U.S. stocks traded mixed on Thursday as investors balanced another wave of strong corporate earnings against renewed pressure in semiconductor stocks and ongoing geopolitical risks in the Middle East. The Dow Jones Industrial Average outperformed, while the S&P 500 hovered near the flatline and the Nasdaq Composite lagged as investors continued to rotate away from some of the market's high-flying AI names.
Markets also digested a fresh batch of economic data that painted a resilient picture of the U.S. economy. Better-than-expected jobless claims pointed to ongoing labor market strength, while retail sales offered another read on consumer spending as investors monitored how rising energy prices and geopolitical tensions could influence inflation and the Federal Reserve's policy outlook.
Market Movers:
- Abbott Laboratories (ABT) +12%: Shares jumped after the healthcare company topped second-quarter earnings and revenue estimates while raising its full-year profit outlook. Broad-based strength across diagnostics, medical devices, and established pharmaceuticals helped offset softer nutrition sales, with management forecasting accelerating growth during the second half of the year.
- UnitedHealth Group (UNH) +9%: The health insurer rallied after reporting stronger-than-expected quarterly earnings and lifting its full-year earnings guidance above Wall Street forecasts. Improved medical costs, stronger revenue growth, and the announcement of a new $5 billion share repurchase program boosted investor confidence.
- J.B. Hunt Transport Services (JBHT) +7%: Shares gained after the transportation company delivered better-than-expected quarterly earnings and revenue, supported by robust growth in its intermodal and integrated capacity businesses. Higher shipping volumes, improved operating efficiency, and continued share buybacks added to the positive sentiment.
- AST SpaceMobile (ASTS) -12%: The satellite communications company fell after announcing a $1 billion convertible senior notes offering. While the financing provides capital for expansion, investors focused on the potential for future dilution despite the company's capped call transactions designed to mitigate that risk.
- Taiwan Semiconductor Manufacturing (TSM) -3%: Shares slipped even after the chipmaker beat second-quarter expectations, issued stronger-than-expected third-quarter guidance, and outlined a major expansion of its U.S. manufacturing footprint. Investors instead focused on valuation concerns and rising pricing, extending recent weakness across semiconductor stocks.
- United Airlines (UAL) -3%: The airline declined despite posting earnings and revenue above expectations, as investors reacted to weaker-than-expected forward profit guidance. Management cited significantly higher fuel costs, though executives expect pricing actions and operational improvements to offset much of the pressure.
- GE Aerospace (GE) -3%: Shares eased following a solid earnings beat and higher full-year guidance as investors locked in profits after a strong run in the stock. Margin compression from inflation, increased engine production, and higher corporate expenses overshadowed the company's upbeat demand outlook.
Chip Stocks Remain Under Pressure
Semiconductor shares remained a key drag on the broader market as investors continued to reassess lofty AI-related valuations. Taiwan Semiconductor's upbeat earnings, stronger capital spending plans, and confidence in demand for its advanced 2-nanometer technology failed to reignite buying interest, with many investors instead focusing on higher manufacturing costs and elevated expectations heading into earnings season.
The weakness extended a second consecutive day of selling across the chip sector, highlighting growing caution after months of outsized gains fueled by artificial intelligence optimism. Investors appear increasingly willing to lock in profits as questions emerge about valuation and the pace of future AI infrastructure spending.
Economic Data Points to a Resilient Economy
Thursday's economic reports painted a mixed but generally constructive picture for the U.S. economy. Initial jobless claims came in below expectations, signaling that the labor market remains relatively healthy despite signs of slowing hiring in recent months.
Retail sales also offered encouraging signs that consumer spending continues to hold up, although higher gasoline prices influenced headline figures. Together, the reports reinforced expectations that the Federal Reserve can afford to remain patient as it evaluates incoming inflation data before making any additional policy moves.
Geopolitical Risks Continue to Influence Markets
Investors also remained focused on escalating tensions in the Middle East after renewed U.S. military strikes and reports that Iran could encourage Houthi forces to disrupt shipping through the Bab el-Mandeb Strait. Such a move would threaten another critical global energy route at a time when shipping through the Strait of Hormuz remains constrained.
Oil prices moved higher as traders weighed the possibility of further supply disruptions, keeping inflation concerns alive even as recent economic data has pointed toward moderating price pressures elsewhere in the economy.
Looking Ahead
Investors now turn their attention to Netflix's earnings after the closing bell, adding another major data point to the early stages of earnings season. Results from technology leaders in the coming weeks will help determine whether the AI-driven rally can regain momentum after this week's semiconductor pullback. Beyond corporate earnings, markets will continue monitoring geopolitical developments and incoming economic data for clues on inflation and Federal Reserve policy. Strong earnings combined with resilient economic fundamentals could help support equities, but elevated valuations, rising energy prices, and global uncertainty are likely to keep volatility elevated in the weeks ahead.