US stocks ended mixed on Thursday, with the Nasdaq Composite falling 1.25% as semiconductor shares slumped and a sharp rise in crude oil prices fuelled concerns over inflation and further interest rate hikes.
The Dow Jones Industrial Average edged up 51.77 points, or 0.10%, to 51,231.64. The S&P 500 fell 36.41 points, or 0.47%, to 7,765.36, while the Nasdaq Composite shed 345.35 points to close at 27,193.34.
Oil prices climbed after attacks on shipping in the Strait of Hormuz heightened supply concerns, compounded by a reduction in US output due to hurricane activity. West Texas Intermediate crude settled 3.6% higher, while Brent crude gained 4.1%.
The rally has added to inflationary pressure, with US crude prices already up more than 60% this year amid the war involving Iran. The Federal Reserve raised interest rates in September for the first time since July 2023, and markets are pricing in a 69.2% probability of another increase in December, according to CME’s FedWatch tool. Rates are widely expected to remain unchanged this month.
Semiconductor stocks were among the biggest drags on the market, with the Philadelphia Semiconductor Index falling 3.4%. The decline followed a Financial Times report that OpenAI’s annualised revenue was US$20 billion below what the company had previously indicated.
Micron Technology dropped 4.8%, while Broadcom and Oracle fell 4.4% and 5.5%, respectively. The latter two companies also faced pressure after the Wall Street Journal reported that Broadcom was arranging US$50 billion in financing for OpenAI, while Oracle was seeking an unspecified amount. The prospect of large technology-related debt issuance has raised concerns about competition for capital.
“The market’s going sideways in anticipation of third-quarter earnings season, which begins next week, and then there’s the ongoing conflict in Iran that’s pushing oil prices higher,” said Terry Sandven, chief equity strategist at US Bank Wealth Management in Minneapolis, Minnesota.
“What’s equally telling is that year-to-date, the path of least resistance for equities has been up.”
Technology stocks weighed on the S&P 500, while energy shares led gains among its 11 major sectors. Samsung Electronics’ forecast for record quarterly profit failed to lift sentiment, with its shares closing lower in South Korea.
Elsewhere, Palantir rose 2.4% after Goldman Sachs upgraded the data analytics software provider to ‘buy’ from ‘neutral’. PepsiCo gained 3.7% after announcing additional spending cuts alongside a lower annual core profit forecast.
Starbucks slipped 0.4% following reports that it was exploring a potential acquisition of Chipotle Mexican Grill. Chipotle shares jumped 6.2%.
Market breadth remained negative. Declining stocks outnumbered advancers by 1.28 to one on the New York Stock Exchange and by 1.33 to one on the Nasdaq. The S&P 500 recorded four new 52-week highs and 12 new lows, while the Nasdaq Composite posted 33 new highs and 319 new lows.
Trading volume across US exchanges reached 18.81 billion shares, above the 20-session average of 17.74 billion shares.
