Nasdaq Plunges 1.47% to 25,881.95 as Chip Stocks Rout Deepens, Alphabet Sinks 4.44% on Gemini AI Delay

Mumbai, July 17: The Nasdaq Composite closed sharply lower on Thursday, plunging 1.47% to settle at 25,881.95, as a relentless sell-off in semiconductor stocks and a damaging report of delays in Alphabet’s flagship AI model weighed heavily on technology shares. The tech-heavy index shed 387.28 points during the session, marking its worst daily performance in recent weeks as investor sentiment turned cautious amid escalating geopolitical tensions and concerns over the sustainability of artificial intelligence spending. 

The broader market also faced headwinds, with the S&P 500 declining 0.51% to 7,533.86 and the Dow Jones Industrial Average slipping 0.20% to 52,553.50. The session’s decline erased two days of gains for all three major indices, as defensive sectors outperformed while growth stocks bore the brunt of selling pressure. 

Chip Stock Carnage Deepens as AI Memory Names Plunge Over 10% on Valuation Scrutiny 

The semiconductor sector suffered its second consecutive day of heavy losses, with the PHLX Semiconductor Index dropping more than 4% as investors reassessed lofty valuations despite robust earnings from industry leaders. AI memory stocks were among the hardest hit, with Western Digital Corporation plummeting 10.07% and Sandisk plunging 8.85%, extending Wednesday’s sharp declines. 

Advanced Micro Devices tumbled 6.57%, while Intel Corporation sank 6.62% and Broadcom fell 4.76%. Nvidia, the AI chip bellwether, declined 2.59%, pushing its market capitalisation below the $5 trillion mark. Micron Technology dropped 6.06%, and Arm Holdings slid 7.49%, reflecting broad-based weakness across the semiconductor ecosystem. 

The sell-off intensified despite Taiwan Semiconductor Manufacturing Company reporting better-than-expected second-quarter results, with earnings surging 77% year-on-year. However, the chip giant’s decision to raise its full-year capital expenditure forecast to $60-64 billion, up from a previous guidance of $52-56 billion, appeared to fuel investor concerns about escalating infrastructure spending and potential overcapacity in the AI supply chain. 

Alphabet Shares Sink 4.44% as Gemini 3.5 Pro AI Model Faces Months-Long Delay 

Alphabet’s Class A shares tumbled 4.44% to close at $354.46 following a Bloomberg report that the company’s flagship Gemini 3.5 Pro AI model is ”months behind schedule” in its delivery timeline. The delay has raised internal concerns that Google risks falling behind rivals OpenAI and Anthropic in the increasingly competitive artificial intelligence race. 

The company is reportedly working to improve the model’s capabilities, particularly in coding performance, according to sources familiar with the matter. The setback highlights internal challenges at Google, including fragmented AI efforts across teams, resource constraints, and competing priorities within its vast product ecosystem. 

The decline in Alphabet shares contributed significantly to the Nasdaq’s underperformance, with the stock accounting for a substantial portion of the index’s losses. Other technology giants also struggled, with Meta Platforms falling 2.62%, Amazon declining 1.21%, and Tesla slipping 0.91%. 

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UnitedHealth Surges 1.16% After Earnings Beat, Raises Full-Year Profit Outlook to $20 Per Share 

UnitedHealth Group shares advanced 1.16% to close at $423.38 after the health insurance giant reported second-quarter results that handily exceeded analyst expectations. The company posted adjusted earnings of $6.38 per share on revenue of $112.03 billion, comfortably surpassing the LSEG consensus estimate of $4.90 per share on revenue of $110.85 billion. 

The healthcare giant raised its full-year adjusted earnings guidance to a range of $19.50 to $20.00 per share, up from its prior forecast of more than $18.25. The optimistic outlook reflects improved operational efficiency and stronger-than-expected performance across its core business segments, including its UnitedHealthcare insurance operations and Optum health services division. 

The stock had climbed as much as 10% earlier in the session, reaching its highest level since April 2025, before paring gains amid broader market weakness. UnitedHealth’s positive results contributed to the healthcare sector’s outperformance, with the S&P 500 healthcare index rising more than 2% on the day. 

Abbott Laboratories Jumps 10.70% on Q2 Sales Surge, Raises Full-Year Earnings Guidance 

Abbott Laboratories shares soared 10.70% to close at $98.82, leading the S&P 500 with its best single-day performance since July 2022. The medical device maker reported second-quarter adjusted earnings of $1.31 per share on sales that increased 13% year-on-year to $12.59 billion, exceeding analyst expectations of $1.28 per share and $12.50 billion, respectively. 

