Dow ends fractionally lower, S&P 500 and Nasdaq fall as semiconductor stocks wobble

U.S. stocks slipped into the close on Wednesday, July 1, as weakness in semiconductor shares and firmer Treasury yields outweighed momentum from a strong first half of the year.

The Dow Jones Industrial Average finished down 13.96 points, or less than 0.1%, at 52,305.24. The S&P 500 fell 16.13 points, or 0.2%, to 7,483.23, while the Nasdaq Composite dropped 173.69 points, or 0.7%, to 26,040.03. The Russell 2000 lost 11.78 points, or 0.4%, to 3,012.59.

Chips lead the pullback

Semiconductor stocks were a major drag on the broader market, especially on the S&P 500 and Nasdaq, which have been supported in recent months by gains in artificial intelligence-related names.

AP reported that Micron Technology was among the AI-linked stocks that fell and weighed on the session. MarketWatch said the Dow ended about 13 points lower and narrowly missed another record close.

Late-day pressure

The market had already posted a strong second quarter and first half, but the final stretch of trading turned softer as investors digested chip volatility and higher rates.

Treasury yields pared some of their gains after a weaker-than-expected U.S. manufacturing report, limiting the downside in stocks but not reversing it.

Warsh remarks in Portugal

The bond move also came as Kevin Warsh, speaking at a central banking forum in Sintra, Portugal, said inflation risks and inflation expectations have come down in recent weeks. He reiterated that the Federal Reserve remains committed to bringing inflation back to its 2% goal and, according to The Guardian, said he would not offer forward guidance on future rate moves.

Traders will now watch whether semiconductor shares stabilize, whether yields continue to firm, and whether additional Fed or ECB forum comments shift expectations for the policy outlook.