflected aggressive profit-taking as investors moved out of high-beta growth stocks after strong gains in the first half of the year. 

Meta Platforms Surges Nearly 9% on Cloud Business Plans 

Technology stocks showed mixed performance as Meta Platforms provided a bright spot, rallying 8.81% following reports that the social media giant is developing a cloud computing business. The initiative, internally dubbed “Meta Compute,” would allow the company to monetise its excess artificial intelligence computing capacity by selling access to third-party customers. 

Microsoft gained 3.02%, while Apple advanced 1.73%, helping to stem the Nasdaq’s decline. Alphabet rose 1.09%, and Amazon added 1.43% as investors rotated into mega-cap technology names. Netflix climbed 3.91%, and Tesla gained 1.12%. 

The cloud computing news triggered a sharp reversal in neocloud stocks, with CoreWeave plunging 13.92% and Nebius Group falling 17.01%, as Meta’s potential entry into the sector threatens to intensify competition in the AI infrastructure market. 

Also Read: How to Invest in the US Stocks From India?

Federal Reserve Chair Warsh Signals Commitment to Price Stability 

Federal Reserve Chairman Kevin Warsh addressed the European Central Bank forum in Sintra, Portugal, reiterating the central bank’s commitment to its 2% inflation target while avoiding forward guidance on interest rate policy. Warsh stated that “prices are too high” and emphasised that the Fed would “deliver price stability” in the United States. 

“The tactics, the strategy, and the rest, that’s still to come,” Warsh said, declining to indicate whether the Fed would raise rates at its July meeting. He noted that inflation risks had eased since the Fed’s June meeting but reaffirmed that any expectations of loose monetary policy would be “disappointed.” 

The 10-year Treasury yield rose 4.3 basis points to 4.474% following Warsh’s remarks, while the 30-year yield climbed to 4.966%. Markets currently price a 29.4% chance of a rate hike at the July meeting, down from 34.2% a week ago. 

ADP Data Shows Slowing Job Growth Ahead of Payrolls Report 

Private sector hiring slowed more than expected in June, with the ADP employment report showing 98,000 jobs added, below economists’ expectations. The data suggests labour market conditions are moderating ahead of Thursday’s official nonfarm payrolls report, which has been moved forward due to the Independence Day holiday. 

US employers announced just under 46,000 job cuts in June, according to Challenger, Gray & Christmas, representing a slight decline from year-ago levels. The unemployment rate is expected to remain at 4.3% for a fourth consecutive month when the Bureau of Labor Statistics releases its June employment data. 

The jobs data comes as manufacturing activity expanded for the sixth straight month, with the ISM manufacturing gauge falling to 53.3 in June from May’s 54.0 reading. The prices paid index recorded its largest single-month drop since 2022, falling to 73 from 82.1, driven partly by falling energy costs. 

Oil Prices Decline to Four-Month Lows on US-Iran Talks 

Oil prices fell to their lowest levels since March as progress in US-Iran negotiations reduced concerns over supply disruptions through the Strait of Hormuz. Brent crude settled at $71.57 per barrel, down 1.89%, while West Texas Intermediate crude fell 1.32% to $68.58. 

US President Donald Trump indicated improved diplomatic progress with Iran, bolstering expectations that tanker flows through the Strait are normalising. Additional pressure came from expectations that OPEC+ could raise output targets from August, which would add to global supply. 

US crude inventories fell by 3.8 million barrels to 408.4 million barrels, hitting an eight-year low, though the draw was smaller than forecast. Gasoline stocks also dropped by 2.3 million barrels, while distillate inventories rose by 2.5 million barrels. 

Dow Jones Industrial Average Hits Record Before Retreating 

The Dow Jones Industrial Average scaled to a new intraday record of 52,742.66 before cooling to close at 52,305.24, down 13.96 points or 0.03%. The 30-stock average’s retreat was led by Caterpillar, which plunged 6.90%, as investors took profits in the AI beneficiary following its strong first-half performance. 

Financial stocks provided support, with Wells Fargo gaining 3.99%, Charles Schwab rising 3.80%, and JPMorgan Chase adding 2.06%. Visa advanced 2.33%, and Mastercard gained 1.72% as investors rotated into value-oriented sectors. 

The Dow’s performance reflected what analysts described as a “Great Rotation” trade, with investors moving funds from technology stocks into more traditional industrial names. The index’s first-half gain of 8.9% marked its best performance since 2021. 

Also Read: US Stock market timings  

IPO Activity Highlights Market Appetite for New Listings 

Bending Spoons surged 39.66% in its Nasdaq debut, with shares of the Italian software company opening at $31 above its IPO price of $29. The owner of AOL, Vimeo, and Evernote saw its market capitalisation exceed $20 billion following the listing. 

Lime, the Uber-backed e-scooter and bike rental company, rose 4% in its trading debut, opening at $27 above its IPO price of $25. The company sold approximately 7 million shares, raising about $174 million, and is valued at approximately $1.73 billion. 

The successful debuts signal renewed investor appetite for IPOs despite recent volatility linked to geopolitical tensions. However, analysts noted that demand was solid but not euphoric, as companies continue to face profitability challenges and industry competition. 

Corporate Earnings and Deal Activity 

General Mills jumped 8.6% after reporting fourth-quarter adjusted earnings of $0.95 per share on revenue of $4.61 billion, surpassing FactSet consensus estimates of $0.80 and $4.59 billion. The company announced plans to generate $3 billion in cumulative cost savings through fiscal year 2030. 

Nike advanced more than 5% despite reporting a 12% sales decline in Greater China, with analysts expressing caution about CEO Elliott Hill’s turnaround plan. The company’s earnings received a $0.52 per share boost from expected tariff refunds from the Trump administration. 

Kroger announced a $1.65 billion acquisition of regional supermarket chain Giant Eagle, expanding its footprint in the Midwest and Mid-Atlantic regions. The deal marks Kroger’s first major acquisition since its $25 billion merger with Albertsons fell apart in 2024. 

Shutterstock plunged nearly 30% after Getty Images terminated their proposed $3.7 billion merger, citing UK regulatory demands that required divestment of Shutterstock’s editorial business. 

Progress Software rallied 18% after reporting second-quarter results that beat expectations, with adjusted earnings of $1.62 per share on revenue of $253.5 million, exceeding analyst estimates. 

The Nasdaq’s decline amid semiconductor profit-taking, combined with the Dow’s record intraday high, highlights ongoing sector rotation from technology into value stocks. Investors should monitor Thursday’s nonfarm payrolls report for labour market signals, while Warsh’s commitment to price stability suggests continued policy vigilance. Oil prices at four-month lows provide relief on inflation, though geopolitical uncertainty persists. The mixed market performance underscores the importance of sector diversification as the bull market enters its fourth year. 

Source 

• https://www.nasdaq.com/ 

• spglobal.com/spdji/en/indices/equity/sp-500/ 

• https://www.dowjones.com/