Wall Street closed mixed on Thursday, pulled down by consumer and communication stocks. Investor sentiment remained cautious as gains in financials and industrials were offset by a continued weakness in AI-related tech stocks. One of the three benchmark indexes ended in the red, one ended in the green, while one remained virtually unchanged.
How Did the Benchmarks Perform?
The Dow Jones Industrial Average (DJI) rose 0.1%, or 71.72 points, to close at 51,920.62. Eighteen components of the 30-stock index ended in the negative territory, while 12 ended in the positive.
The tech-heavy Nasdaq Composite fell 118.03 points, or 0.5%, to close at 25,358.6.
The S&P 500 lost 0.73 points, remaining virtually flat to close at 7,357.49. Five of the 11 broad sectors of the benchmark index closed in the red. The Consumer Discretionary Select Sector SPDR (XLY), the Consumer Staples Select Sector SPDR (XLP) and the Communication Services Select Sector SPDR (XLC) declined 1.8%, 1.1% and 1%, respectively, while the Industrials Select Sector SPDR (XLI) advanced 2.2%.
The fear gauge CBOE Volatility Index (VIX) increased 1.4% to 18.89. A total of 20.34 billion shares were traded on Thursday, lower than the last 20-session average of 23.04 billion. Advancers outnumbered decliners by a 1.4-to-1 ratio on the NYSE, while declining issues led advancing ones by a 1.06-to-1 ratio on the Nasdaq.
Tech Weakness Extends AI Fatigue on Wall Street
Technology stocks once again weighed on Wall Street on Thursday, extending a week of AI-driven fatigue as investors grew increasingly cautious about lofty valuations and rising costs across the sector.
The session began on a positive note after Micron Technology, Inc.’s MU shares surged 15.7% following strong third-quarter fiscal 2026 earnings and revenue, lifting semiconductor stocks and boosting optimism around tech stocks. Micron currently carries a Zacks Rank #1 (Strong Buy) and has been dominating news in recent weeks. The Philadelphia SE Semiconductor index (SOX) rose 3.2% in the session. However, the early momentum quickly faded as selling pressure intensified across large-cap technology names.
Apple Inc. AAPL, a Zacks Rank #2 (Buy) stock, tumbled 6.2% after announcing price increases for MacBook and iPad models, citing higher chip and component costs. Microsoft Corporation MSFT, a Zacks Rank #3 (Hold) stock, fell 3.5% after unveiling price hikes for Xbox consoles, adding to concerns that companies are passing rising costs on to consumers. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The sharp declines in two of the market’s biggest technology companies overshadowed Micron’s upbeat results, dragging the Nasdaq lower and reinforcing investor worries that enthusiasm for AI-related stocks is giving way to concerns over valuations, spending and profitability.
Hotter PCE Inflation Revives Rate Hike Concerns
The Fed’s preferred inflation gauge, PCE inflation, climbed above 4% in May, heightening expectations that policymakers could move closer to another interest-rate hike. Core PCE rose 0.3%, matching April’s increase. Personal income advanced 0.7% after being flat in April, while personal spending also gained 0.7%, rising from April’s 0.4% rise. Personal savings rate held steady at 3%, reflecting resilient consumer activity despite persistent inflation.
Economic Data
For the week ending June 20, initial jobless claims came in at 215,000, a decrease of 12,000 from the previous week’s revised level. The prior week’s level was revised up by 1,000 from 226,000 to 227,000. The 4-week moving average was 224,250, an increase of 750 from the previous week’s revised average. The previous week’s average was revised up by 250 from 223,250 to 223,500.
Continuing claims during the week ending June 13 came in at 1,821,000, an increase of 21,000 from the previous week’s revised level. The previous week’s level was revised down by 10,000 from 1,810,000 to 1,800,000. The 4-week moving average was 1,794,500, an increase of 9,000 from the previous week’s revised average. The previous week’s average was revised down by 2,500 from 1,788,000 to 1,785,500.
Per the U.S. Census Bureau, Durable Goods Orders for May fell 4.5%. The number for April was revised to an increase of 8.5% from the previously reported rise of 7.9%.
Per the Bureau of Economic Analysis, the third estimate for first-quarter 2026 GDP in the United States came in at an increase of 2.1%, revised up from the second estimate which had come in at 1.6%.
Beyond Nvidia: AI’s Second Wave Is Here
The AI revolution has already minted millionaires. But the stocks everyone knows about aren’t likely to keep delivering the biggest profits. AI’s second wave is moving from infrastructure to implementation and these companies are at the forefront of this transition, positioned to become what Amazon and Google were to the internet era.
This article originally published on Zacks Investment Research (zacks.com).
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