US Stock Market: Extreme Selling In AI-Chip Stocks Pushed Nasdaq To Crash 500 Pts; Dow Jones, S&P 500 Fall Too

The US stock market dropped sharply on Thursday as AI chip-related stocks witnessed intense selloffs. The Nasdaq Composite took the worst hit and crashed nearly 504 points. The Dow Jones and S&P 500 indexes fell significantly too. Apart from this, major Q2 earnings played a role in dampening investors' sentiments.

Nasdaq Composite

The Nasdaq Composite dropped by 387.28 points or 1.5% on Thursday. The reason was the broad-based selloffs due to the industry's aggressive growth expectations. Stocks like Micron Technology and AMD dropped over 5% each, while SanDisk nosedived by over 12% and Broadcom plunged approximately 5%. Also, the US-listed shares of SK Hynix plummeted by over 13%.

"For the second time in three days, solid earnings and guidance from a dominant chip firm preceded a pullback in the sector, possibly an ominous sign as tech results accelerate. Taiwan Semiconductor Manufacturing (TSM) announced a 77% annual earnings gain only to see shares fall more than 4%, hurting other semiconductors and the Nasdaq early," said Joe Mazzola, Charles Schwab's Head Trading & Derivatives Strategist.

He also pointed out that the broader market also dipped and Treasury note yields rose as the U.S. continued striking Iran and crude stayed near recent highs.

Meanwhile, the Dow Jones Industrial Average or DJIA dropped by 105.67 points or 0.20% to close at 52,552.97. Also, the S&P 500 index dipped by 38.63 points or 0.51% to end at 7,533.77.

Strong earnings and improving inflation data put the market in a positive frame of mind by mid-week, but gains are limited due to rising crude prices as attacks and threats continued to rattle the Middle East, as per Charles Schwab's market commentary.

Notably, Netlfix stock plunged over 9% due to weak Q3 guidance and engagement concerns.

Despite a 13% year-over-year revenue increase and net income slightly above expectations, the company's Q3 revenue forecast of $12.86 billion fell short of analyst predictions. Concerns about viewer engagement resurfaced as Netflix announced plans to reduce the frequency of its detailed viewing reports, focusing more on revenue and operating profit, as per Forex Leaders report.

Will US Market Performance Be Reflected On Indian Stock Market?

According to Ponmudi R, CEO of Enrich Money, investor concerns have intensified after the United States launched a sixth wave of airstrikes on Iran, further escalating the conflict and keeping global financial markets on edge. Any fresh deterioration in the situation could trigger renewed risk aversion and increase volatility across asset classes.

Also, crude oil prices remain elevated but relatively stable, trading in the $78-79 per barrel range. Persistent tensions in the region continue to fuel concerns over disruptions to energy supplies through the Strait of Hormuz, while sustained strength in oil prices and continued weakness in the rupee remain key headwinds for domestic market sentiment.

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