U.S. stocks traded lower Thursday after a major Asian chipmaker delivered a disappointing forecast which dragged the technology sector lower. Investors also fretted over rising interest rates.
The Dow Jones industrial average dropped 123 points, with Apple among the worst-performing stocks in the index. The S&P 500 declined 0.8 percent with technology falling 1.5 percent. The Nasdaq composite dropped 1 percent.
Taiwan Semiconductor Manufacturing (TMSC) said Thursday it expects second-quarter revenue to range between $7.8 billion and $7.9 billion, well below a Wall Street consensus estimate of $8.8 billion.
The announcement weighed on the entire technology sector. Shares of Apple fell 2.6 percent, while Nvidia, Micron and Advanced Micro Devices all fell at least 3 percent.
Wall Street also kept an eye on rising interest rates, as the 10-year Treasury note yield broke above 2.9 percent. The 10-year traded around these levels earlier this year, sparking a correction in the U.S. stock market as investors feared the possibility inflation was rising faster than expected. The move higher on the benchmark U.S. yield came after the two-year yield traded near highest levels in nearly a decade.
“The market is looking tired as yields may soon be a constraining factor that could overshadow good earnings,” said Peter Cardillo, chief market economist at Spartan Capital Securities.
Thursday’s dip came after the S&P 500 and Nasdaq posted slight gains on Wednesday, boosted by strong corporate earnings from United Airlines and CSX.
The corporate earnings season continued on Thursday, as Procter & Gamble, Bank of New York Mellon and Blackstone all reported better-than-expected earnings.
Earnings have been strong thus far. According to Thomson Reuters I/B/E/S, 79 percent of the S&P 500 companies that had reported through Wednesday morning surpassed earnings expectations. Meanwhile, 83 percent of those companies topped sales estimates.
“We’ve been fairly happy with the results thus far,” said Shannon Saccocia, chief investment strategist at Boston Private. But noted investors are “looking for great results as they search for the next catalyst to take us higher.”
Elsewhere in corporate news, Amazon CEO Jeff Bezos revealed the company has 100 million Prime members in his annual letter to shareholders. The stock rose 2 percent.
In data news, weekly jobless claims totaled 232,000, slightly more than expected. The Philadelphia Fed index hit 23.2 for April, higher than a Reuters estimate of 20.