U.S. stocks ended mostly lower on Tuesday as investors continued rotating away from artificial intelligence-related stocks while rising oil prices added pressure to market sentiment.
The Dow Jones Industrial Average slipped 130.76 points (0.25%) to close at 52,925.15, after touching a fresh intraday record earlier in the session. The Nasdaq Composite dropped 1.16% to 25,818.69, while the S&P 500 declined 0.45% to finish at 7,503.85.
Semiconductor stocks led the market lower, with Micron falling 4.7%. Other chipmakers, including KLA, Marvell Technology, Broadcom, and AMD, also posted notable losses, dragging the VanEck Semiconductor ETF (SMH) down more than 3%.
While technology stocks struggled, investors shifted toward more defensive sectors. Eli Lilly climbed nearly 3%, while JPMorgan Chase, Microsoft, and Walmart also advanced. Walmart gained after announcing price reductions on several everyday products, including ground beef and Coca-Cola.
Oil prices surged after reports that Iran attacked a Qatari LNG tanker near the Strait of Hormuz, raising concerns over global energy supplies. Brent crude settled 3% higher at $74.16 per barrel, while West Texas Intermediate (WTI) rose nearly 3% to $70.44. Prices extended gains after the close following the U.S. decision to revoke a waiver that had allowed the sale of Iranian oil.
Weakness in semiconductor stocks began in Asia, where South Korea’s Kospi fell nearly 5% after Samsung Electronics dropped almost 7%. Although Samsung reported a sharp increase in second-quarter profits, investors remained cautious over future demand and AI-related spending. European markets also weakened, with the Stoxx 600 closing about 0.7% lower.
Market sentiment was further pressured by a Reuters report that DeepSeek is developing its own AI chip, potentially reducing its reliance on suppliers such as Nvidia and Samsung.
Meanwhile, SpaceX shares declined more than 6% following their entry into the Nasdaq-100, despite receiving several bullish analyst initiations from major Wall Street firms, including Morgan Stanley and Raymond James.
Frequently Asked Questions
Why did the Nasdaq fall more than the Dow?
The Nasdaq is heavily weighted toward technology and semiconductor stocks. A sharp sell-off in AI and chip companies like Micron, AMD, and Broadcom pulled the index lower, while the Dow benefited from gains in healthcare and financial stocks.
Why do rising oil prices affect the stock market?
Higher oil prices can increase business costs, fuel inflation, and reduce consumer spending. This may lead investors to worry about slower economic growth and delay expectations for interest rate cuts.
What is sector rotation in the stock market?
Sector rotation occurs when investors move money from one industry to another. In this case, funds flowed out of AI and semiconductor stocks and into healthcare, financials, and consumer defensive companies.
Why are semiconductor stocks so important to the market?
Semiconductor companies power AI, cloud computing, smartphones, and data centers. Because they represent a large share of major indexes, significant moves in chip stocks can heavily influence the overall market direction.
