New York stocks closed lower as semiconductor shares plunged and geopolitical uncertainty over a U.S.-Iran war intensified.
On the New York Stock Exchange on the 16th, the Dow Jones Industrial Average closed down 0.2% at 52,552.97, the Standard & Poor's 500 fell 0.51% to 7,533.77, and the Nasdaq dropped 1.47% to 25,881.95.
TSMC raised its capital expenditure forecast for the year, dragging down the entire semiconductor sector and ultimately sending the Nasdaq to a relatively sharp decline. According to CNBC that day, TSMC expects its capital expenditure this year to reach $60 billion to $64 billion (88.8 trillion won to 94.8 trillion won). That is higher than the previous forecast of $52 billion to $56 billion, and was linked to expectations that TSMC's earnings would deteriorate. TSMC shares fell 2.3% that day.
Bloomberg described the situation, saying that "with uncertainty over when the trillions of dollars in investment by tech companies will translate into actual profits, investors are watching whether technology stocks are overvalued." Matt Maley of U.S. financial firm Miller Tabak noted, "The future movement of semiconductor-related stocks remains the most important issue in the stock market," adding, "Meaningful cracks are clearly appearing, so a strong and sustained rebound must emerge soon, and if it does not, it will be a serious warning sign."
The Philadelphia Semiconductor Index fell 4.27%, and SK hynix's ADR shares plunged 13.7%, closing at 152.31, slightly above their IPO price of $149. Micron dropped 5.7% and AMD fell 5.3%. Broadcom declined 5%. Alphabet shares fell 4% on reports that it would delay the release of Gemini 3.5 Pro. Meta, Nvidia and Amazon shares all fell as well. Reuters pointed out that "the daily volatility of semiconductor stocks is increasingly having a greater influence as a factor determining the overall movement of major U.S. stock indexes, particularly the tech-heavy Nasdaq."
Overall, corporate earnings were strong. More than 87% of the 40 S&P 500 companies that reported earnings for the last quarter posted results that beat market expectations. Patrick Ryan, chief investment strategist at Madison Investments, assessed, "Taken as a whole, considering the earnings of companies across all market capitalizations, market conditions remain solid." However, Bloomberg diagnosed that the continuing military tension between the United States and Iran is weighing on overall investor sentiment.
International oil prices fell. On the ICE Futures exchange, Brent crude for September delivery closed down 0.9% at $84.23 a barrel, while on the New York Mercantile Exchange, U.S. West Texas Intermediate (WTI) for August delivery slipped 0.8% to $78.95 a barrel.
Hawkish remarks also came from regional Federal Reserve bank presidents. Kansas City Fed President Jeff Schmid said at an economic forum held in Nebraska that day, "My primary concern is inflation," adding, "It is too hot and has been above target for too long." Dallas Fed President Lorie Logan emphasized in a speech at an event held in Houston, Texas, "If inflation does not come down to 2% on its own, some degree of policy tightening will be needed to reach the target."
