Dow jumps 800 points, but AI stock selloff drags Nasdaq lower

US stocks opened sharply divided on Thursday, June 4, as a steep selloff in semiconductor shares weighed on technology stocks, while investors rotated into other sectors, lifting the Dow Jones Industrial Average by more than 500 points in early trade.

The Dow Jones Industrial Average surged over 1.5%, gaining more than 800 points, while the S&P 500 slipped about 0.2%. The tech-heavy Nasdaq came under significant pressure, falling around 0.6%, as concerns emerged over the sustainability of the artificial intelligence-driven rally.

The decline was led by chipmaker Broadcom, whose shares plunged more than 15% after the company disappointed investors with its AI chip outlook despite reporting quarterly results. The weak forecast sparked fresh doubts about demand momentum in the booming AI sector, triggering a broader selloff across semiconductor stocks.

The downturn spread across the chip industry, with the VanEck Semiconductor ETF dropping more than 3%. Shares of Arm Holdings and Micron Technology fell over 6% each, while Marvell Technology declined around 5%.

Cybersecurity firm CrowdStrike also came under pressure, sliding about 10% after issuing softer-than-expected revenue guidance for the current quarter.

Market sentiment remained cautious amid escalating geopolitical tensions in West Asia. Investors continued to monitor developments after fresh military exchanges involving the United States and Iran heightened concerns over regional stability.

Adding to concerns about the economic outlook, fresh labour market data showed signs of softening. Initial

jobless claims rose to 225,000 in the week

ended May 30, according to the Labor Department, up from 212,000 in the previous week and above economists' expectations of 215,000. The reading marked the highest level of first-time unemployment claims since early February.