A global selloff in semiconductor stocks that forced the Korea Exchange to halt trading for 20 minutes Tuesday rolled straight into Wall Street, dragging the tech-heavy Nasdaq sharply lower at midday while the rest of the market split in two directions. The trigger was a brutal slide in chipmakers across Asia and Europe, driven by fears that the artificial-intelligence boom has run too far, too fast — and by growing worry that the Federal Reserve, under Chair Kevin Warsh, will raise interest rates before year-end. Investors are also tracking peace talks between the United States and Iran, where Tehran said Monday there had been “encouraging progress” and agreed to a roadmap toward a final deal within 60 days, easing some pressure on oil.
The result was a sharply divided tape. The Dow Jones Industrial Average held in positive territory, up about 0.2%, or roughly 100 points, helped by non-tech names. The S&P 500 slipped around 0.4%, weighed down by its large technology holdings. The Nasdaq-100 bore the brunt, falling about 2.7% as nearly every chip and computer-hardware stock in the index dropped. The small-cap Russell 2000, which closed above 3,000 for the first time ever on Monday, also eased.
Market Movers
Memory-chip maker Micron Technology led the decliners, sliding more than 10% ahead of its quarterly earnings due late Wednesday. Qualcomm fell roughly 7% to about $207 after reports it is in advanced talks to buy AI chip startup Modular in a deal valued near $4 billion. Arm Holdings dropped about 8%, and Western Digital fell more than 8% to around $67. Among the megacaps, Nvidia lost close to 3% and Tesla fell about 4%. SpaceX, fresh off the largest stock debut ever, slid for a fourth straight day, dropping below its $150 opening price and back under a $2 trillion valuation.
Not everything sold off. Microsoft bucked the trend, rising about 2.5%, while Amazon added roughly 1.7%. IBM climbed about 4% to $263 after JPMorgan upgraded the stock to “overweight” and President Trump praised the company and signed an executive order on quantum computing. Defensive names held up too, with Public Storage up 4.4% to $334.43 and Accenture gaining 3.3% to $128.82.
On the analyst desk, Wells Fargo analyst Ike Boruchow downgraded Ross Stores to equal weight from overweight while maintaining a $245 price target, warning that the discount retail sector could slow sharply as lower-income consumers continue to struggle. Dan Ives of Wedbush Securities struck a calmer note, calling the selloff a “gut check moment” in an AI buildout that remains in its early stages rather than the start of a deeper downturn.
The rout also put a spotlight on jobs. Oracle shares fell about 2.6% to $170.85 after the company disclosed in an annual regulatory filing that it eliminated roughly 21,000 positions over the past year — nearly 13% of its workforce — as it leans harder into AI. Oracle said AI deployment across its operations has reduced headcount and may continue to do so, offering a stark example of how the technology fueling the market rally is also reshaping payrolls.
Commodities and Volatility
Oil continued to slide as traders assessed the U.S.-Iran roadmap. West Texas Intermediate crude traded near $73 a barrel, down about 1%, while Brent crude hovered just below $77.
Precious metals also weakened. Gold fell more than 1.5% to roughly $4,138 an ounce, while silver slipped back toward its yearly low near $61. The U.S. Dollar Index climbed above 101 for the first time since last May, while Treasury yields edged lower, with the 2-year note down about 4 basis points and the 10-year yield off roughly 2 basis points. Bitcoin traded near $63,000.
The Day Ahead
Earnings season picks up after the closing bell, with FedEx reporting late Tuesday and Micron Technology reporting Wednesday. Investors will be watching Micron closely for clues about demand for AI memory chips and whether the sector’s recent rally still has room to run.
The economic calendar also becomes more active later this week. Reports due include May new-home sales on Wednesday, the May PCE inflation gauge and a final estimate of first-quarter GDP on Thursday, and the University of Michigan’s consumer sentiment index on Friday.
JBizNews Desk | New York
© JBizNews.com All Rights Reserved. Reproduction or distribution without written permission is prohibited.