Nasdaq slides as chip selloff drags Wall Street lower

4:15pm: Semiconductor selloff

Wall Street ended lower on Thursday, with semiconductor stocks leading the decline as investors took a step back from the AI trade despite another round of solid corporate earnings.

The Nasdaq bore the brunt of the selling, falling 387 points, or 1.5%, to 25,882 as chipmakers came under heavy pressure. The S&P 500 lost 39 points, or 0.5%, to close at 7,534, while the Dow proved more resilient, slipping 106 points, or 0.2%, to 52,553.

The biggest drag came from the semiconductor sector, where the Philadelphia Semiconductor Index tumbled as investors questioned whether massive spending on AI infrastructure will continue delivering the strong returns that have fueled the industry's rally. Major names including Nvidia, Micron Technology, and Broadcom all finished sharply lower, weighing heavily on the broader market.

Investors also looked ahead to Netflix's quarterly earnings, due after the closing bell, with the streaming giant expected to offer another glimpse into consumer demand and the health of the technology sector.

3:45pm: Proactive news headlines

• Power Metallic Mines Inc (TSX-V:PNPN, FRA:IVV1, OTCQB:PNPNF) retained its Outperform rating from Noble Capital Markets, which said the company is well-positioned for multiple development and exploration catalysts in the second half of 2026.
• Century Lithium Corp. (TSX-V:LCE, OTCQX:CYDVF) maintained its Outperform rating from Noble Capital Markets after successfully converting lithium carbonate from its Angel Island project into high-purity lithium metal and battery cells.
• AtaiBeckley Inc. (NASDAQ:ATAI, XETRA:9VC) agreed to be acquired by Eli Lilly in a deal worth up to approximately $3.8 billion, strengthening Lilly's neuroscience pipeline with investigational mental health therapies.
• American Resources Corp (NASDAQ:AREC) said its majority-owned subsidiary Electrified Materials Corporation completed a private placement that raised approximately $9.5 million in gross proceeds.
• Trillion Energy International Inc. (CSE:TCF, OTCQB:TRLEF, FRA:Z620) finalized plans for a 40-kilometre 2D seismic survey on its M47c,d oil block in Türkiye, with exploration work scheduled to begin in late summer 2026.
• Reconnaissance Energy Africa Ltd (TSX-V:RECO, OTCQX:RECAF, FRA:0XD) reported preliminary testing from its Kavango West 1X discovery well in Namibia, successfully producing hydrocarbons to the surface and advancing testing of additional formations.
• Montero Mining and Exploration Ltd (TSX-V:MON, OTC:MXTRF) completed the first drill hole of its 2026 exploration program at the Elvira gold project in Chile, targeting high-priority mineralization identified through geological analysis and AI-assisted data integration.
• 374Water Inc (NASDAQ:SCWO, FRA:8LL) signed a memorandum of understanding with Arcadis to jointly pursue federal and commercial contracts for PFAS waste destruction using its AirSCWO technology.
• Medicus Pharma (NASDAQ:MDCX) received US FDA feedback and central Institutional Review Board approval for its optimized Phase 2 study of Teverelix, reducing planned enrollment while advancing development of the treatment for acute urinary retention.
• Thor Explorations Ltd (TSX-V:THX, AIM:THX, OTC:THXPF, FRA:T2X) maintained its full-year production and cost guidance after second-quarter gold production from its Segilola mine in Nigeria kept the company on track to meet its annual targets.

2:45pm: Market movers

• AtaiBeckley Inc. (NASDAQ:ATAI, XETRA:9VC) agreed to be acquired by Eli Lilly and Co (NYSE:LLY) in a deal worth up to approximately $3.8 billion, strengthening Lilly's neuroscience pipeline with investigational mental health therapies.
• Cintas Corporation (NASDAQ:CTAS) was upgraded to Buy by Bank of America, which raised its price target after the company's stronger-than-expected fourth-quarter results and upbeat fiscal 2027 outlook reinforced confidence in its earnings growth.
• Abbott Laboratories (NYSE:ABT) shares surged after the healthcare company reported second-quarter earnings that beat expectations and raised its full-year adjusted earnings guidance.
• GE Aerospace reported better-than-expected second-quarter earnings and revenue, although its shares declined as investors focused on high expectations and moderating order growth.
• UnitedHealth Group Inc (NYSE:UNH, XETRA:UNH) shares rose in after-hours trading after the health insurer delivered stronger-than-expected second-quarter earnings and increased its full-year adjusted earnings outlook.
• Taiwan Semiconductor Manufacturing Co (ADR) (NYSE:TSM) reported a 77% increase in second-quarter profit and raised its capital spending forecast as strong demand for AI chips continued to drive growth.
• Medicus Pharma (NASDAQ:MDCX) received US FDA feedback and central Institutional Review Board approval for an optimized Phase 2 study of Teverelix, reducing the planned enrollment while advancing development of the treatment for acute urinary retention.

1:15pm: Netflix due up

Netflix Inc (NASDAQ:NFLX, XETRA:NFC) (Netflix Inc (NASDAQ:NFLX, XETRA:NFC), Netflix Inc (NASDAQ:NFLX, XETRA:NFC)) reports second quarter earnings tonight, and two major brokerages are sticking with their bullish calls even as the stock has struggled this year.

Shares were little changed Thursday at $73.50, but that stability masks a rough 2026 for Netflix investors: the stock has fallen more than 20% year-to-date.

Jefferies reiterated its Buy rating and $110 price target, while Bank of America kept its own Buy rating and $125 price objective. Both firms see the pullback as a buying opportunity rather than a red flag, even as they acknowledge the market's patience is being tested.

