Nasdaq Drops 0.8% as Chip Stock Rout Triggers Profit-Taking; Dow, S&P 500 Dip Amid Fed Rate Hike Fears

Mumbai, July 1: The US stock market commenced the second half of 2026 on a subdued note, with all three major indices opening lower on Wednesday as investors locked in profits following a record-breaking first half for semiconductor stocks. The tech-heavy Nasdaq Composite (^IXIC) fell 0.8%, while the S&P 500 (^GSPC) shed 0.4% and the Dow Jones Industrial Average (^DJI) dropped 184 points, or 0.3%, retreating from its historic record high of 52,319.20 achieved at the end of the second quarter.

The sell-off was primarily driven by a sharp pullback in semiconductor stocks, compounded by cautious sentiment surrounding Federal Reserve Chairman Kevin Warsh’s remarks at the European Central Bank forum in Portugal and stalling US-Iran peace talks in Qatar.

Chip Stocks Plunge Up to 8% as Investors Book Profits After Record 82% ETF Surge

The semiconductor sector bore the brunt of Wednesday’s selling pressure, with major players witnessing significant declines as market participants booked profits after an extraordinary six-month run. Micron Technology (MU) plunged 6%, although the stock remains up approximately 277% year-to-date. SanDisk (SNDK) tumbled 8%, cooling off after an astronomical 850% gain in the first half of 2026.

Nvidia (NVDA) and Broadcom (AVGO) fell roughly 3% and 2%, respectively, while Lam Research (LRCX) dropped 6.10% and KLA Corporation (KLAC) declined 6%. The sell-off reflects a natural correction following the semiconductor sector’s historic outperformance, with the VanEck Semiconductor ETF (SMH) having surged 82% in the first six months of the year, marking its best first-half performance since its inception in May 2000.

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

The chip-driven rally significantly boosted broader indexes in the first half of 2026. The second-quarter rally alone added $2 trillion in combined market capitalisation to Micron, Intel (INTC), and Advanced Micro Devices (AMD). Intel fell 3.23% and AMD dropped 3.43% in Wednesday’s session, while Applied Materials (AMAT) declined 4.84% and ASML Holdings (ASML) lost 2.78%.

First Half Records Set Stage for Pullback: Dow Up 8.9%, Nasdaq Gains 12.8%

The profit-taking comes after US markets delivered their strongest first-half performance in years. The Dow Jones Industrial Average climbed 8.9% in the first six months of 2026, marking its best first-half performance since 2021. The S&P 500 rose 9.6%, while the Nasdaq Composite advanced 12.8%. The small-cap Russell 2000 surged nearly 22%, clinching its best first-half performance since 1991.

The overall market outperformance was driven by the surge in chip and AI-related names. However, Bespoke Investment Group co-founder Paul Hickey suggested on CNBC’s “Closing Bell: Overtime” that the semiconductor sector may have become “extended,” noting that while he remains positive on the sector long-term, he would not be aggressive towards it at current levels.

Fed Chairman Warsh Avoids Rate Hike Clues as Markets Price 67% Chance of September Increase

Investors closely watched Federal Reserve Chairman Kevin Warsh’s remarks at the ECB forum in Sintra, Portugal, for signals on the Fed’s next policy move. Although he avoided giving clear guidance on a July rate decision, he said inflationary risks had eased since the previous meeting.

Markets continue to expect a possible rate move later this year, while rising Treasury yields, with the 10-year yield reaching 4.42%, reflected expectations of a higher-for-longer interest rate environment.

ADP Private Payrolls Miss Estimates at 98,000 as Job Market Shows Signs of Cooling

Economic data released on Wednesday reinforced the cautious market mood as the ADP National Employment Report showed that US private employers added 98,000 jobs in June, below the expected 110,000 and May’s revised 122,000. Services accounted for 96,000 new jobs, while goods-producing industries added 2,000, including 5,000 manufacturing jobs.

Annual pay growth remained steady at 4.4%. Separately, Challenger, Gray & Christmas reported nearly 46,000 planned job cuts in June, slightly lower than a year earlier. Investors are now awaiting Thursday’s June nonfarm payrolls report, with economists forecasting 115,000 new jobs after 172,000 were added in May.

