Stock market indexes fell on July 16 as tech stocks tumbled amid renewed concerns about artificial intelligence spending, with the Nasdaq Composite leading declines. The tech-heavy index dropped 1.5% to close at 25,881.95, while the S&P 500 fell 0.5% to 7,533.77 and the Dow Jones Industrial Average declined 0.2% to 52,552.97, according to Barron’s.
Semiconductor stocks drove the selloff, extending a rough stretch for the AI trade despite strong earnings reports from major chipmakers. Memory stocks retreated sharply, with SK Hynix falling roughly 14% after dropping 9% the previous day, while the Roundhill Memory ETF declined almost 9%. Sandisk and Seagate Technology Holdings fell 13% and 10%, respectively, according to Investopedia.
Taiwan Semiconductor Manufacturing Co. (TSMC), the world’s largest contract chipmaker, reported better-than-expected results and strong demand for AI chips. However, the company raised its full-year capital expenditure forecast to $60 billion to $64 billion, up from $52 billion to $56 billion, and announced plans to invest another $100 billion in its Arizona operations. The company’s U.S.-listed shares slipped more than 2% despite the earnings beat, as investors focused on the higher spending outlook, according to Investopedia.
Concerns about the sustainability of massive AI infrastructure investments weighed on sentiment across the sector. The iShares Semiconductor ETF declined 4.5%, while major chip designers including Nvidia and Broadcom also posted losses. Alphabet fell about 4.5% after a Bloomberg report indicated that Google’s AI unit was “months behind schedule” delivering its flagship Gemini 3.5 Pro model, per Investopedia.
Despite the tech weakness, broader market breadth remained relatively resilient. Most stocks actually gained on the day, but the concentrated losses in mega-cap tech stocks and semiconductors were enough to drag the major indexes lower. The equal-weight S&P 500 index traded higher, signaling that the market’s problems were concentrated in the tech sector, according to Barron’s analysis.
Earlier in the week, the stock market had posted gains on softer-than-expected inflation data and strong earnings reports. U.S. retail sales rose 0.2% in June, matching economist estimates, while jobless claims for the week ended July 11 came in at 208,000, lower than expected, according to Investopedia. Morgan Stanley Wealth Management’s Chief Economic Strategist Ellen Zentner noted that the economic data “underscores the ongoing resilience of the U.S. economy,” even as investors reassessed valuations in the AI space.
Sources
- Investopedia — Nasdaq, S&P 500, and Dow closing levels and percentages; details on chip stock declines, TSMC earnings and capital expenditure guidance, Alphabet’s decline, and economic data on retail sales and jobless claims
- Barron’s — Market closing data and analysis of index performance; commentary on chip stock weakness and broad market breadth
- Reuters — Confirmation of chip stocks pulling the Nasdaq and S&P 500 lower on July 16
