US equity benchmark futures were indicating a weak opening for Thursday, with Nasdaq 100 futures down 0.8% and S&P 500 futures falling 0.2% amid concerns over AI stock rallies losing steam. However, at the close, the Dow Jones Industrial Average settled flat at 52,305.24, down 0.027%, the S&P 500 fell 0.2%, and the Nasdaq Composite declined 0.7%. This follows Wednesday's session where US stocks settled lower as investors pared exposure to semiconductor stocks after aggressively increasing exposure during the first half of 2026. The muted closing comes after Wall Street posted its strongest first-half performance in five years, with investors turning cautious at the start of the second half of 2026. The day's lackluster performance comes after a strong second quarter for the indexes, with the S&P 500 and Nasdaq Composite registering their biggest quarterly gains since 2020, while the Dow marked its best showing since 2022. The softer performance reflects investor concerns about mixed economic data and uncertainty around Federal Reserve policy direction, compounded by fresh U.S.-Iran tensions that are casting doubt over Middle East peace prospects.
The Philadelphia Stock Exchange Semiconductor Index slumped 5.4%, continuing a sluggish start to the quarter as the semiconductor sell-off deepened. Asian semiconductor stocks experienced a dramatic sell-off, with SK Hynix Inc. and Samsung Electronics Co. each plunging more than 8% in Seoul trading, while Kioxia Holdings Corp tumbled 14% in Japan after a blistering rally that had driven the stock up more than 650% so far this year. The weakness follows a negative session on Wall Street, where the major US indices ended lower after the Dow Jones Industrial Average erased an intraday gain of 423.46 points, which had briefly pushed it to a record high. After aggressively increasing exposure to chip and memory stocks during the first half of 2026—some of which delivered gains of as much as 300%—investors are now reassessing valuations and the sustainability of the AI-driven rally. The drop in semis came after the Information's report that Anthropic PBC is in talks with Samsung Electronics Co. to be a manufacturing partner for a custom artificial intelligence chip, with plans at an early stage and Anthropic determining details around the processor. According to Louis Navellier of Navellier & Associates, "There are concerns that the high memory prices will bring AI solutions that need less memory, and that the data center build-out may not all get built in the end."
Technology stocks trailed the S&P 500 Index for a second-straight day as evidence mounts that the AI trade is entering a period of significant consolidation. The tech-heavy Nasdaq 100 Index fell 1.6% as semiconductor company stocks tumbled, with defensive consumer staples, utilities and healthcare stocks jumping amid the second consecutive session of investors rotating out of technology stocks that propelled the market higher in the first part of the year. "Evidence continues to grow that the AI trade is at best entering a period of significant consolidation, and at worst putting in a meaningful top," wrote Jonathan Krinsky, chief market technician at BTIG. "There are concerns that the high memory prices will bring AI solutions that need less memory, and that the data center build-out may not all get built in the end," according to Louis Navellier of Navellier & Associates. "And that token pricing of AI software will push users to lower-cost versions, especially Chinese offerings, and is bringing increased caution regarding the enthusiasm for all things AI."
Investors are now awaiting remarks from Federal Reserve Chairman Kevin Warsh, who is scheduled to speak at the European Central Bank's Forum on Central Banking in Sintra, Portugal. Warsh declined to comment on the central bank's move at its rate-setting meeting later this month, though he noted that prices were "too high" but inflation risks have come down. Warsh said that the Fed's primary objective is to deliver price stability and refrained from giving any forward guidance. Warsh said he will stick firmly to the U.S. central bank's 2% inflation target and "disappoint" anyone who expects loose monetary policy despite President Donald Trump's call for interest rate cuts. "Expectations of inflation over the first four weeks of this period have come down, inflation risks have come down," Warsh said at the forum. The speech comes as markets prepare for Thursday's closely watched June non-farm payrolls report, which will be released a day earlier than usual because of the US Independence Day holiday. Attention now turns to the US nonfarm payrolls report due later on Thursday for fresh clues on the Federal Reserve's policy outlook after Warsh's remarks dampened expectations of a July rate hike. According to Vested Finance, "A stronger-than-expected report would reinforce the view that the US economy remains resilient. However, a softer reading could further reduce expectations of tighter monetary policy, potentially providing relief for growth stocks that have struggled over the past week."
Crude oil prices traded near a four-month low as traffic through the Strait of Hormuz continued to recover, easing concerns over supply disruptions. Brent crude slipped below $71 a barrel, trading at its lowest level since the week before the Iran war began in late February, while West Texas Intermediate (WTI) fell below $68 a barrel. The decline follows Brent crude futures ending the second quarter of 2026 with a 40% decline, marking their worst quarterly performance since the pandemic-driven collapse in 2020. Higher production from major Middle East oil producers, coupled with a sharp increase in Iranian oil exports following the lifting of the US naval blockade, has strengthened expectations that global oil supply will outpace demand. A US official said crude flows through the strategic waterway had exceeded 10 million barrels per day. Meanwhile, Saudi Arabia has made the unusual move of selling millions of barrels of crude on an ad hoc basis to customers in Asia as it resumes shipping oil from terminals inside the Persian Gulf, as reported by Bloomberg.
