Chip Stocks Slide
Nasdaq Slides as Chip Stocks Dive Amid AI Valuation Concerns and Market Rotation
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Key Points
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The CNN Money Fear and Greed Index remained in the Fear zone at 43.5, signaling a risk-off mood as the session progressed.
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Crinetics Pharmaceuticals surged about 99% on news of a takeover by Vertex Pharmaceuticals, while Rivian Automotive fell about 18% on a 75 million-share offering.
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Market breadth in tech showed eight of the 11 S&P 500 sector indexes down, as investors also eyed SK Hynix’s upcoming U.S. listing later this week.
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The semiconductor group remained under pressure with the Philadelphia Semiconductor Index dropping about 4.65% and the VanEck Semiconductor ETF down roughly 3.8%, underscoring a broad chips rout.
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Oil prices surged on Middle East tensions, with Brent crude up about 5% to $75.69 and WTI up nearly 5% to $71.91 a barrel following attacks near the Strait of Hormuz.
The Nasdaq Composite dropped 1.16% on Tuesday to close at 25,818.69, dragged down by a sharp selloff in chip stocks and growing doubts about whether the AI boom can keep going Bloomingbit. The S&P 500 fell 0.45% to 7,503.85, while the Dow shed 130.76 points, or 0.25%, to close at 52,925.15 HDFCSky.
The CNN Money Fear and Greed Index sat at 43.5, firmly in the Fear zone, as investors pulled back from high-growth tech and moved toward safer corners of the market ScanX.
Chip Stocks Take the Hardest Hit
Semiconductors led the market lower. The Philadelphia Semiconductor Index dropped about 4.65%, and the VanEck Semiconductor ETF fell roughly 3.8% Bloomingbit. The selling was broad and deep, hitting nearly every major chip name.
The drop came even after Samsung posted solid earnings — a sign that investors were focused on bigger worries Traders Union. Those worries center on AI chip valuations. Markets are asking whether demand can justify the steep run-up in prices seen over the past year KLSE Screener.
DeepSeek and SK Hynix Add to AI Uncertainty
Fresh headlines added fuel to the fire. DeepSeek, the Chinese AI firm, is reportedly developing its own chips Traders Union. That raised new questions about whether U.S. chip makers will keep their edge in the AI race.
Meanwhile, SK Hynix is set to list on a U.S. exchange later this week ScanX. The timing put even more attention on the semiconductor sector at an already fragile moment. Eight of 11 S&P 500 sector indexes closed in the red on the day.
Oil Surges 5% on Middle East Strait Fears
Oil prices spiked sharply after attacks near the Strait of Hormuz raised supply fears. Brent crude jumped about 5% to $75.69 a barrel. WTI crude rose nearly 5% as well, to $71.91 Bloomingbit.
The Strait of Hormuz is a narrow waterway that carries a large share of the world's oil. Any threat to it sends energy prices higher fast. The spike stoked inflation fears and pushed Treasury yields up, making investors even more cautious about risky assets HDFCSky.
Crinetics Soars 99% While Rivian Sinks 18%
Not everything fell. Crinetics Pharmaceuticals nearly doubled, surging about 99% after Vertex Pharmaceuticals announced a takeover deal ScanX. The deal stood out as one of the session's few bright spots.
On the other end, Rivian Automotive dropped about 18% after the company announced a 75 million-share stock offering Bloomingbit. The offering dilutes existing shareholders and spooked investors already nervous about the EV maker's cash needs. The split between winners and losers showed a market that is anything but uniform right now.
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