Wall Street ends mixed as chip sell-off weighs on Nasdaq - CommBank

💡 The Nasdaq composite ended lower, dragged down by a sell-off in technology shares.

The Federal Reserve delivered a hawkish surprise on Wednesday, signaling that interest rate cuts remain further away than markets had hoped. Fed Chair Jerome Powell told reporters that the central bank needs "greater confidence" that inflation is sustainably declining before it will consider easing policy.

The sell-off in technology shares on Thursday was led by a decline in semiconductor stocks, with the Philadelphia Semiconductor Index falling 3.4% to its lowest level since October 2023. $SMH fell 4.1% to $144.21, while $NVDA dropped 2.4% to $544.11.

Nasdaq Composite Falls

The Nasdaq composite index fell 2.1% to 13,036.45, its lowest level since November 2023. The index has now declined for four consecutive sessions, led by a sell-off in technology shares. The S&P 500 fell 1.1% to 4,054.51, while the Dow Jones Industrial Average fell 0.8% to 33,361.21.

CommBank Comments on Market Volatility

Commonwealth Bank of Australia economist Craig James said in a note to clients that the sell-off in technology shares is a sign of "cautious optimism" among investors. James noted that the sell-off is not a sign of a broader market downturn, but rather a sign that investors are becoming more cautious.

Market Reaction

The sell-off in technology shares led to a decline in the S&P 500 and the Dow Jones Industrial Average. The 10-year Treasury yield fell to 4.4% from 4.5% on Wednesday, as investors became more risk-averse.

What It Means for Investors