S&P 500 Retreats as Semiconductor Rally Stalls

Applied Materials bore the brunt of the market’s skepticism, tumbling 5.5% after providing a quarterly outlook that failed to meet heightened expectations. The broader chip sector mirrored this weakness, with Broadcom shedding 6.8% and the Philadelphia SE Semiconductor index slipping 1.2%. These declines reflect a growing nervousness regarding the sustainability of AI-related valuations, which have propelled market indices for much of the year.

Energy stocks provided a rare pocket of strength, climbing 1.4% as crude prices reacted to escalating instability in the Strait of Hormuz. Despite the day’s losses, both the S&P 500 and the Nasdaq remain on pace for their third straight week of gains. Market participants are currently recalibrating their outlook for monetary policy, with recent economic indicators suggesting the Federal Reserve may opt to hold interest rates steady when it meets in September.