01.07.202620:17:56UTC+00US Stocks Drop as Chipmakers Sink

US equity indices finished lower on Wednesday as investors reassessed how sustainable the recent AI-driven rally may be. The S&P 500 slipped 0.2%, while the Nasdaq 100 fell 1.5%, dragged down by a sharp selloff in semiconductor stocks. Major chipmakers led the decline amid persistent concerns that AI-related investments have become overstretched. Micron Technology tumbled 10.6%, AMD dropped 6.9%, and Intel slid 9%.

In contrast, Meta jumped 8.8% after unveiling plans to build a cloud business to monetize its excess AI computing capacity. Other mega-cap “Magnificent Seven” hyperscalers extended their rebound, with Microsoft up 3%, Amazon advancing 1.4%, and Alphabet gaining 1.1%. The Dow Jones Industrial Average ended roughly unchanged, supported by strength in non-technology sectors.

On the macro front, data showed US manufacturing activity expanded for a sixth consecutive month, while input cost pressures eased. In addition, Fed Chairman Warsh indicated that inflation risks are moderating, reducing the need for an immediate, more hawkish policy response from the Federal Reserve.