S&P 500, Nasdaq Slip as Chip Stock Rally Loses Steam Despite Falling Oil Prices
The U.S. stock market ended mixed on Tuesday, with the S&P 500 and Nasdaq Composite posting losses as a short-lived rebound in semiconductor stocks lost momentum. Investors remained cautious despite a sharp decline in oil prices, while attention shifted toward upcoming high-profile IPOs and broader market sentiment. The S&P 500 slipped 0.26% to close at 7,386.65, while the Nasdaq Composite fell 0.97% to 25,678.82. In contrast, the Dow Jones Industrial Average managed a modest gain of 86.10 points, or 0.17%, ending the session at 50,872.11.
Technology stocks weighed heavily on the market, particularly semiconductor companies that had staged a strong recovery just a day earlier. The iShares Semiconductor ETF dropped 1% after rebounding 6% on Monday. Major chipmakers including Micron Technology and Broadcom also retreated, each falling about 1% as investors continued to assess whether the sector’s AI-fueled rally had become overheated. The semiconductor industry has faced increased volatility after suffering one of its sharpest sell-offs in years last week.
Meanwhile, easing concerns in the Middle East helped drive oil prices lower, providing some relief to investors. West Texas Intermediate crude futures declined 3.4% to settle at $88.20 per barrel after comments from U.S. Energy Secretary Chris Wright suggested shipping activity through the Strait of Hormuz was improving. Optimism also grew after President Donald Trump indicated that a potential agreement with Iran could be reached within days, potentially leading to the immediate reopening of the crucial trade route.
The drop in oil prices sparked a rotation into sectors expected to benefit from lower energy costs and stronger economic activity. Materials and consumer discretionary stocks led gains within the S&P 500, while real estate shares received support from stronger-than-expected existing home sales data. However, the information technology sector fell nearly 2%, reflecting continued pressure on growth-oriented stocks after months of strong gains driven by artificial intelligence enthusiasm.
Market analysts say investors are becoming increasingly cautious ahead of several major market events. Infrastructure Capital Advisors CEO Jay Hatfield noted that money is flowing out of high-growth technology stocks and into cyclical companies that could benefit from improving economic conditions. He also pointed to the upcoming SpaceX IPO, expected to be one of the largest public offerings in history, as a source of uncertainty. With OpenAI also filing confidentially for an IPO, investors are closely watching whether these landmark listings will extend the AI-driven market rally or signal a turning point for the sector.
source: cnbc