Chip stocks dragged the Nasdaq and S&P 500 lower Thursday as they continued to outpace broader market moves despite generally upbeat U.S. economic data and a strong start to the second-quarter earnings season.

Among the 11 major sectors in the S&P 500, technology was one of the biggest percentage losers, with semiconductor stocks weighing heavily on the broader market.

Daily moves in chips increasingly determine the overall movement of major US stock indexes, particularly the tech-heavy Nasdaq.

“It comes down strictly to the weight of the chips in the S&P 500,” said Paul Nolte, senior wealth adviser and market strategist at Murphy & Sylvest in Elmhurst, Illinois. “Three or four years ago, it was 8%, and now it’s over 20%. If you look at the rest of the market, it’s doing well.”

Even after TSMC reported a 77% jump in quarterly profit, weakness in chips reflected high expectations for a sector that has jumped nearly 70% so far this year. The chipmaker’s US-listed shares lost ground on the day.

Memory-chip makers were the biggest laggards, with SanDisk, Western Digital, Seagate Technology and Intel among the biggest percentage losers.

“This extreme volatility is very worrisome for the average investor when they see these large swings in their portfolio value,” said Tim Gresky, senior portfolio strategist at Ingalls & Snyder in New York. “(But) a number of non-tech sectors are doing well, so it’s a real mix here.”

According to preliminary data, the S&P 500 fell 37.78 points, or 0.50%, to close at 7,534.62, while the Nasdaq Composite lost 383.76 points, or 1.47%, to 25,885.47. The Dow Jones Industrial Average was down 109.13 points, or 0.21%, at 52,549.51.

Dow’s losses were partially pared by UnitedHealth Group’s advance after the company beat Wall Street’s earnings estimates and raised its 2026 forecast.

United Airlines fell as oil prices weighed on its forward guidance.

GE Aerospace fell even after the company lifted its 2026 profit forecast.

Analysts have set a high bar for the second quarter earnings season. S&P 500 companies, as a whole, are expected to post annual revenue growth of 24.8%. According to the latest available data from LSEG, technology earnings alone are up 65.5% from the year-ago quarter.

Solid retail sales, low jobless claims, weak housing data

A period of US economic indicators released on Thursday showed solid core retail sales, a drop in jobless claims and an increase in manufacturing activity in the Northeast.

Less positive data came from the housing sector, with a larger-than-expected decline in outstanding home sales and a decline in homebuilder sentiment, pointing to higher borrowing costs and strained affordability for homebuyers.

The US And Iran extended its barrage of airstrikes, extending a week-long escalation that nullified last month’s ceasefire. But Iran’s release of a US citizen suggested there was still a way for both sides to avoid a resumption of all-out war.