The company raised its full-year adjusted earnings outlook to a range of $5.45 to $5.60 per share, up from its previous guidance of $5.38 to $5.58. Chief Executive Robert Ford attributed the strong performance to growing momentum across the company’s business lines and expressed confidence that the trend would continue into the second half of the year. 

Despite Thursday’s sharp rally, Abbott shares remain down more than 20% year-to-date, reflecting the broader challenges facing the healthcare sector in 2026. The positive earnings surprise and upgraded guidance provided a much-needed catalyst for the stock. 

Csquare Prices IPO Below Range at $21, Debuts With 3% Decline in AI Infrastructure Listing 

Brookfield-backed data centre operator Csquare debuted on the New York Stock Exchange on Thursday, pricing its initial public offering at $21 per share and raising more than $1 billion with a market valuation of $3.24 billion. The offering came in below the company’s marketed range of $23 to $27, reflecting cautious investor sentiment toward AI-related listings. 

The stock declined approximately 3% on its debut, underscoring the challenging environment for new issues even among companies tied to the high-growth AI data centre sector. Analysts noted concerns around leverage and ongoing losses, suggesting investors are not willing to back AI-linked listings at any valuation. 

Despite the weak start, the listing signals continued market access for AI infrastructure firms amid a broader wave of sector IPOs, though demand appears disciplined rather than exuberant. The performance will be closely watched by other companies considering public listings in the coming weeks. 

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Goldman Sachs, Morgan Stanley Lead Financial Sector Declines as Investment Banking Outlook Weakens 

Goldman Sachs shares tumbled 5.36% to lead declines among financial stocks, while Morgan Stanley dropped 4.89% as investors reassessed the investment banking outlook amid uncertain market conditions. The weakness in financial stocks followed strong earnings from major banks earlier in the week, suggesting profit-taking after significant gains. 

Charles Schwab added 0.26% and Bank of America slipped 0.24%, reflecting mixed performance across the financial sector. The S&P 500 financial sector was the third-worst performer on the day, trailing only the information technology and communication services sectors. 

Despite Thursday’s weakness, financial stocks remain among the best-performing sectors this year, benefiting from higher interest rates and robust trading activity. The sector’s performance continues to be closely tied to expectations for Federal Reserve monetary policy and the broader economic outlook. 

SpaceX Short Sellers Amass $8.7 Billion in Profits as Shares Trade Below IPO Price 

Short sellers targeting SpaceX shares have accumulated an estimated $8.7 billion in paper profits since the rockets-to-AI firm’s initial public offering last month, according to data and analytics firm Ortex Technologies. The stock slipped below its $135 IPO price for the first time on Thursday, closing down approximately 3%. 

Bearish positioning has increased dramatically, with approximately 185 million SpaceX shares now sold short, representing about 29% of the company’s publicly tradable float and roughly $25 billion in bearish wagers. S3 Partners reported that short interest has ballooned from an estimated 40 million shares just three weeks ago. 

The aggressive short selling reflects investor skepticism about SpaceX’s valuation and the sustainability of its growth trajectory following the highly anticipated IPO. The stock’s performance will be closely monitored as a barometer of market appetite for high-growth, speculative technology names. 

Eli Lilly to Acquire Psychedelic Drugmaker AtaiBeckley for Up to $3.8 Billion in Depression Therapy Bet 

Eli Lilly announced its acquisition of clinical-stage biopharmaceutical company AtaiBeckley in a deal valued at $2.8 billion upfront, with the potential to reach $3.8 billion if certain milestones are achieved. AtaiBeckley shares surged 33.40% to $7.15 following the announcement, while Eli Lilly shares added 2%. 

The acquisition gives Eli Lilly access to AtaiBeckley’s experimental DMT-based therapy being developed for patients with treatment-resistant depression. The therapy is designed to restore synaptic connectivity and promote the growth of new neural connections, offering a distinct mechanism from conventional antidepressants. 

The deal represents Eli Lilly’s significant bet on neuroscience and psychiatric pharmaceuticals, one of the industry’s most challenging areas for drug development. The transaction is expected to strengthen the company’s presence in mental health treatments alongside its established positions in obesity and diabetes care. 

JB Hunt Transport Services Jumps 8.01% on Strong Quarterly Results and Positive Outlook 

JB Hunt Transport Services shares advanced 8.01% to close at $298.41 after the trucking company reported better-than-expected second-quarter results. The Lowell, Arkansas-based company posted earnings of $1.91 per share on revenue that increased 19% year-on-year to $3.50 billion, exceeding analyst expectations of $1.73 per share and $3.26 billion. 

Chief Executive Shelley Simpson attributed the strong performance to the company’s strategic investments in people, technology, and capacity. She noted that improving market conditions and disciplined capital management contributed to the quarter’s success. 