Jefferies doesn't expect a meaningful upside surprise in second quarter or full-year revenue guidance. It's forecasting constant-currency revenue growth of 12% year-over-year for both the second and third quarters, in line with Wall Street. The firm also doesn't expect Netflix to lift its full-year revenue outlook this quarter, citing soft third-party subscription data.

Bank of America is looking for largely in-line financial results, with investors more focused on the company's second-half outlook, engagement trends, and any commentary on acquisition appetite and broader strategic priorities.

11:50am: AI stocks out of favor

Investors are still favoring stocks with little direct exposure to AI, according to Chris Beauchamp, Chief Market Analyst at online trading and investing platform IG.

“Right now, not being so dependent on chip stocks is a good thing. The rotation in markets has seen money desert chip and AI stocks, and flow to areas where these are either less prominent or non-existent,” Beauchamp wrote.

“(T)he Dow and Russell 2000 continue to show greater resilience than the techy Nasdaq & S&P 500. This is all healthy market action, but is little comfort to latecomers to the tech rally, who were assuming that the euphoria for the sector would continue.”

10:55am: Retail sales rise

US retail sales rose 0.2% in June from the previous month, reflecting lower gasoline prices while underlying consumer spending remained resilient.

Online retailers and auto dealers led June retail sales gains with 1.9% increases, while a sharp 5.3% drop in gasoline station sales—along with declines in clothing, grocery, and health and personal care stores—weighed on the overall results.

Bill Adams, chief US economist at Fifth Third Commercial Bank, said the softer headline growth was "actually good news," as it reflected falling gas prices rather than weakening demand.

Excluding gas stations, retail sales increased a robust 0.7% in June, while core retail sales (which exclude food services, gas stations and autos) rose 0.4%. Control group sales, which feed directly into GDP calculations, advanced 0.5%.

Adams also noted that upward revisions to April and May retail sales suggest stronger consumer spending than previously estimated, supporting expectations for an upgrade to second-quarter US GDP growth estimates.

10am: Uneven start

There was another uneven start for Wall Street on Thursday with stocks searching for direction. 

The Dow Jones started 0.2% higher, before slipping to flat, while the Nasdaq dropped over 1% initially before cutting this to an 0.8% deficit. The S&P 500 has slipped 0.3%.

Healthcare stocks led the gains after upbeat earnings, with Abbott jumping 11.8% to top the S&P leaderboard and insurer UnitedHealth rising 8.8%, making it the Dow's best performer.

Technology stocks remain under pressure, with SanDisk again the biggest faller on the Nasdaq 100, down 9.4%, followed by memory peers Seagate and Western Digital, both down around 7%, then AI chipmakers including Arm, Marvell, Micron, Qualcomm, Intel, Broadcom and Nvidia also traded lower.

8.05am: Wall Street futures mixed, Lilly dips toe in psychedelics with Atai deal

Wall Street looked set for a mixed open Thursday with further yo-yoing in technology stocks amidst a fresh batch of corporate earnings.

Futures pointed to the Dow Jones opening 0.2%, while the S&P 500 was called down 0.2% and the Nasdaq looked set to bear the brunt of the selling, with futures off 0.8% as semiconductor stocks see pressure.

Oil prices were little changed, with West Texas Intermediate trading just below $80 a barrel, despite further escalation in the Middle East.

Iran's military said it had launched missiles and drones at US military positions in Kuwait, Bahrain and Jordan in retaliation for an earlier US strike, while Reuters reported Tehran had instructed Yemen's Houthi movement to prepare to close the Bab el-Mandeb Strait if Washington attacks Iran's power infrastructure, raising the prospect of disruption to a second key global shipping route.

The three major US indexes all finished higher on Wednesday after softer-than-expected producer price inflation reinforced expectations that the Federal Reserve will leave interest rates unchanged later this month.

The Dow rose 150 points, or 0.3%, to 53,141.48, the S&P climbed 0.4% to 7,614.75, and the Nasdaq Composite added 0.6% to close at 25,654.64.

Weakness in Asian semiconductor names seemed to spill into US futures, as markets were unimpressed with Taiwan Semiconductor Manufacturing Co (ADR) (NYSE:TSM) beating expectations with a 77% jump in quarterly profit and upbeat guidance, citing "extremely robust" demand for AI chips. TSMC shares fell about 5% in US premarket trading though.

That follows a similar negative reaction to strong results from Dutch chip equipment maker ASML, highlighting investors' increasingly demanding expectations for AI-linked companies.

Before attention turns to Netflix Inc (NASDAQ:NFLX, XETRA:NFC) after the closing bell, there are a swathe of life science updates ahead of the open.

UnitedHealth Group Inc (NYSE:UNH, XETRA:UNH) rose 6% in premarket trading after the health insurer beat second-quarter earnings expectations and raised its full-year guidance, helped by stronger operational performance despite membership headwinds.

Abbott Laboratories (NYSE:ABT) gained 3.3% as investors welcomed better-than-expected quarterly results and an upbeat outlook.

Merck & Co Inc (NYSE:MRK, XETRA:6MK) added over 1% after the FDA approved its first-in-class cholesterol pill Liprendra, while second-quarter sales edged ahead of forecasts and the drugmaker reiterated its growth outlook.

AtaiBeckley Inc. (NASDAQ:ATAI, XETRA:9VC) surged almost 34% after agreeing to a $2.8 billion takeover by Eli Lilly, with the deal including additional milestone payments that could take the total value to $3.8 billion.

Prologis Inc (NYSE:PLD) was little moved after the logistics property group beat forecasts on both funds from operations and revenue in the second quarter, signalling resilient demand for warehouse space.

From the financials, State Street Corp (NYSE:STT) climbed after the custodian bank topped expectations for earnings, revenue, net interest income and assets under management in the second quarter.