US stocks opened lower on Thursday as a sharp selloff in semiconductor shares following Broadcom’s quarterly results weighed on investor sentiment.
Markets were also closely watching rising geopolitical tensions in the Middle East and the release of fresh US economic data.
The S&P 500 fell about 0.28%, while the Nasdaq Composite dropped roughly 1%.
The Dow Jones Industrial Average bucked the trend, rising more than 500 points, supported by gains in healthcare stocks.
The weakness followed a difficult session on Wall Street that left the S&P 500 lower for the week after a nine-week winning streak.
Broadcom earnings pressure semiconductor sector
Chip stocks came under broad selling pressure after Broadcom shares dropped as much as 14% in trading following a fiscal second-quarter revenue miss.
The company also maintained its long-term target of generating $100 billion in artificial intelligence chip sales.
The stock had rallied nearly 55% during the quarter, and if losses hold through the session, Broadcom could shed nearly $350 billion in market value.
The weakness spread across the semiconductor sector. Advanced Micro Devices and Qualcomm fell about 5% and 1%, respectively, while Micron Technology and Marvell Technology declined more than 5%.
The VanEck Semiconductor ETF also lost more than 3% in trading.
Arm Holdings was among the other notable decliners, falling roughly 6%.
CrowdStrike also came under pressure, with shares dropping 8% after the cybersecurity company reported higher first-quarter operating expenses and issued weaker-than-expected second-quarter revenue guidance.
Geopolitical tensions and economic data remain in focus
Markets also continued to monitor developments in the Middle East after tensions between the United States and Iran intensified.
According to reports, Iran struck Kuwait International Airport earlier this week, while US Central Command said American forces had intercepted multiple Iranian ballistic missiles and drones before carrying out “self-defense strikes” on Qeshm Island in response to attempted attacks by Tehran.
Although the two sides had agreed to a ceasefire earlier this year, negotiations aimed at ending the conflict and reopening the Strait of Hormuz have made limited progress, raising concerns that oil prices could remain elevated and contribute to inflationary pressures.
Labor market data and Fed outlook
Fresh economic data released Thursday showed initial jobless claims rose to 225,000 for the week ended May 30, up from 212,000 the previous week and above economists’ expectations for 215,000.
The reading marked the highest level since early February.
Separately, first-quarter productivity increased 0.3%, below forecasts for a 0.5% gain, while unit labor costs rose 1.8%, also below expectations.
The latest figures arrive ahead of Friday’s monthly employment report and the Federal Reserve’s upcoming policy meeting under new Chair Kevin Warsh.
According to LSEG data, traders currently see a 75% chance of a 25-basis-point interest rate hike before the end of the year.
Meanwhile, investor attention is also turning toward Elon Musk-led SpaceX, which begins its investor roadshow on Thursday ahead of its planned June 12 market debut.
The company aims to raise $75 billion in what could become a record-setting initial public offering, valuing the business at approximately $1.75 trillion.
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