The Dow Jones Industrial Average pulled back from an intraday record on Tuesday, closing 131 points lower (0.3%), as a renewed selloff in artificial intelligence-linked semiconductor stocks overshadowed gains in defensive sectors. The S&P 500 fell 0.5%, while the Nasdaq Composite dropped 1.2%, led lower by chipmakers.
The VanEck Semiconductor ETF (SMH) tumbled more than 5%, with Micron Technology losing approximately 7%. Other major decliners included KLA, Marvell Technology, Broadcom, and Advanced Micro Devices, as investors continued to rotate out of AI-related names.
Samsung Earnings Trigger Global Chip Selloff
The pressure on semiconductor stocks originated in Asia after Samsung Electronics' preliminary second-quarter earnings failed to satisfy investors, despite reporting what could be one of its strongest quarters. Samsung projected operating profit of 89.4 trillion won and revenue of 171 trillion won, but its shares still fell nearly 7% as market participants questioned whether the strong performance had already been priced in.
The weakness spread across global chip markets. South Korea's Kospi index dropped nearly 5%, while US-listed memory chip companies including Micron and SanDisk declined sharply. Adding to the sector's woes, Reuters reported that Chinese AI startup DeepSeek is developing its own AI chip, a move that could reduce its reliance on suppliers such as Nvidia and Huawei.
Investors are now looking ahead to Friday, when South Korean memory-chip maker SK Hynix is scheduled to begin trading on the Nasdaq. For further analysis on the chip selloff, see Micron Plunges 22%: AI Chip Selloff or Rare Entry Point for Investors? and Kospi Drops 4% as Samsung's Record Profit Fails to Sustain AI Rally.
Defensive Sectors Outperform as Oil Prices Rise
While semiconductor shares weakened, investors shifted into healthcare, financials, and several large-cap stocks viewed as more defensive. Eli Lilly gained about 2%, while JPMorgan Chase, Microsoft, and Walmart also traded higher. Walmart rose after announcing price reductions on products including ground beef and Coca-Cola.
Energy markets remained in focus after reports that Iran attacked a Qatari liquefied natural gas tanker near the Strait of Hormuz. Brent crude settled about 5% higher at $75.74 per barrel, while US West Texas Intermediate crude gained nearly 5% to $72.01. Oil prices extended gains after the close following the US decision to revoke a waiver authorizing the sale of Iranian oil. For a broader market recap, see Evening Digest: Samsung Drags Chip Stocks; Oil Surges on Hormuz Attacks.
SpaceX Falls Despite Nasdaq-100 Inclusion
SpaceX shares declined 6% on Tuesday despite officially joining the Nasdaq-100 index and receiving several bullish analyst initiations. Brokerages including Morgan Stanley and Raymond James began coverage with positive ratings and price targets, although investors continued to reduce exposure to AI-related and high-growth stocks.
Investors are now awaiting minutes from the Federal Reserve's latest policy meeting on Wednesday, which will offer further insight into monetary policy under Chair Kevin Warsh.
This article is for informational purposes only and does not constitute financial advice.
