Wall Street’s rally cooled off on Tuesday as a fresh wave of selling hit semiconductor stocks, ending the Dow’s run of record closes. A disappointing reaction to Samsung Electronics’ earnings overnight reignited worries that chip and AI-infrastructure valuations have gotten ahead of themselves, dragging the tech-heavy Nasdaq Composite to its worst day in weeks. Rising oil prices tied to escalating tension in the Middle East and a jump in consumer inflation expectations added to the cautious mood.
What Moved Markets
The Dow Jones Industrial Average slipped 130.76 points, or 0.25 percent, to close at 52,925.15, pulling back from the record high above 53,000 it set a day earlier. The S&P 500 fell 33.58 points, or 0.45 percent, to finish at 7,503.85. The Nasdaq Composite led the declines, dropping 302.47 points, or 1.16 percent, to close at 25,818.69.
The selling started overnight after Samsung Electronics reported that quarterly profit had surged nineteenfold from a year ago, but the results still fell short of some analysts’ lofty expectations. Shares of the South Korean chip giant fell roughly 7 percent, dragging the KOSPI index down with it and spilling over into U.S. trading. Chipmakers bore the brunt of the pressure: the VanEck Semiconductor ETF fell more than 3 percent, with Micron down 4.7 percent and KLA, Marvell Technology, Broadcom and AMD also posting losses. “Expectations are up, and fundamentals are struggling to meet these high, sky-high demands, and that’s what’s fueling today’s decline,” said Mike Bailey, director of research at FBB Capital Partners.
Adding to the unease, Bloomberg reported that the U.S. revoked a waiver allowing Iran to export oil after several strikes on tankers in the Strait of Hormuz, with reports of a fourth vessel attacked during the session. Oil prices advanced on the news. Separately, the New York Federal Reserve’s latest survey showed consumer inflation expectations climbing, with the one-year outlook rising to 3.7 percent, the highest reading since September 2023.
Notable Movers
Crinetics Pharmaceuticals (CRNX) rocketed nearly 99 percent after Vertex Pharmaceuticals (VRTX) agreed to acquire the company for about $10 billion. Vertex shares slipped about 2 percent on the deal news.
Fiserv (FISV) gained 3.5 percent, and is up roughly 9 percent over the last five sessions, on reports that the payments company is looking to shed its STAR and Accel debit card networks, an asset that has drawn interest from large banks such as JPMorgan and Bank of America looking for ways around debit fee regulations.
SpaceX (SPCX) fell about 5 percent even as it officially joined the Nasdaq-100 on Tuesday, one of the fastest additions in the index’s history. Heavy buying from index-tracking funds had largely already occurred ahead of the inclusion date, leaving little fresh demand to lift the stock on the day itself.
Chipmakers broadly struggled alongside the VanEck Semiconductor ETF’s decline, with Micron, KLA, Marvell, Broadcom and AMD all trading lower as investors reassessed how much more upside is priced into the AI hardware trade.
Looking Ahead
Investors will be watching for any further escalation in the Strait of Hormuz, which could keep pressure on oil prices and add another layer of uncertainty to markets already digesting stretched AI valuations. On the earnings front, PepsiCo is due to report second-quarter results Thursday morning, kicking off a light week for corporate results before the pace of earnings season picks up. Traders will also be parsing incoming inflation data and Fed commentary after this week’s jump in inflation expectations, along with any further reaction across global chip stocks following Samsung’s earnings.