Wall Street Drops as Chip Selloff Enters Bear Market
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- Philadelphia Semiconductor Index (.SOX) confirmed it entered a bear market, closing 20.2% below its June 22 record, logging its steepest weekly loss in over a year while shedding more than 18% in July alone.
- All three major U.S. indexes posted weekly losses: the Dow fell 0.77% to 52,146.42, the S&P 500 dropped 1.01% to 7,457.69, and the Nasdaq declined 1.40% to 25,520.24, with communication services and consumer discretionary hit hardest.
- Netflix tumbled 7.3% after issuing a weaker-than-expected earnings forecast, raising doubts about the sustainability of its content growth momentum, while Intuitive Surgical slid 14.2% on warnings that insurance-plan changes may be delaying da Vinci procedures.
- Uber dropped 2.1% after unveiling a nearly $15 billion deal to acquire Germany's Delivery Hero, the same session Energy stocks were the S&P 500's sole sector gainers on spiking crude amid signs of escalating Iran-war hostilities.
- Magnificent Seven megacaps all dipped except Apple, with Meta falling 2.7% and Alphabet sliding 3.2%, as Ryan Detrick of Carson Group told Reuters the market has "chip fatigue" and these stocks "got way ahead of themselves."
- Q2 earnings season is off to an upbeat start: 90% of the 49 S&P 500 companies that have reported beat expectations, and analysts now project year-on-year S&P 500 earnings growth of 26.0%, up from 19.2% as of April 1, per LSEG.
Why it matters: The SOX's 20% drawdown formalizes a shift from chip-led leadership to outright sector capitulation, yet the index still sits up ~65% YTD against the S&P 500's 9%, meaning positioning unwinds — not fundamentals — are doing the damage. With 90% of early Q2 reporters beating estimates and energy lifting on Iran tensions, the day's decline is a story of valuation re-rating and geopolitics, not earnings deterioration.
