Updates after market open

By Twesha Dikshit and Joel Jose

June 25 (Reuters) - The S&P 500 and the Nasdaq dropped on Thursday as declines in big technology names weighed despite strong forecasts from Micron and Qualcomm aiding semiconductor shares, while investors also assessed economic data.

Tech shares reversed early gains to move lower as jitters surrounding hyperscalers' spending and expectations of higher interest rates continued to weigh despite the outlook from Micron MU.O and Qualcomm QCOM.O signalling robust demand for AI infrastructure.

Apple AAPL.O dropped 4.8%, while Nvidia NVDA.O, Microsoft MSFT.O and Alphabet GOOGL.O were down between 1.5% and 2.7%.

Micron soared 10% and surpassed Meta Platforms META.O and Tesla TSLA.O in market value, while Qualcomm rose 3%. Other memory chips also moved higher, with Sandisk SNDK.O soaring 10%, while Western Digital WDC.O and Seagate Technology STX.O rose over 2% each.

Concerns over debt-backed spending by hyperscalers and fears of a more hawkish Federal Reserve have fueled a market downturn this week, with tech shares leading the selloff.

Meanwhile, the Personal Consumption Expenditures (PCE) price index came in line with expectations at 4.1%. A final reading of first-quarter GDP data showed the economy grew by 2.1%, compared to a prior estimate of 1.6%.

"We believe inflation remains elevated for now, though it could gradually trend lower over time," said Michele Morganti, senior equity strategist at Generali Investments.

"There is still a risk that the Federal Reserve delivers a rate hike later this year. Even so, U.S. equities appear capable of absorbing both this environment and a somewhat more hawkish Fed."

A slide in oil prices to below pre-war levels and data pointing to a resilient economy have added to optimism that inflationary pressures may soften, without higher interest rates.

Eight out of 11 major S&P 500 sectors moved higher, with industrial shares .SPLRCI leading gains with a 2% rise.

The Philadelphia SE Semiconductor index .SOX rose 0.7%, while the tech sector .SPLRCT dipped 1%.

At 09:58 a.m. ET the Dow Jones Industrial Average .DJI rose 205.53 points, or 0.40%, to 52,054.43, the S&P 500 .SPX lost 28.11 points, or 0.38%, to 7,330.11 and the Nasdaq Composite .IXIC lost 305.50 points, or 1.20%, to 25,171.14.

Software shares .SPLRCIS declined 1.6%, with Atlassian TEAM.O and Applovin APP.O dropping 4.1% and 9.3%, respectively.

Micron and Qualcomm have rallied over 200% and 50%, respectively, in this quarter alone. The Philadelphia SE Semiconductor Index .SOX is on track for its strongest quarter on record, according to LSEG data.

The Nasdaq was still on track for its biggest monthly decline since March 2025, while the Philadelphia semiconductor index was headed for its worst week since the start of the Middle East conflict earlier this year.

Comments from new Fed Chair Kevin Warsh emphasising the need to tame inflation have led traders to anticipate at least one rate hike by year-end.

Remarks from New York Fed President John Williams and Chicago Fed President Austan Goolsbee will also be parsed later in the day.
Among other movers, Bio-Techne Corp TECH.O jumped 19.3% after Germany's Merck KGaA MRCG.DE agreed to acquire the biotech firm for $73 per share in cash, representing a total enterprise value of about $11.3 billion.

Advancing issues outnumbered decliners by a 1.86-to-1 ratio on the NYSE and by a 1.01-to-1 ratio on the Nasdaq.

The S&P 500 posted 34 new 52-week highs and 12 new lows while the Nasdaq Composite recorded 126 new highs and 115 new lows.