Indexes

The week's two-day climb to Wednesday's near-record close came apart in a single session, and the cause was not the economy but the price of owning artificial intelligence. Technology and the chip group sold off for a second day after Taiwan Semiconductor's record quarter arrived with a sharply higher spending plan, and the Nasdaq Composite fell hardest, down 1.73%. The retreat was narrow rather than broad: investors did not flee the market so much as rotate, with health care up 2.2%, energy higher, and classic defensives bid while the year's crowded winners were trimmed. UnitedHealth's 4.6% jump on a blowout quarter did most of the work holding the Dow's loss to 0.48%, and the S&P 500 gave back its whole weekly advance to close at 7,513.27, within two points of where it began the week on Monday. Firm data cut the other way — the Philadelphia Fed's factory gauge printed 41.4 against forecasts near 13 — but stronger growth is cold comfort for stocks whose valuations already assume it. The tell sat in the volatility gauge: the VIX eased to 15.67 even as the Nasdaq slid, the market's way of calling this an orderly rotation and not a scare.

Sector Heat Map

The split was textbook defense over offense, with health care, energy, and the rate-sensitive corners gaining while semiconductors and megacap growth funded the move.

In the News

Rates, FX, Commodities

Treasuries went almost nowhere even with the data running hot; two soft inflation readings earlier in the week had already pulled yields down, and Thursday's firm activity numbers nudged them just a basis point or two higher. The one commodity that moved was gold, down 1.5% to break back under $4,000 as steady real yields and a firmer growth picture sapped the haven bid the Iran war would normally supply.

Technicals

At 7,513 the S&P 500 closed just above its 50-day average near 7,500, the line that has guided the advance since spring, leaving Thursday's drop a round-trip of the week rather than a change of trend; the July record at 7,575 is the level to reclaim. The Nasdaq Composite fell furthest, closing at 25,814 and slipping under its own 50-day for the first time since the spring, the mark bulls need to win back quickly. Two-year and 10-year yields finished within a basis point or two of Wednesday, at 4.16% and 4.57%, both parked mid-band for the spring and summer while this week's soft inflation prints kept the recent highs at a distance. The sharpest single-name move was in memory: the hourly view of Micron below shows a slide that began at the open and barely paused.

Micron (MU), hourly. Memory names led the second day of the semiconductor retreat, the stock sliding from the opening bell.

Breakouts & Breakdowns

Breakouts

Eli Lilly (LLY) — health care was the day's best sector, up 2.2%, and its largest member pushed back toward the record high it set earlier this summer as money rotated out of technology; a close through that peak would confirm the group's return to leadership.

Exxon Mobil (XOM) — energy firmed with the oil group, lifting Exxon toward the top of the multi-week range near $182 that has capped it since spring, with the year's highs the next marker above.

Breakdowns

Micron (MU) — down 6.3%, the weakest of the memory names, cutting through near-term support as the Korea-led selloff extended into another day; the 50-day is the next line to hold.

GE Aerospace (GE) — off 4% despite a beat-and-raise, a sharp reversal from record highs that left the stock back below where it opened the week, a sell-the-news break.

Eli Lilly (LLY), daily. Health care led the market as money rotated out of technology, lifting Lilly toward its record high.

Top Movers

Gainers

UnitedHealth (UNH) rose 4.61%, the single biggest reason the Dow's loss stayed shallow, after second-quarter adjusted earnings of $6.38 a share blew past the $4.90 analysts expected on revenue of $112.03 billion, and management raised its full-year profit outlook. The quarter matters because UnitedHealth spent the past year as the Dow's problem child, dogged by high medical costs and a leadership change, so a clean beat with higher guidance is the first firm evidence the worst has passed. It carried the whole health-care sector and gave the rotation out of technology somewhere to land.

J.B. Hunt (JBHT) jumped about 7% after the freight hauler earned $1.91 a share against the $1.74 the Street expected, with revenue of $3.5 billion topping forecasts and management pointing to firmer intermodal demand as the quarter wore on, a hopeful read on the broader shipping economy.

Losers

Netflix (NFLX) fell roughly 9% in late trading after its second-quarter report landed with revenue of $12.56 billion, just shy of the $12.59 billion Wall Street wanted, even as earnings of $0.80 a share edged past estimates and operating margin held at 33%. The trouble was the shape of the guide: management kept its full-year revenue range at $51.0 to $51.4 billion and its 31.5% margin target, and with the stock already down about 20% on the year, in line was not enough. Netflix has now fallen the day of its report in five straight quarters, a streak that says expectations, not results, keep tripping it.

Nvidia (NVDA) fell 2.7%, sliding from record territory and dragging the Nasdaq lower with it, the clearest evidence the selling was about valuation rather than any single company's results.

Broadcom (AVGO) slid 3.6%, swept into the memory-driven selloff despite a custom-chip and networking business with little exposure to the glut behind it.

Taiwan Semiconductor (TSM) slipped about 2%, the trigger for the whole episode, as a record quarter was overshadowed a second day by its raised $60 billion-plus capital-spending plan.

UnitedHealth (UNH), daily. A 4.6% earnings jump carried the stock back above its 50-day line.

Netflix (NFLX), daily. Shares fell in late trading after an in-line quarter, a fifth earnings-day decline in a row.

Key Macro Data Today

Real data finally arrived after a quiet start to the week, and it painted a firmer economy than the doves wanted to see.

The Philadelphia Fed's blowout and the drop in claims did the most to firm the growth picture, and together the readings pushed September rate-cut odds lower even after a benign week for inflation.

Notable Earnings This Session

Blue chips packed the morning slate, while the after-hours headliner did the real work.

Pre-Open

UnitedHealth and GE Aerospace reported before the bell, with Taiwan Semiconductor's overnight numbers setting the tone for chips; J.B. Hunt's beat, out the prior evening, was still lifting the freight group. UnitedHealth's report was the one that moved the market.

Post-Close

After the close, Netflix was the marquee name, and its roughly 9% drop in late trading overshadowed an otherwise light remainder of the slate.

Drivers

1. The chip group decides Friday's mood. Two sessions of selling have taken the Philadelphia semiconductor index more than 5% below Monday's level, and Nvidia, Broadcom, and the memory names all finished at or near their lows; a third losing day would turn a valuation wobble into something the broad market has to respect, while any steadying bounce would suggest this week's reset has largely run its course. The Composite's 50-day average, which it closed just beneath, is the first line to reclaim on the way back up.

2. A cluster of data lands before the bell and could move rate expectations again. Housing starts and building permits come at 8:30, industrial production at 9:15, and a first look at July consumer sentiment from the University of Michigan at 10:00; that confidence reading carries the most weight after a day when firm activity trimmed September rate-cut odds. A soft print would hand the doves back some ground.

3. Netflix passes the earnings baton to the rest of big technology. Its slide on an in-line quarter sets a wary tone for the megacap reports that dominate the back half of the month, with Tesla, Alphabet, and the other giants due the week of July 27, two days before the Federal Reserve's July 28-29 meeting.

S&P 500 fund (SPY), daily. The index round-tripped the week to finish near Monday's level.