Unlike much of the last week, though, Thursday’s losses hit many corners of the market. Smaller stocks, which had been cranking higher after badly lagging their larger rivals, fell more than the rest of the market. The Russell 2000 index lost 1.8 per cent after jumping more than 1 per cent in five of the last six days.

The majority of stocks within the S&P 500 also fell after giving up gains from earlier in the day. The sharpest loss came from Domino’s Pizza, which dropped 13.6 per cent despite topping analysts’ expectations for profit in the spring.

The pizza chain temporarily suspended its forecast for how many stores will open globally over the long term. While that’s likely due to reasons beyond the company’s control, analysts said it could frustrate investors.

Stocks of chip companies stabilised a bit after tumbling a day earlier amid worries about potentially worsening tensions with China. US-traded shares of Taiwan Semiconductor Manufacturing Co rose 0.4 per cent after the industry giant reported stronger profit for the latest quarter than analysts expected. It bounced back from its loss of 8 per cent the prior day, but only after swerving between gains and losses.

Nvidia rose 2.9 per cent after likewise flipping between gains and losses through the day. It stretched its gain for the year to nearly 145 per cent.

Earlier this year, a climb for Nvidia and some of the other handful of stocks that came to be known as the “magnificent seven” may have been enough to prop up the rest of the market.

Wall Street is hoping the economy can remain in a “Goldilocks” state, where it’s not so hot that it puts upward pressure on inflation but not so cold that it slides into a recession.

But a shift had gotten under way on Wall Street over the last week. Instead of piling into big tech, which critics have called too pricey, investors moved toward smaller stocks, companies whose profits are closely tied to the economy’s strength and other areas that have been unloved for a while.

The momentum kicked into a high gear after an encouraging report on inflation raised expectations for the Federal Reserve to begin easing interest rates in September. Lower rates and a solid US economy could mean bigger benefits for smaller companies than for big tech giants, which rose almost regardless of such factors.

In the bond market, Treasury yields rose following some mixed data on the economy.

One report said more workers applied for unemployment benefits last week than economists expected. That could be a signal of a softening job market, though the number remains low compared with history.

A separate report said manufacturing in the mid-Atlantic region is growing much better than economists thought.

The yield on the 10-year Treasury rose to 4.19 per cent from 4.16 per cent late on Wednesday.

All told, the S&P 500 fell 43.68 points to 5544.59. The Dow dropped 533.06 to 40,665.02, and the Nasdaq sank 125.70 to 17,871.22.

In sharemarkets abroad, European indexes were mixed after the European Central Bank held its main interest rate steady. Asian indexes were also mixed.

With AP

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