JB Hunt shares have gained more than 50% since the start of the year, reflecting investor confidence in the transportation sector’s recovery amid easing supply chain constraints and resilient freight demand. 

Jobless Claims Drop to 208,000 as Labour Market Shows Resilience Amid Economic Uncertainty 

US initial unemployment claims fell to a seasonally adjusted 208,000 in the week ended July 11, well below economists’ expectations of 218,000 and marking a 10-week low, highlighting continued labour market resilience. 

Continuing claims declined by 16,000 to just over 1.8 million, suggesting displaced workers are finding new jobs relatively quickly. Meanwhile, the Philadelphia Fed Manufacturing Index surged to 41.4 in July from the previous month, far exceeding the 9.8 forecast and reaching its highest level since November 2021, signalling a sharp rebound in regional manufacturing activity. 

Also Read: Nasdaq Jumps 0.62% to 26,269, S&P 500 Rises 0.38% as Cooling PPI Data, Strong Earnings Offset Iran Tensions

Retail Sales Rise 0.2% in June as Consumers Show Resilience Despite Higher Fuel Costs 

US retail sales increased 0.2% in June, in line with economists’ expectations, indicating that consumer spending remained resilient despite higher living costs and elevated borrowing rates. However, retail sales excluding automobiles fell 0.2%, missing expectations for a milder 0.1% decline and signalling softer discretionary spending. 

Gasoline station sales dropped 5.3% as fuel prices eased during the month, although analysts cautioned that the decline may be temporary amid rising geopolitical tensions in the Middle East. Consumers continued to prioritise essential purchases, supporting grocery stores and online retailers, while department stores and automotive dealers reported weaker demand. The mixed performance suggests households remain cautious, balancing spending with persistent inflation and higher financing costs. 

Oil Prices Hold Near One-Month High as Iran Tensions Escalate, Threat of Red Sea Closure Looms 

Oil prices stayed close to one-month highs as escalating US-Iran tensions heightened concerns over global supply disruptions. Brent crude traded near $85 per barrel, while West Texas Intermediate hovered around $80. 

Fresh US strikes on Iranian targets and reports that Tehran had instructed Yemen’s Houthi militia to prepare for a possible closure of the Bab el-Mandeb Strait increased fears of supply interruptions. Combined risks to the Strait of Hormuz and Bab el-Mandeb could disrupt up to 5 million barrels of oil per day, tightening global supplies. Reflecting higher crude prices, the US national average diesel price climbed to $5 per gallon, raising concerns about transportation and business costs. 

Treasury Yields Rise Across Curve as Fed Officials Signal Readiness for Higher Rates 

US Treasury yields advanced after Federal Reserve officials reiterated concerns that inflation remains above target. The 10-year Treasury yield rose to 4.58%, while the 2-year yield increased to 4.16%. 

Dallas Fed President Lorie Logan said current monetary policy may not be restrictive enough to bring inflation back to the Fed’s 2% target, while Kansas City Fed President Jeff Schmid also warned that persistent price pressures could require further policy tightening. Their comments reinforced expectations that interest rates could remain elevated for longer despite signs of moderating inflation. 

Dollar Steadies Near One-Month Low as Rate Hike Expectations Diminish, Oil Risks Support Safe-Haven Demand 

The US dollar remained near a one-month low as investors weighed softer rate-hike expectations against growing geopolitical risks. Rising oil prices supported safe-haven demand for the greenback, while analysts expect continued strength from resilient US economic growth and strong foreign investment in technology. The euro weakened amid higher European energy costs, while the yen remained under pressure. 

Homebuilder Sentiment Falls to 34 in July as Affordability Pressures Intensify 

US homebuilder sentiment declined to 34 in July from 36 in June, marking a second straight monthly fall and remaining below 40 for the fifteenth consecutive month. Current sales, future sales expectations and buyer traffic all weakened as affordability pressures persisted. 

The National Association of Home Builders cited elevated mortgage rates, expensive land, rising construction costs and labour shortages as key challenges. The average 30-year fixed mortgage rate climbed to 6.55%, its highest level since August 2025, further reducing affordability and weighing on housing demand. 

The Nasdaq’s sharp decline highlights continued vulnerability in technology and semiconductor stocks despite strong underlying earnings, as investors reassess valuations and AI spending sustainability. The session’s sector rotation into healthcare and defensive names suggests a cautious market environment, while labour market resilience and elevated geopolitical risks keep Federal Reserve policy expectations fluid. Near-term market direction will likely hinge on upcoming earnings from major technology companies and developments in US-Iran tensions. Treasury yields and oil prices remain key indicators to monitor for broader market sentiment. 

Source 

• https://www.nasdaq.com/ 

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

• https://www.dowjones.com/