On Wednesday, major U.S. equities indexes experienced significant declines, driven primarily by a sharp drop in tech stocks, especially semiconductor firms.
The S&P 500 fell by 1.4%, and the Nasdaq saw a steep decline of 2.8%. In contrast, the Dow Jones Industrial Average gained 0.6%, buoyed by a rotation out of tech stocks and strong performance in the health care sector.
The tech sector faced pressure due to geopolitical concerns, with reports indicating that the U.S. might impose restrictions on semiconductor equipment exports to China. This news hit the semiconductor industry hard, with shares of key players like Applied Materials (AMAT), Lam Research (LRCX), and KLA Corp. (KLAC) all plummeting around 10%. Advanced Micro Devices (AMD) also saw a significant drop, while several other semiconductor firms within the S&P 500 fell between 8% and 9%.
Vistra Corp. (VST) experienced the largest drop of any S&P 500 stock, sinking 11.3%. The utility company had previously seen strong gains in early 2024 due to anticipated increases in energy demand from AI-driven data centers. However, concerns about the power grid in Texas, exacerbated by outages following Hurricane Beryl, have reversed its fortunes in July.
GE Vernova (GEV), spun off from GE in April, also saw substantial losses, plunging 9.3%. The decline was attributed to market apprehensions over a potential return of Donald Trump to the presidency, given his opposition to wind energy, a significant part of GE Vernova’s business.
In contrast, another April spinoff, Solventum (SOLV), posted the best performance within the S&P 500, rising 5.9%. Despite a recent price target cut by Morgan Stanley, analysts remain optimistic about the medical technology sector, predicting strong utilization and volumes.
Progressive (PGR) shares rebounded by 5.4% after posting mixed quarterly results the previous session. Despite revenue falling short of expectations, profits exceeded forecasts, and analysts highlighted the company’s strong underwriting profitability.
Henry Schein (HSIC), a supplier of dental and medical products, also gained 5.4% after opening a new 811,000-square-foot distribution center in Fort Worth, Texas, the largest in its global network.
FMC Corp. (FMC) saw its shares rise by 4.6% following the appointment of John M. Raines to its board of directors. Raines brings over three decades of experience in top roles within the food and agriculture industries.
