Wall Street Closes Lower, Chip Stocks a Major Weigh
US stock markets closed lower on Tuesday, after a major sell-off in technology and chip stocks weighed on market sentiment. The S&P 500 fell 1.4%, while the Nasdaq 100 slumped 3.3% as investors began to question the sustainability of the rally in AI-driven stocks. This decline suggests the market is becoming more selective about technology stocks that previously rose sharply on the AI hype.
The greatest pressure came from semiconductor and memory chip stocks. Nvidia fell 4.2%, Broadcom fell 3.1%, Qualcomm plummeted 8%, AMD fell 5.8%, Micron fell 13.2%, and Sandisk fell 11.2%. This decline occurred after concerns arose that tech companies' heavy spending on AI infrastructure might not necessarily yield the expected returns. Investors also weighed on news that SK Hynix was slowing production of advanced AI chips to shift capacity to commodity DRAM.
Other major tech stocks also suffered. Tesla fell 5.8%, while Oracle weakened 5.8% as the market reduced exposure to stocks sensitive to data center spending and AI infrastructure projects. Meanwhile, SpaceX rose 1% after previously under pressure. However, the company's decision to issue bonds just a week after its IPO continued to heighten market concerns about the technology sector's significant funding needs.
Pressure on Wall Street was also exacerbated by persistently high US government bond yields. Treasury yields remained at high levels after the Fed's dot plot last week indicated a more hawkish stance. Despite weakening energy prices, the market still believes interest rate pressures have not abated. This situation limits the recovery room for traditional sectors and makes highly valued stocks, particularly technology, increasingly vulnerable to sell-offs.
Despite significant pressure on the Nasdaq, the Dow Jones Industrial Average closed near flat thanks to support from healthcare and consumer staples stocks. This movement indicates a temporary rotation away from high-risk technology stocks toward more defensive sectors. Going forward, investors will be watching to see whether the chip stock correction is merely short-term profit-taking or an early sign that the AI euphoria is losing steam.
Source: Newsmaker.id
