Updates to mid-afternoon trading

By Stephen Culp and Ragini Mathur

NEW YORK, July 16 (Reuters) - Chip stocks pulled the Nasdaq and the S&P 500 lower on Thursday as they continue to lead broader market moves despite generally upbeat U.S. economic data and what has so far been a strong earnings season.

Among the 11 major sectors in the S&P 500, technology .SPLRCT was the biggest percentage loser, with a 4.8% drop in semiconductor stocks .SOX weighing heavily on the sector and the market.

Daily moves in chips have increasingly dictated the overall movement of the major U.S. stock indexes, particularly the tech-heavy Nasdaq.

"It comes strictly down to the weight of the chips in the S&P 500," said Paul Nolte, senior wealth advisor & market strategist at Murphy & Sylvest in Elmhurst, Illinois. "Three or four years ago, it was 8%, and now it's over 20%. If you look at the rest of the market, it's doing fine."

The weakness in chips, even after chip demand bellwether TSMC posted a 77% jump in quarterly profit, demonstrated the lofty expectations for a sector that has soared by nearly 70% so far this year. U.S.-listed shares of the chipmaker TSM.N fell 3.5%.

Memory-chip makers were among the biggest laggards, with SanDisk SNDK.O, Western Digital WDC.O, Seagate Technology STX.O, and Intel INTC.O down between 6.9% and 12.1%.

"Part of the reason for chip selloff is investors are realizing, okay, let's start doing math here," Nolte added. "It's a cyclical industry, and at some point, they're going to satisfy chip demand. Then what happens?"

The Dow's losses were cushioned in part by a 2.5% gain in UnitedHealth Group UNH.N after the company beat Wall Street earnings estimates and hiked its 2026 forecast.

Healthcare stocks .SPXHC were up 2.2%.

United Airlines UAL.O fell 1.4% as surging oil prices weighed on its forward guidance.

GE Aerospace GE.N slid 6.3%, even after the company lifted its 2026 profit forecast.

Analysts have set a high bar for second-quarter earnings season. S&P 500 companies, in aggregate, are expected to post year-on-year earnings growth of 23.7%. Technology earnings alone are seen jumping 65.5% from the year-ago quarter, according to the latest available data from LSEG.

The Dow Jones Industrial Average .DJI fell 183.32 points, or 0.35%, to 52,473.99, the S&P 500 .SPX lost 39.70 points, or 0.52%, to 7,532.70 and the Nasdaq Composite .IXIC lost 313.66 points, or 1.19%, to 25,955.57.

SOLID RETAIL SALES, LOW JOBLESS CLAIMS, WEAK HOUSING DATA

A spate of economic indicators released on Thursday showed solid core retail sales, a drop in jobless claims and surging manufacturing activity in the Northeast.

Less positive data came from the housing sector, with a bigger than expected drop in pending home sales and souring homebuilder sentiment reflecting high borrowing costs and strained affordability among would-be homebuyers.

The U.S. and Iran extended their barrage of airstrikes, extending a week-long escalation that has all but voided last month's truce. But Iran's release of a U.S. citizen suggested a path remains for the two sides to avert the resumption of all-out war.

Declining issues outnumbered advancers by a 1.07-to-1 ratio on the NYSE. There were 276 new highs and 141 new lows on the NYSE.

On the Nasdaq, 1,809 stocks rose and 2,861 fell as declining issues outnumbered advancers by a 1.58-to-1 ratio.

The S&P 500 posted 38 new 52-week highs and two new lows while the Nasdaq Composite recorded 183 new highs and 132 new lows.