US stock markets fall as chip sector weakness offsets solid earnings data

US stock markets retreated on Thursday, 16 July 2026, as a notable selloff in semiconductor stocks overshadowed a series of positive economic indicators and the early stages of second-quarter earnings reports. The decline was most pronounced in technology-heavy indices, with the Nasdaq Composite dropping 387.28 points, or 1.47%, to close at 25,881.95. The S&P 500 slipped 38.63 points, or 0.51%, to finish at 7,533.77.

The Dow Jones Industrial Average experienced a shallower decline, shedding 105.32 points, or 0.20%, to end the session at 52,553.32. This performance was bolstered by a 1.2% increase in UnitedHealth Group, which followed the company’s decision to raise its 2026 forecast after surpassing Wall Street expectations.

Market analysts pointed to the growing influence of semiconductor firms as the primary driver behind the volatility. Semiconductor stocks experienced a 4.3% decline, dragging the broader technology sector down by 1.8%.

"It comes strictly down to the weight of the chips in the S&P 500. Three or four years ago, it was 8%, and now it's over 20%. If you look at the rest of the market, it's doing fine."

Paul Nolte, senior wealth advisor & market strategist at Murphy & Sylvest, via Reuters

This sensitivity to chip-sector movement persisted despite strong performance signals from major industry players. TSMC, considered a bellwether for demand, reported a 77% increase in quarterly profit. Nevertheless, U.S.-listed shares of the firm fell 2.3% as investors adjusted positions following a year-to-date rally of nearly 70% for the sector. Memory-chip manufacturers bore the brunt of the session's losses; shares of Intel, Seagate Technology, Western Digital, and SanDisk fell by margins ranging from 5.8% to 12.6%.

Other companies struggled to maintain momentum despite optimistic outlooks. GE Aerospace slid 4.1%, even after the company lifted its 2026 profit forecast, and United Airlines fell 1.8% as surging oil prices weighed on its forward guidance.

"This extreme volatility is very disconcerting for the average investor when they see these huge swings in their portfolio value. (But) a number of the non-tech sectors are doing well, so it's a real mix here."

Tim Ghriskey, senior portfolio strategist at Ingalls & Snyder, via Reuters

The day’s economic data provided a contrast to the stock market's losses. A spate of U.S. Economic indicators released on Thursday showed solid core retail sales, a drop in jobless claims and surging manufacturing activity in the Northeast. Less positive data came from the housing sector, with a bigger than expected drop in pending home sales and souring homebuilder sentiment reflecting high borrowing costs and strained affordability for would-be homebuyers.

Looking ahead, expectations for the current earnings season remain high. Analysts have set a high bar for second-quarter earnings season. S&P 500 companies, in aggregate, are expected to post year-on-year earnings growth of 24.8%. Technology earnings alone are seen jumping 65.5% from the year-ago quarter, according to the latest available data from LSEG.

Volume on U.S. Exchanges was 17.19 billion shares, compared with the 21.19 billion average for the full session over the last 20 trading days. Declining issues outnumbered advancers by a 1.08-to-1 ratio on the NYSE. On the Nasdaq, 1,817 stocks rose and 2,979 fell as declining issues outnumbered advancers by a 1.64-to-1 ratio.

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