On Tuesday, the stock market experienced a downturn as investors opted to sell off shares related to artificial intelligence, following a period of significant gains. The tech-driven Nasdaq Composite Index fell by 2.2%, with much of the selling pressure focused on semiconductor stocks.
The benchmark S&P 500 declined by 1.3%, while the Dow Jones Industrial Average, which is less tech-centric, lost 250 points, roughly 0.5%. This followed last Friday's disappointing performance for the Nasdaq and S&P, which marked their worst day of the year before bouncing back on Monday.
As fears increased in the market, the Volatility Index, known as the VIX, surged by 15%. Among those hit hardest were firms in the semiconductor sector, which is crucial to the tech industry. An index measuring semiconductor companies plummeted nearly 6%. Broadcom, a key player in this market, saw its shares fall over 4% after delivering a revenue outlook that slightly fell short of expectations—the company's worst week in a year and a half. Similarly, Marvell Technology saw a drastic 12% drop, while Nvidia, the largest company in the S&P 500 by market capitalization, witnessed a nearly 3% decline.
In a related development, oil prices stabilized somewhat following President Donald Trump’s announcement on social media regarding Iran’s downing of a U.S. Army Apache helicopter. Trump confirmed that the pilots were safe but injured and emphasized the need for a U.S. response to the incident.
Brent crude oil prices decreased by 2.8%, trading at $91.64 per barrel, while U.S. crude fell by 3.5% to $88.11 per barrel, having previously dipped as low as $86. This reduction in oil prices may have alleviated some inflation concerns, leading to a drop in U.S. Treasury yields. Nonetheless, the critical 10-year Treasury yield remains above 4.5%, which might sway some investors away from equities.
Since reaching all-time highs on June 2, the S&P 500 and the Nasdaq have fallen by over 4% and 6.5%, respectively, although both indices are still showing gains for the year, with the S&P up more than 6% and the Nasdaq up over 8%.
