The Dow Jones Industrial Average retreated from record levels on Tuesday as a renewed selloff in artificial intelligence-linked semiconductor stocks outweighed gains in defensive sectors, while rising oil prices added to investor caution.
The Dow fell 131 points, or 0.3%, after reaching a fresh intraday record earlier in the session.
The S&P 500 declined 0.5%, while the Nasdaq Composite dropped 1.2% as semiconductor shares led the broader market lower.
The VanEck Semiconductor ETF (SMH) fell more than 5%, with Micron Technology losing around 7%.
KLA, Marvell Technology, Broadcom and Advanced Micro Devices also posted steep declines as investors continued rotating out of AI-related stocks.
Samsung earnings trigger global chip selloff
The pressure on semiconductor stocks began in Asia after Samsung Electronics’ preliminary second-quarter earnings failed to satisfy investors despite reporting what could be one of its strongest quarters.
Samsung projected operating profit of 89.4 trillion won and revenue of 171 trillion won for the second quarter, but its shares still fell nearly 7% as investors questioned whether the strong performance had already been priced into the stock.
The weakness spread through global chip markets. South Korea’s Kospi index dropped nearly 5%, while US-listed memory chip companies including Micron and SanDisk declined sharply.
Reuters also reported that Chinese AI startup DeepSeek is developing its own AI chip, a move that could reduce its reliance on semiconductors supplied by companies such as Nvidia and Huawei, adding another source of pressure for the sector.
Investors are also looking ahead to Friday, when South Korean memory-chip maker SK Hynix is scheduled to begin trading on the Nasdaq.
Defensive sectors outperform as oil prices rise
While semiconductor shares weakened, investors shifted into healthcare, financials and several large-cap stocks viewed as more defensive.
Eli Lilly gained about 2%, while JPMorgan Chase, Microsoft and Walmart also traded higher.
Walmart rose after announcing price reductions on products including ground beef and Coca-Cola.
Energy markets also remained in focus after reports that Iran attacked a Qatari liquefied natural gas tanker near the Strait of Hormuz.
Brent crude settled about 5% higher at $75.74 per barrel, while US West Texas Intermediate crude gained nearly 5% to $72.01.
Oil prices extended gains after the close following the US decision to revoke a waiver authorizing the sale of Iranian oil.
SpaceX falls despite Nasdaq-100 inclusion
SpaceX shares declined 6% on Tuesday despite officially joining the Nasdaq-100 index and receiving several bullish analyst initiations.
Brokerages including Morgan Stanley and Raymond James began coverage with positive ratings and price targets, although investors continued to reduce exposure to AI-related and high-growth stocks.
Investors are now awaiting minutes from the Federal Reserve’s latest policy meeting on Wednesday, which will offer further insight into monetary policy under Chair Kevin Warsh.
