S&P 500 ends lower; chips tumble and Moderna rallies

Traders working on the floor of the New York Stock Exchange during morning trading on June 26, in New York City.

NEW YORK – The S&P 500 ended marginally lower on June 26, with a steep drop in AI-related chip stocks and sharp gains in Moderna and other healthcare stocks.

The PHLX chip index tumbled 5.3 per cent, underscoring recent volatility among AI-related chipmakers that have fuelled much of Wall Street’s gains in recent years.

While some investors remain optimistic about the potential for artificial intelligence to fuel higher profits, others worry that massive spending to build AI data centres may take too long to pay off.

“It’s too early to conclude that there’s a major correction brewing in tech, but what I would say is that the questions around profitability and the capex story are certainly not going away,” said David Stubbs, chief investment strategist at AlphaCore Wealth Advisory.

Stubbs also warned that Wall Street could be vulnerable to signs that US companies may not be able to deliver on investors’ high earnings expectations.

Apple rallied 3.1 per cent and partly rebounded from a selloff on June 25, when it raised iPad and MacBook prices, blaming soaring memory and storage chip costs.

Moderna surged almost 13 per cent to its highest level since 2024 after the drug developer hosted an investor event and showcased its pipeline.

Eight of the 11 S&P 500 sector indexes declined, led lower by industrials, down 3.41 per cent, followed by a 2.45 per cent loss in materials.

US inflation rose above 4 per cent in May, data showed on June 25, as the Iran war drove up energy prices, keeping alive the possibility of a Fed rate hike.

While oil prices have retreated sharply as the Middle East tensions eased, Apple’s newly announced price hikes suggest inflation remains a concern, said Art Hogan, chief market strategist at B. Riley Wealth.

“We saw a similar dynamic during the pandemic, when supply chain disruptions limited access to semiconductors. Now, we’re witnessing a comparable supply shock, this time driven by memory, which is creating renewed inflationary pressure,” Hogan said.