Dow Average Set for Record High as Chipmakers Sink: Markets Wrap
(Bloomberg) — Wall Street drove a rotation out of chipmakers into several other industries after Broadcom Inc.’s underwhelming outlook tested the artificial-intelligence trade that has powered the market.
A blistering run in semiconductor companies from war-driven lows took a breather as Broadcom’s forecast for sales of AI chips disappointed investors hoping for more. The stock tumbled 13%, the most since January 2025, dragging down a key sector gauge. Despite weakness in the high-profile group, about 350 firms in the S&P 500 rose. The Dow Jones Industrial Average climbed toward a record.
The selloff in chipmakers came on the heels of a surge that put the industry’s stocks on track for their best year since 1999. While those companies continue to benefit from the flood of cash being spent on AI, calls for consolidation have emerged after such a powerful advance.
“The rally off the March lows has been an extremely strong one. In fact, it has been parabolic, especially for the chip stocks,” said Matt Maley at Miller Tabak. “Therefore, if the earnings report from Broadcom is the catalyst for a pullback that lasts more than a day or two, it would actually be healthy for the stock market.”
Traders continued to keep a close eye on the geopolitical front. Oil fell as a conditional ceasefire between Israel and Lebanon offered to ease the way toward a US-Iran peace deal, even as the truce was marred by clashes.
Geopolitical worries have briefly weighed on equities, but the fundamentals are telling a different story, according to Bret Kenwell at eToro. Earnings estimates have continued to move higher, while management teams have talked up a resilient consumer, he noted.
“Despite the strength, the rally has been decidedly one-dimensional,” Kenwell said. “That doesn’t mean stocks are set to roll over, but it does suggest the market could benefit from some rotation, consolidation, or at least a little digestion.”
To Mark Malek, the AI trade is entering a more mature phase where story quality matters as much as revenue growth.
“The market is no longer paying endlessly for AI stamped on the box,” said the chief investment officer of Siebert Financial. “Broadcom did not have a bad quarter; the stock had a bad setup. The selloff is a valuation lesson. Demand is real, spending is real, and the opportunity remains massive. But prices can still run ahead of reality.”
While AI and the Iran war continue to dominate the narrative, Friday’s US payrolls data will still be key, according to Tom Essaye at The Sevens Report. He says the report needs to be “Goldilocks” to help send the market higher in the near term.
Corporate Highlights:
SpaceX set out its IPO pitch to retail investors early on Thursday with a video in which Chief Financial Officer Bret Johnsen joins the dots between the company’s rocket, satellite and AI businesses. CrowdStrike Holdings Inc. projected second-quarter revenue that failed to impress investors who had bid up the stock in recent months amid concerns about the threat posed by hackers armed with powerful artificial-intelligence tools. Blackstone Inc. limited redemptions from its flagship private credit fund for the first time, after investors sought to pull 10% of the shares, the latest such fund to cap withdrawals amid a continued investor exodus. Petco Health & Wellness Co.’s second-quarter forecast fell below consensus estimates, outweighing a better-than-expected first quarter including a return to positive revenue growth for the first time in nearly two years. UnitedHealth Group Inc. was upgraded to buy from neutral at Bank of America Corp., which cited improving medical cost trends. Some of the main moves in markets:
Stocks
The S&P 500 rose 0.4% as of 1:17 p.m. New York time The Nasdaq 100 fell 0.4% The Dow Jones Industrial Average rose 1.6% The MSCI World Index rose 0.4% Broadcom fell 13% Philadelphia Stock Exchange Semiconductor Index fell 2% The Russell 2000 Index rose 1.3% Currencies
The Bloomberg Dollar Spot Index was little changed The euro rose 0.2% to $1.1621 The British pound rose 0.1% to $1.3433 The Japanese yen was little changed at 159.99 per dollar Cryptocurrencies
Bitcoin fell 2.1% to $63,569.59 Ether fell 0.4% to $1,772.55 Bonds
The yield on 10-year Treasuries declined three basis points to 4.47% Germany’s 10-year yield declined one basis point to 3.02% Britain’s 10-year yield declined three basis points to 4.90% Commodities
West Texas Intermediate crude fell 3.9% to $92.31 a barrel Spot gold rose 1% to $4,477.36 an ounce ©2026 Bloomberg L.P.
