The Dow Jones Industrial Average advanced roughly 160 points, or 0.3%, on Tuesday, even as the Nasdaq Composite fell about 0.7% amid renewed weakness in semiconductor stocks. The S&P 500 slipped 0.25%, dragged lower by declines in major chipmakers. The divergence highlights a cautious tone in equity markets as investors await the start of the second-quarter earnings season and the release of Federal Reserve meeting minutes.
Dow Outperforms as Chip Stocks Slide
The blue-chip index found support from gains in software giants such as Microsoft, Salesforce, and IBM, helping it outperform despite broader technology hardware weakness. In contrast, semiconductor names faced heavy selling. Micron Technology dropped 6.9%, while KLA, Marvell Technology, Broadcom, and Advanced Micro Devices also traded lower. Nvidia lost more than 1.4% after a Reuters report indicated that Chinese startup DeepSeek is developing its own artificial intelligence chip, potentially reducing its reliance on Nvidia and Samsung products.
Memory stocks were among the hardest hit. Western Digital fell over 6%, and SanDisk declined 8% as investors took profits following a strong rally in the sector over the past year. The selloff extended to the broader chip industry, with the Philadelphia Semiconductor Index losing ground.
Samsung Selloff Weighs on Global Chip Sector
The latest wave of selling originated in Asia after South Korea's Kospi index dropped nearly 5%, driven by heavy losses in semiconductor companies. Samsung Electronics fell nearly 7% despite reporting a 19-fold increase in second-quarter operating profit. Investors appeared to focus on concerns about spending, demand, and elevated expectations following the stock's strong rally. SK Hynix also declined sharply, extending weakness across the memory-chip industry. The company is scheduled to begin trading on the Nasdaq later this week, adding another closely watched event for the sector.
The weakness spread to Europe, where the STOXX 600 edged lower, before reaching U.S. markets. Analysts noted that the market reaction reflects heightened expectations heading into earnings season after semiconductor stocks led much of this year's rally.
Earnings and Fed in Focus
Investors are now turning their attention to the second-quarter earnings season, which is expected to test whether AI-related companies can justify their elevated valuations. Market participants are also awaiting minutes from the Federal Reserve's latest policy meeting on Wednesday, the first under Chair Kevin Warsh. According to LSEG data, traders currently expect at least one 25-basis-point interest rate increase before the end of the year.
Outside the technology sector, Fiserv rose after reports that the payments company had discussed selling its debit card payments infrastructure business to major U.S. banks, including JPMorgan Chase and Bank of America. Rivian shares fell more than 10% after the electric vehicle maker launched an offering of 75 million shares despite forecasting second-quarter revenue above analysts' estimates.
Oil prices moved higher following reports of attacks on vessels near the Strait of Hormuz, adding another factor for investors to monitor as markets head into a busy week of earnings and monetary policy updates. For more on how geopolitical events can impact markets, see our coverage of Dow Plunges 509 Points as Trump's Iran Remarks Trigger Oil Surge, Inflation Fears.
As the earnings season unfolds, investors will be watching for signs of whether the AI-driven rally can sustain momentum. For a deeper dive into the chip sector's recent volatility, read Micron Plunges 22%: AI Chip Selloff or Rare Entry Point for Investors?
This article is for informational purposes only and does not constitute financial advice.