Iran Peace Talks Stalemate Sends Oil Lower Despite Geopolitical Tensions

Geopolitical uncertainty remained in focus as peace talks in Qatar stalled after Iran reportedly declined to meet President Donald Trump’s team, raising doubts over a lasting agreement.

Despite the setback, President Trump signalled he was open to extending negotiations beyond the 18 August deadline. Oil prices fell around 1%, with Brent crude slipping towards $72 per barrel and West Texas Intermediate (WTI) trading below $69. Tanker traffic through the Strait of Hormuz continued to recover, while Goldman Sachs expects the global oil market to return to oversupply as regional tensions ease, although risks surrounding Iran’s nuclear programme and maritime security persist.

Nike Shares Fall on Grim Sales Outlook as China Revenue Dips 12%

Nike Inc. (NKE) shares fell in premarket trading after the Dow component reported fiscal fourth-quarter earnings that beat expectations but issued a cautious outlook. The sportswear giant’s revenue dipped as China sales sank 12%, overshadowing the modest earnings beat and raising concerns about the pace of CEO Elliott Hill’s turnaround efforts.

Revenue declined amid persistent market share losses, while analysts flagged a delayed recovery despite restructuring efforts and product launches. Nike’s stock, which had been trading at the lowest levels since 2014, fell modestly in premarket trade.

The company’s struggles in the Chinese market highlight broader challenges facing US consumer discretionary companies in the region amid slowing economic growth and intensifying local competition.

Shutterstock Plunges 30% as Getty Images Merger Called Off; Salesforce, ServiceNow Gain on Upgrades

Shutterstock (SSTK) shares tumbled over 30% after Getty Images called off its proposed merger with the company due to demands from a UK regulator. Getty Images declined 4% following the announcement. The collapsed deal represents a significant setback for both companies, which had sought to combine their operations to better compete in the increasingly competitive visual content market.

Meanwhile, Salesforce (CRM) rose nearly 4% and ServiceNow (NOW) gained over 5% after Guggenheim upgraded both software companies to “buy,” believing that artificial intelligence will not be a death knell for the companies and citing attractive valuations. ServiceNow shares were up 5.58% on the Nasdaq 100 heatmap, while Salesforce advanced 4.01% on the Dow Jones Industrial Average.

Bloom Energy Jumps 7% on $25 Billion AI Data Centre Partnership Expansion

Bloom Energy (BE) jumped 7% in after-hours trading following the announcement of a massive expansion of its alliance with Brookfield Asset Management (BAM) to finance power projects for AI data centres. The new partnership is valued at $25 billion, representing a fivefold increase from the $5 billion announced last October.

The stock had already surged 10.1% on Tuesday, reclaiming its 50-day and 21-day moving averages. The expansion underscores the growing demand for energy infrastructure to support artificial intelligence data centres, a theme that has driven significant market interest throughout the first half of 2026.

BYD Poised to Overtake Tesla in EV Sales Again as Chinese Carmaker Delivers 557,090 Units

BYD Co. (1211.HK) could retake Tesla (TSLA) in fully electric car sales once again, according to numbers released Wednesday. The Chinese carmaker delivered 557,090 electric models in the three months through June, according to company data. While this figure represents a drop from the same quarter last year, it is likely to remain unbeaten by Tesla, which is expected to report deliveries of roughly 396,500 models for the quarter, per Bloomberg estimates.

Tesla shares were largely unchanged in premarket trading, edging up 0.51%. If BYD’s sales figures remain on top, it would mark the second time the Chinese company has overtaken Elon Musk’s Tesla. While BYD first surpassed Tesla’s deliveries in the fourth quarter of 2024 and continued to print higher numbers through 2025, Tesla reclaimed the lead in the first quarter of 2026. The shifting dynamic comes as Musk has increasingly focused on SpaceX’s AI business and Tesla’s potential shift toward robotics.

Market participants are closely watching Thursday’s June nonfarm payrolls report, expected to show 115,000 new jobs, as it could shape Federal Reserve rate expectations. The S&P 500 options market implies a 0.8% move after the data. Investors are also focused on second-quarter earnings from 14 July, inflation data, and US-Iran developments influencing oil prices.

Source

• https://www.nasdaq.com/

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

• https://www.dowjones.com/