In a major shift for the stock market, the broad index experienced a decline of at least 1% on Wednesday, marking the first significant slide in several months. This ended a remarkable streak of 52 consecutive trading sessions without a drop of 1% or greater, making it the longest period for this milestone since January 2020, as reported by Deutsche Bank.

Macro strategist Henry Allen noted that this abrupt halt in the market's advance signals a notable change in the current market narrative. Over the past few weeks, the index has been reaching a succession of record highs. However, Allen identified chipmakers as the primary reason for the recent slump. Bloomberg News reported that the Biden administration is considering imposing tougher trade restrictions if companies continue granting China access to U.S.-made technology, which affected the performance of chipmakers.

Meanwhile, the Labor Department released data indicating a concerning rise in jobless claims. Initial filings for unemployment benefits surged last week, reaching the highest level since late 2021. Jobless claims totaled 243,000 for the week ending July 13, surpassing the Dow Jones estimate of 229,000. Continuing claims, which lag by a week, also saw an increase of 20,000, reaching 1.867 million, the highest level since November 27, 2021.

Amidst these economic developments, the Philadelphia Federal Reserve's manufacturing index unexpectedly rose to 13.9 in July, exceeding the estimate of 2.9. This index measures the difference between companies reporting expansion and contraction.

In the premarket session, Domino's Pizza saw its shares plummet by more than 13% after announcing its mixed second-quarter results. Although the company surpassed the LSEG estimate with earnings of $4.03 per share, its revenue met expectations at $1.1 billion. However, U.S. comparable store sales grew slightly lower than anticipated.

United Airlines, on the other hand, experienced a 1.5% increase in its shares before the bell after reporting a 23% jump in profits for the last quarter. However, the airline's current-quarter outlook disappointed investors, with adjusted earnings expected to range between $2.75 and $3.25 per share, falling short of the estimated $3.44 per share.

In more positive news, Discover Financial Services saw its stock gain 3.5% following its better-than-expected second-quarter results. The bank and payments company reported earnings per share of $6.06 on $4.54 billion in revenue, surpassing the LSEG estimate of $3.07 per share and $4.17 billion in revenue.

Additionally, semiconductor funds are looking to recover from Wednesday's considerable drop. The VanEck ETF and iShares fund both bounced back around 1% in premarket trading, seeking to regain ground after their worst session since March 2020. Despite Wednesday's decline, the VanEck ETF remains up over 45% this year, while the iShares fund has gained more than 26%.

Overall, the stock market's first significant decline in months coupled with the surge in jobless claims has shifted the market narrative and raised concerns about the future economic outlook. Investors will closely monitor developments in trade restrictions and job market conditions to gauge the market's future trajectory.