S&P 500 ends down as chip stocks give up gains
Sign up now: Get ST's newsletters delivered to your inbox
Traders working on the floor of the New York Stock Exchange, in New York City, on May 7.
PHOTO: REUTERS
- S&P 500 declined on May 7, primarily due to chip stock retreats and uncertainty regarding US-Iran peace talks. Arm Holdings tumbled over AI chip supply worries.
- Despite declines, US stocks show overall strength from tech/AI demand and robust earnings. The Fed is expected to hold rates amid a resilient labour market.
- Chip stocks like Intel declined, but Nvidia, Microsoft, Datadog, and cybersecurity firms rallied. Whirlpool slumped after missing sales and suspending its dividend.
AI generated
NEW YORK - The S&P 500 ended lower on May 7, with Intel and other chip stocks retreating after a recent rally, while uncertainty around US-Iran peace talks weighed on the wider market.
US-listed shares of Arm Holdings tumbled as worries about the company’s ability to secure sufficient supplies for its new AI chip overshadowed a strong earnings forecast.
Intel and Advanced Micro Devices both declined about 3 per cent, giving back some of their gains from earlier this week.
The PHLX chip index dropped 2.7 per cent, trimming its gain so far this quarter to 47 per cent.
The United States and Iran were edging towards a temporary agreement to halt their war, sources and officials said, with Tehran reviewing a proposal that would stop the fighting but leave the most contentious issues unresolved.
“You can have a string of days like this, and that’s not going to take away from the fact that this has been a rip-roaring quarter of recovery, driven by fundamentals,” said Mr Mike Dickson, head of portfolio management at Horizon Investments in Charlotte, North Carolina.
Oil prices edged lower, trading around US$100 a barrel.
Nvidia and Microsoft both climbed almost 2 per cent, underscoring investor confidence in Wall Street’s heavyweight AI companies.
The S&P 500 declined 0.38 per cent to end the session at 7,337.11 points.
The Nasdaq declined 0.13 per cent to 25,806.20 points, while the Dow Jones Industrial Average declined 0.63 per cent to 49,596.97 points.
Nine of the 11 S&P 500 sector indexes declined, led lower by materials, down 1.83 per cent, followed by a 1.78 per cent loss in energy.
Volume on US exchanges was heavy, with 18.3 billion shares traded, compared to an average of 17.5 billion shares over the previous 20 sessions.
A relentless rally in technology and AI shares has helped push US stocks to record highs in recent days as investors cheer signs of strong demand for artificial intelligence and a robust earnings season. S&P 500 companies are on track for their strongest profit growth in more than four years.
Upbeat economic readings in recent weeks have also helped allay concerns about the economy.
With the May 7 decline, the S&P 500 remains up 7 per cent in 2026.
Data showed the number of Americans filing claims for unemployment benefits rose less than expected last week.
After a strong private payrolls report on May 6, investors are awaiting more comprehensive nonfarm payrolls data on May 8, with jobs seen increasing by 62,000 in April after rebounding 178,000 in March, according to a Reuters poll of economists.
Traders continued to bet the US Federal Reserve would hold interest rates steady through the end of the year due to a resilient labor market and elevated energy prices.
Cleveland Fed president Beth Hammack said she expects the central bank to hold interest rates steady well into the future as it navigates a climate of considerable uncertainty.
Datadog soared 31 per cent after the cloud-monitoring company raised its full-year earnings forecast. Cybersecurity companies CrowdStrike jumped 8 per cent and Palo Alto Networks added 7 per cent.
Whirlpool slumped 12 per cent after the home-appliance maker missed first-quarter sales estimates and suspended its dividend.
Declining stocks outnumbered rising ones within the S&P 500 by a 1.8-to-one ratio.
The S&P 500 posted 18 new highs and 11 new lows; the Nasdaq recorded 132 new highs and 89 new lows. REUTERS
